Alternative Money Systems vs Unconditional Basic Income

As someone who is active around UBI (»Unconditional Basic Income«), one cannot escape the people who have the »perfect solution« by introducing a new type of money.

Recently, we have been contacted by people who have a system of IOU that they propose would help with UBI. But this suggested system is just one of many that we have seen: some new form of digital money, some new forms of accounting which would replace money, some forms of depreciative money, etc., etc.

Most of these suggested systems are »well-meaning«. They rightfully see that there is a lot of problems in the world and they want to offer a solution. And as everyone can see that the capitalist system is at the core of many problems, then the reasoning seems to go as follows:

Capitalism is based on capital. And capital is money. So we need a different type of money.

Wrong. This error seems to be at the heart of all these well-meaning money theories.

Capital, as defined by Marx, is a social relationship. Most capital is not held in cash and not on a bank account either: It is held as ownership (e.g., via stocks or via contracts) on factories, companies, land, etc.

An ownership that allows the exploitation of labour (and natural resources) in order to create profit. This relationship only works if on the other end of this equations are enough people who are forced to sell their labour power in order to survive. This is best expressed in the anecdote about »Mr. Peel« in Capital Vol. I:

»He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things. Mr. Peel, he moans, took with him from England to Swan River, West Australia, means of subsistence and of production to the amount of £50,000. Mr. Peel had the foresight to bring with him, besides, 300 persons of the working class, men, women, and children. Once arrived at his destination, “Mr. Peel was left without a servant to make his bed or fetch him water from the river.” Unhappy Mr. Peel who provided for everything except the export of English modes of production to Swan River! « -- Marx, Capital Vol I. Ch. 33.

So, of course you can come up with a different kind of money. One that has a built-in mechanism of taxation. But then you need the government to mandate the use of this mechanism. If you have the government on your side to mandate this: then you could as well ask them to introduce the taxation in the first place, and you do not need to rely on a confusing new money system.

If you do not have the government on your side to establish the rules, then of course you can try on your own: Those who can gain from your new money system would have an incentive to use it, but those who would have a hidden form of taxation by using it would not want to use it. So the corporations and the rich would not use it. Since most people are caught in the above-mentioned social relation where they have to be part of the system that exploits them, it should be clear that such a voluntary approach would not get you far.

Also, do not expect that the rich and powerful would not be able to find out exactly where the hidden taxation of your new money system is located. You cannot expect to simply trick them into it.

Now, even with a government-mandated system, it should be clear that the rich and the powerful will try everything to circumvent the taxation that would be built into the system. Just look at how good they are in doing this now:

E.g., how the rich argue that they do not want to be taxed on unrealized gains on their stocks, but Elon Musk then uses his stocks as collateral to get a loan to buy Twitter:

Trevor Noah - Elon Musk’s Billionaire Games (YouTube)

So as soon as you mandate the use of a new kind of money, then the rich and powerful will use the magic of contract law to invent their own form of money again.

The point here is: It would still be easy to tax the rich, but this would require the political will to do so. And as the rich and powerful have enough influence over politics, they can rig the system to their advantage.

So this is why I get angry at these alternative money systems: They are a smoke screen that distracts from the real problems. They make it seem that the issue is a technicality in our financial system and not an issue at the core of political economy.

When discussed in the context of UBI, the smoke screen goes even further. It distracts from all the reasons why we want a basic income in the first place.

The fact that more than half of all labour today is unpaid labour is not caused by the money system, but is a deliberate choice of society. The fact that one needs wage labour in order to survive is not an accident, but is there because it is in the interest of the owners of the factories.

Money, in the end, is a way to ration access to the goods and services that society produces. As long as the amount of goods and services stays the same, one can imagine rather different schemes of how to distribute that money and thus change the rationing. Basic income is a scheme where we say that everyone should have a basic share of that.

Now the argument that is usually brought against basic income is: Who would work when they have a basic income? And of course a lot of people would reduce their hours or give up their paid job. We expect that a lot of people would still contribute a lot to society, just as a lot of people now contribute without a paycheck. But the amount of goods and services could shrink. If we look at what work is done in our economy now, we see that there are a lot of bullshit jobs. Jobs that do not contribute to society or that even create more harm than good. E.g., look at all the jobs that are bound to burning fossil fuels and that contribute to climate change. In this area alone, some jobs create 5 or 10 times more harm than good.

So alongside a basic income that allows people to quit their bullshit jobs, we need a tax system that disincentivizes products and services that are not useful or are harmful. Again, these alternate money systems are not helpful here: By introducing hidden taxation, we forget that we need explicit taxation where we choose what we need as a society and what we find harmful.

Conclusion: Alternate money systems are built on a misunderstanding of what capitalism really is, so they introduce changes without fundamentally fixing anything. It just creates useless distraction in the discourse on what is wrong and what to do about it. While these ideas usually come from well-meaning people, they really do not help us, and we should reject them.

Franz Schaefer (Mond), August 2026