A
theoretical form of currency designed for social stability. All contemporary
currency is
linear - take X dollars, add X dollars and you've got 2X dollars. In a non-linear currency, X and X would result in 1.9X effective units of currency. X, X and X would make 2.8X effective units of currency. The more money one had, the more money it would take to make that next effective unit of currency, referred to as
eu from here on. Obviously there would have to be an underlying unit turned into effective cash through an
algorithm, requiring the use of computers in almost every
transaction, but sole use of
electronic currency would allow it. Implementation could differ, but the proposed form of non-linear currency would apply to every transfer and valuation of wealth.
What would the advantages of non-linear currency be? Since it would work against enormously large amounts of weath when the point of diminishing returns struck, the disparity between economic classes would stay relatively small. It would provide a strong reason for donations, as ten eus for one person would be one hundreds eus for someone else. Absolute bedrock poverty would be nearly abolished due to this effect. It would encourage affordable prices for most of life's necessities.
Disadvantages? There are certain political issues raised by the authoritarian nature of non-linear currency. The more economic disadvantages include many caused by high inflation. It would discourage the accumulation of wealth and so discourage enterprise both through lessened rewards to successful entrepeneurs and through making it harder to build up capital. The largest disadvantage would be complexity - the numerous rules to cover every situation and attempts to avoid the built-in tax on large amounts of money would be overwhelming. Increased barter would be one consequence, although such could be counted as an advantage. Currency evasion would replace tax evasion as the sport of the rich. Well made but costly products would be refused in preference to cheap products with lower value, raising the cost of life in the long term. Unless material objects were included in the valuation of one's wealth, a troubling idea that would require a realtime estimate of the worth of everything owned and the search against hidden products, it would encourage greatly increased consumer spending (again a possible advantage) as a way to lower one's wealth and therefore increase the purchasing power of new income. Even the choice of algorithm would be extremely complex - what rate of currency decay would be best for society?
Although non-linear currrency would never work in modern society, it's a concept that could inspire something if thrown into the gigantic collective think tank that is Everything.