A Chit Economy

The rules for our chit economy are as follows:

  • Each member of society receives a fixed number of chits per year which are used to reward others for goods and services they receive
  • There are only as many chits in the economy as there are individuals (i.e. # chits = # individuals x fixed # of chits per individual per year)
  • Chits expire. Use-’em-or-lose-’em.

I exchange chits for goods and services received. As others receive my chits they in turn can use these chits to compensate others. Chits are transferable as long as they’re unexpired. Individuals who receive many chits provide goods & services highly valued by others, and vice versa. We are a nation of traders in chit.

No cheating by jumping ahead, but chits are probably not what you think.


  1. A Chit Economy
  2. Growing Chits
  3. Society and Chits
  4. What Are Chits?
  5. Why Chits and not Labor?

Growing Chits

Everyone in society learns to provide services that garner lots of chits from others. The more you receive the more you can dole out to others for goods and services. Especially successful are individuals who accelerate their accumulation of chits over time by investing chits into themselves to increase the value of the services they offer. They invest chits either from their fixed allotment or from excess chits received from others, and this investment brings them even more chits during the next annual cycle.

Successful individuals actively ‘promote’ their services so as to make them more highly desirable across the economy. They uncover individuals most desirous of their services (i.e., willing to pay more chits). Less successful individuals provide generic services, those that can be provided by more individuals than needs call for. Although this service may be extremely valuable to me as a recipient, it will not be long before I become aware, through promotion, of others willing to provide these services for fewer chits.

Society and Chits

At the societal level it is best chits not be allowed to expire. Chits expired means services not rendered to someone.

Individuals can keep chits from expiring by converting them into assets (e.g., buying durable or semi-durable goods). These chit-holders become less subject to the exigencies of use-it-or-lose-it. They can spend chits with greater leisure (less urgency) allowing for greater satisfaction. Better yet would be to instantiate chits into assets that can later be sold multiple times (records, books, movies). Even if each consumer only pays a few chits, collectively this adds up. However, individuals can only hold so many assets.

At the societal level some bright individual institutes a mechanism to save chits from expiring. When chits are about to expire, they identify others who want those chits now, and who provide a promissory note in exchange for the chits. The holder of the promissory note can, in the future, redeem the note and receive services from others, just like the original chits never expired (albeit there is a transaction cost built into the promissory note to reward the bright individual). The original issuer of the note makes good on the promise by securing future chits to cover the future redemption. Society institutes protections for these transactions (e.g., protection against defaults, misrepresentations, rules for transfer of the promissory note to third parties, inheritance). As long as there is someone willing to ‘consume’ today’s chits, under this mechanism chits need never expire.

What Are Chits?

Chits are waking hours. Everyone is given approximately the same number of waking hours in a year, and they must decide how to spend those waking hours.[1] They can spend them on themselves or on others. Waking hours given over to idleness are never recovered.

I’ll use my waking hours for my own purposes unless you offer me more in a trade. Trading in chits must benefit both parties: we both get more done in a day. And if we both get more done in a day we are both better off. My goal is to order my life in such a way that I am trading my waking hours for many more waking hours from others. I multiply my waking hours. I am allotted only so many waking hours in this world and can therefore only accomplish so much. But by trading chits I can accomplish so much more. Two hands multiply to hundreds. Think barn raising.

Inequality of outcome comes when I’m willing to trade my waking hour for less than a waking hour from others. I and many others willingly give up 1 chit to receive what in essence is 1/1000000 of a chit from Meryl Streep, by watching her movies. Similarly I pay 1000 chits for 1/1000 of a chit from you in order to purchase your laptop computer, which I hope to use to later increase the value of my waking hours for others.

You may argue I was worse off from my trade with Ms. Streep, that I should use that waking hour to repair the roof of my house. I counter that it’s my waking hour. I ‘feel’ better off having made my trade with Ms. Streep based on my particular circumstances and emotional state at the moment of the trade. It felt as though she personally traded an hour with me by her presence in the movie. All my chits are not the same, and I willingly vote some of them for what others may consider frivolous, but this is what I consider getting more done in a day.

I could opt for a life of only the ‘grossest groceries’, a life of meditation and simple living. A self-oriented life. I’m going to disengage from the chit economy and do everything myself. I do not multiply my waking hours. I content myself with what mine alone can produce.

Evil and lazy slave! You should have deposited my chits with the bankers, and on my return I would have received my money back with interest!

Not participating in the chit economy does not build cathedrals, amphitheaters or societies. It leeches on civilization and its achievements.

I instead opt to use my allotment of chits to help others. An other-oriented life. I seek distributed, unbiased, unambiguous measures of my help to others and I find it based on the number the chits I receive for my services. The ‘monetary value’ of those chits is irrelevant. Many a saint has accumulated chits and achieved an astronomical level of exchange, exceeding even Merly Streep. Most of us are not saints, but having the ability to leverage our chits to do more than merely provide for our own sustenance, this opens up possibilities for our humanity to others.

Why Chits and not Labor?

We seek the best way to trade waking hours with others regardless the exchange rate of those trades. We seek to maximize other-orientedness (whew!) in society. I do for others and they do for me. Using chits as a stand‑in for labor eliminates confusions introduced by wages, skills, equity, etc.

How do we organize the waking hours in a society to maximize service to others? Surely we can and should get everyone doing something rather than nothing, but we want to know the best way to do that something. We do not, for example, subscribe to the following:

“[we adjust] production to the needs of the community, … distribute the work to be done among all those able to work [to] guarantee a livelihood to every man, woman, and child.” – Albert Einstein[2]

Instead we set up society to maximize trading in chits, and we do this without discouraging individuals from maximizing their own chit exchange rates.[3] We let high exchange rate individuals do what they do best, and we encourage these (and all) individuals to engage in chit trading with all their chits.

How do we do this? Use-it-or-lose-it. Those who receive chits must purchase semi-durable assets, consume the chits, or lose ‘em. Our bright individual with the promissory notes must take into account that the surety for the note really does expire. You find a use for my waking hours this year or they’re gone. Forget store‑of‑value, we want currency that expires. Hyperinflation works too. Yeah, yeah. I only say this to shake up the thinking.

The goal is to for everyone to seek out others to get more done in their lives, today! Fix that roof. Paint that room. Donate to that charity. Harvest that crop. Anything you want, as long as you trade chits sooner rather than later. We seek the means to push chit-holders to actively seek out others for a trade: to deepen the feeling of loss of an expired chit to the individual and to society.

1. As you reread this article substituting waking hours for chits, you’ll find chits do not have a ‘fixed’ monetary value, either across individuals or within a single individual.

2. http://monthlyreview.org/2009/05/01/why-socialism. A classic example of genius in one field attempting and failing to peddle their influence in another.

3. Increasing labor productivity is the best path to higher standards of living, and this means a high rate of chit exchange for highly productive labor. Individuals who command high exchange rates are highly valued by society. I eagerly trade one hour for 1/1000000 of an hour, and it feels to me as though I got a good deal. If the highly leveraged individual works 1 hour, then society feels as though it received 1,000,000 of my hours. But only if 1,000,000 chits are traded.


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