Time-based economy

The time-based economy (TBE) is a theory of an economic system in which the basis for determining exchange coefficients (value), the amount of taxes and the level of wages is working time (service hours). It is precisely this reliance on the time factor that distinguishes the TBE from most other economic systems.

The TBE proceeds from the notion that modern economic systems rest on factors that have different significance for different people (the possession of capital, the ownership of a plot of land, a legally established or natural monopoly, and so on). Someone inevitably has to adapt to rules that suit others without any changes at all. For some, these conditions will inevitably be unfair. Adherents of the TBE hold that the cause of injustice in today's systems is the absence of permanent rules for conducting economic activity and establishing values. It is assumed that the shortcomings of modern systems could be eliminated if the laws of nature became the basis of the economy. Time is an objective measure; its duration cannot be regulated or altered by political decisions. This makes it possible to regard such a measure as the fairest basis for an economic system.

References to a social system based on the equal exchange of working time can be found in John Francis Bray. His work "Labour's Wrongs and Labour's Remedy" (1839) was cited by K. Marx, who noted that:

In London, in Sheffield, in Leeds and in many other towns of England, equitable-labour-exchange-bazars [bazaars for the fair exchange of the products of labour] were founded. Having absorbed considerable capital, all these bazaars went scandalously bankrupt. This put these people off them for good.

— see: "The Poverty of Philosophy", Marx, Engels. Works, - 2nd ed., vol. 4, 1955, pp. 102-106; p. 109 (note)

Projects for directly tying units of account to working time appear periodically. In the USSR there was the labour-day (trudoden). Contemporary examples include the Ithaca Hour and various "time banks".

In 1976 Anders Gernandt, a member of Sweden's People's Party, put a proposal for the introduction of a time tax to a vote in the Riksdag, but the proposal was not adopted.

The principal aim of the TBE is to replace the rent system with normative payments established for work performed, which depend on time (they are mathematical functions with "time" as the argument). According to the principles of the TBE, capital cannot increase over time without the performance of labour whose duration corresponds to that increase.

Another aim of the TBE is to link the value of capital to some objective physical basis, in the way that size and weight are linked to the physical concepts of "distance" and "mass". As conceived by its authors, such an approach should make fraud and speculation more difficult or even impossible.

The TBE has been criticized for being too theoretical to work in reality; and for proceeding from the assumption that all those subject to taxation have work. This theory also fails to indicate an objective basis for adequately accounting for differences in the qualifications and quality of workers and the efficiency of their labour, which may create perverse incentives.