UNIT

UNIT is a monetary model with an incorporated currency. It provides Basic Income to all citizens, giving governments a better way to fund their programmes based on a set of rules that dictate how money is created, distributed and destroyed, accounting for people’s basic needs while incentivising work and innovation.

Transformative
STUDENTS INVOLVED
João Alves Marrucho
Deepu James
ABOUT
Designed for governments
Money as a public service and the future of state-money
Traditionally, Central Banks create the initial money supply, lend it to other banks, which in turn expand that money to the wider public. These loans are expected to be repaid with interests, but because the money to pay interests is never created to start with, this creates an unredeemable debt. Central banks then issue more credit thus increasing the global amount of unredeemable debt which is now more than 322% of global GDP. This radical design flaw leads to an endemic, toxic competition environment and many other societal problems like over-consumption, financial crashes and inequality, just to state a few. So how might we create a mathematically viable form of state-money for the Fourth Industrial Revolution?
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Bypassing banks and fair social contract

Currently monetary policies are broken and imprisoning society in a fast-paced, productivity-driven economy that seems to be increasing economic inequality all over the world. Consequently, people are becoming increasingly sceptical about current policies, so new ideas have been dropping on the table like blockchain currencies and Universal Basic Income. However, these ideas have yet to develop a well-rounded answer to state-money’s social contract. On one hand, blockchain projects are not concerned with state policies – on the other hand, a universal basic income, if simply presented as a demand, fails to answer the question: how would you fund it without creating more unredeemable debt? I’ve tried to combine some of the features of these models to design a form of state-money that is both mathematically viable and focused on a fair social contract.

How does UNIT create money?

UNIT creates currency in three different ways. Firstly, through a Basic Income (BI): a regular amount of units created directly to all adults current accounts to be spent at will. But, if everyone is given money, who would do the all the work? Well, the second way of creating money is to create more money to reward the citizens who work for public services of universal access. To this second way of creating money, UNIT refers to as Universal Basic Income (UBI). The third way of creating money is through Loans to allow citizens’ bigger purchases.

A server as a smart-ledger

Instead of a bank, there’s a server. This server is basically a smart ledger that creates and eliminates money according to a specific set of rules, and registers transactions between users. Technically speaking, the server can be centralised, or decentralised. Whatever the technology, what is crucial to UNIT is the social contract that the server helps to enact, which is, to allow governments to fund their public programmes whilst still allowing space for private initiatives.

UNIT's social contract

To uphold this social contract, UNIT allows public and private organisations to increase their workers' income in different ways. For the public sector, because public services should be free and cannot therefore derive profit, public workers are paid an additional fee to incentivise work on essential sectors. This additional fee is under this system referred to as a public Premium. In contrast, private organisations cannot receive such public Premiums, so individuals and companies are free to charge whatever they want and use profit to increase their revenues. But if we keep on creating money, what will stop it from losing value? Indeed, we need a way to control the amount of money.Instead of pegging it to gold, limiting it to a random number, or even increasing the difficulty of mining it, UNIT keeps it tied to the amount of citizens that exist and eliminates it according to its use.

Claiming economics back into the grounds of humanities

This was set as a speculative design project but in all honesty the objective was never to design a monetary model for Utopia. The problem is real: last year’s dramatic shifts in working practices with the advent of home working, the massive waves of unemployment seen around the world, and the increasing automation of work have raised urgent questions about how the economy could operate more sustainably and with human welfare at its core. However, we seem to be doubling down on our mistakes with massive stimulus packages that inflates the global money supply, to as yet unclear consequences. The idea that these stimulus packages will focus on helping large corporations weather the economic downturn to the detriment of ordinary people is looming. We need a model that incorporates both, combining a depth of research with creativity in addressing the political and economic challenges posed by the Fourth Industrial Revolution.

special thanks

Partners: Frey Lindsay (Business and migration journalist for the BBC World Service Senior contributor Diversity & Inclusion at Forbes), Pedro Baltazar (Mathematics & Banking Quantitative Analyst at UBS, Mathematician)Collaborators: Albino Tavares, António Martins, Ben Marland, Francisco Eduardo, Frenéticas Nuances, Ruben Alonso

My family who has never stopped supporting and all who helped making this project a little less speculative and a little more real.

students involved on the project

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