Are there any Higher DL (GURPS TL9+ ish) colonies without labor subsidies, capital disbursements, or similar redistribution? It seems that in high DL places I’ve read your descriptions of the relative value of capital and labor is skewed pretty hard towards the capital side, and labor is subsidized, or capital is assigned to folks via some system that prevents destitution, or some similar system. I’m not sure if this is universal in FB or not. Certainly in many of the lower DL colonies resources are very concentrated.
It depends rather on how narrowly you choose to define “subsidy”. In a broad but still useful sense humans cannot survive for generation after generation in any environment without somebody subsidises somebody, because at very least infants are necessarily dependent on some adult or existing stock of capital. But that’s not really what we’re talking about. There are certainly some colonies in Flat Black that have high dev levels — 7.5 or above — in which most people do not receive either as a lump sum or as a continuing stream any overt transfer of wealth or income from the government. Do you count an inheritance as a subsidy from ones forebears?
Fundamentally, the issue is that microeconomics offers no assurance that the market-clearing wage of labour will exceed a decent minimum, nor even that it will suffice for subsistence¹. So far, capital has always been complementary with labour, so that accumulations of capital have raised the marginal productivity of labour and tended² to raise the wage rate³. But as machines become capable of performing more and more of the tasks that used to require human hands and minds⁴ we expect that capital⁵ will become more of a substitute and less of a complement for labour⁶. The equilibrium price of labour will fall.
Note that previous paragraph is about the pure wage rate. The market wage rates of skilled workers include what is technically the pure wage of their time and plus what is technically the interest on their human capital⁷. Policymakers in the WEIRD⁸ West since the 1970s have supposed that there is an easy and benign escape from the “threat” of automation to be had by giving everyone a grubstake of human capital (often at public expense) in the form of tertiary education⁹. It is a cruel twist of Fate¹⁰ that computers are now threatening mostly white-collar workers with redundancy, and that we have a desperate shortage of plumbers, electricians, and carpenters. So free college is an early form of the universal capital grubstake that I suppose for many highly-developed colonies in Flat Black; unfortunately it is not one that is likely to cut the mustard at high DL where information work has its market wage depressed by automation at least as much as manual work does.
So, at a high level of technology and development it is plausible that ordinary people will not be able to support themselves at a decent standard of living and raise their successors in the next generation by the wage on their labour, nor even by their wage augmented by the interest of a subsidised grubstake of vocational training. They must receive a share of the interest of physical capital, otherwise they will starve, revolt, emigrate, fail to maintain their numbers by bearing and raising children and die out, or vote in a socialist government. None of those processes perpetuates an economy with a class of starving wage-earners¹¹. So we get to consider the ways in which a society might provide that each member receives some part of the revenue of capital.
First you have a bunch of socialist solutions, in which most of the land and physical capital are in social, collective, or national ownership and control, and the revenues are received by some sort of government, collective, or community. The revenues can be shared out either as unconditional dividends, or as above-market wages for productive and necessary work, or as wages for more-or-less worthy-seeming make-work, or in kind (a residence with a food synthesiser and free utilities, free education and full health care, access to public amenities, free InterNet and content etc. to augment low wages). Different approaches can had dramatic effects on society, norms, and well-being. An unconditional dividend effects the disinvention of work: its a cliché that this would make people idle and unhappy, they could equally well be busy and content at sports and hobbies, socially engaged, and highly skilled amateurs of the arts and sciences. A bonus multiple of wages makes people busy at productive (but not very productive) work that perhaps brings a feeling of worthiness, but it seems to me to be a destructive misallocation of people’s time. Wages for unproductive make-work is the same but more so.
Then you have a bunch of broadly social-democrat solutions, in which most of the land and capital are left in private ownership and control (whether individual or corporate) and part of their revenue is confiscated for redistribution. This gives you a class of owners (on Tau Ceti, including all the elderly) and a class of non-owners. Among the non-owners you get the same sort of effects as in the socialist approaches, according to whether you pay a dividend, a wage subsidy for earned wages, or a wage for make-work. Also, this kind of arrangement can be disguised more effectively than frank socialism by paying the dividend mostly in kind (free health care, child care, education and training, roads and public transport, utilities, use of IP etc.) or as disguised savings (Social Security, in the US usage).
Then you have a bunch of syndicalist solutions in which land and capital belong to various corporations that don’t have the universal obligations of a government, collective, community etc… Examples include families or clans, or selective clubs like the “cliques” on Seeonee. An entitlement to income in cash or kind comes with membership. Membership may be hereditary, selective, elective etc., and the chance may exist to be refused membership. In some cases the corporations, or some of them, may be devoted to particular efforts, such as scholarship, research, exploration, team sports, community service…. A person might, after striving to qualify, join a fire brigade, a community choir, a movie-making outfit, or a military unit and them be supported by it, in comfort, while continuing in more-or-less strenuous work pro bono publico.
Then you have distributist solutions in which everyone except perhaps children and a minority of unfortunates owns and controls a personal stake of land and capital, and keeps most of its revenue. Perhaps everyone is given a grubstake of physical and/or human capital out of public resources, and a super-egalitarian sub-variant in which other inheritance and transfers are not allowed.
And finally there is a bunch of solutions in which the land and capital remain in the ownership and control of a minority of individuals or bodies corporate, but in which the wealthy are expected and obliged to support dependents. One variation of this that in which individuals such as the heads of families or clans inherit a mass of land and capital, but are required to support a bunch of relatives as dependents, paying the boarding-school fees of minor children and giving allowances to adult ones pending their inheritances. Such an arrangement could result in a great deal of attention to provident marriages and restrained child-bearing. Another is one in which the wealthy support large entourages of dependents as a form of conspicuous consumption, like 18th-century owners of landscaped estates who sometimes hired a picturesque hermit to live in a grotto in their romantic parks. These are all pretty horrible, I think.
The details can get a bit complicated. Consider, for instance, New Fujian. The land and most of the capital there belong to monasteries, which provide a lot of disguised subsidies to people of working age in their territories by providing free roads, sewers, water supplies, communications and content, sanitation, education, board and lodging for children in the instar stage, medical, dental, and psychiatric care, besides bearing the expenses of the administration and law enforcement, and providing retirement incomes (conditions apply). Families on New Fujian don’t look subsidised, consider themselves to be ground down into a condition that is bearable only because of the promise of becoming a privileged héshang one day. But they live better on their wages than poor families could afford to do on a world where you had to pay taxes to support government services.
¹ Except in the term in which feedback through reproduction rate, infant mortality, or starvation equilibrates the labour supply as a survivable wage. The sections in Smith  that deal with the long-term equilibrium of the wage rate and its connection to economic growth are horrifying. No wonder Malthus  was such a sourpuss. Thank God for contraceptives, sex ed, and the liberation of women*!
² Ceteris paribus, that is. Other effects, such as centralised maladministration of production, wrong-headed or pro-rentier legislation or policy, outright kleptocracy, war, disaster, etc. can countervail. For example, the apparent stagnation of wages in the USA since 1977 has been in large part the result of the increase in wage costs being paid in the form of increased health-care costs.
³ Yes, that’s right. The dark Satanic mills of English 18th-Century industrialisation paid workers higher real wages, not lower ones, than farm work at the same time. And farms in England paid labourers better than farms in Poland, or even France. It’s not that factory work in the Industrial Revolution wasn’t ghastly — it was — it’s that farm labour‡ in the Middle Ages and the Enlightenment was even worse.
⁴ It’s turning out to be a nasty joke on the education & training policies of the last fifty years of so that computers are making white-collar workers such as administrators, legal juniors, research assistants, and code monkeys obsolete faster than robots are obsoleting skilled manual workers such as plumbers and surgeons.
⁵ Watch out for the categorisation. This will be capital consisting of different machines, not a magical change in the economics of the old technology.
⁶ Isoquants of output in capital-labour space will become more linear, less concave.
⁷ Skills, knowledge, and even to an extent business and professional contacts partake of the nature both of labour (because their employment is rival with some person’s leisure) and of capital (because they are produced by the investment of prior production as a rival to consumption). They are termed “human capital”, and the return to them is classified as interest, not as a wage.
⁸ Western, Educated, Industrialised, Rich, and Democratic.
⁹ Very unfortunately indeed they have often mistaken education in the liberal arts (which is human capital in about the same way that a HD widescreen TV is physical capital) for a vocational grubstake. As a result I now have friends who are unhappy middle-aged clerks with honours degrees in classics and prehistory, whom free university education did not elevate to the middle class as they expected.
¹⁰ Which I predicted at least as early as 1987.
¹¹ See note 1 for Adam Smith’s description of the equilibration of the labour supply by the working class hovering on the edge of starvation. That won’t work if automation prevents the wage rate from rising when the working class dwindles.
* Where women are not free, children starve†.
† Yes, I have parenthetic footnotes on my parenthetic footnotes.
‡ Be careful to compare poor workers in the industrial mills with poor (i.e. landless) labourers in the rural manors, not with such peasants who have rights to a virgate of land in copyhold etc.
Malthus, Thomas  Essay upon the Principle of Population
Smith, Adam  An Inquiry into the Nature and Causes of the Wealth of Nations, Book 1, chapter 8
Firstly, thanks for the comprehensive summary. It is mostly what I thought, with more understanding of the details and clear explanations.
If I may summarize, at high DLs labor cannot usually provide enough value to live on, so some sort of capital income is necessary, and there are a variety of ways to do this.
Are there any places in Flat Black where there was cruel culling of those lacking capital as DL increased? The pessimist in me thinks it must have happened, and I am sure there are interesting settings to spun off of such disasters. However, it is entirely possible that knowledge from Old Earth steered everyone away from such policies or something similar.
Yes, and it is still going on. Colonies stuck at DL 6–6.5 by chronic demand-deficient unemployment, with wages so low that the “working” class save for emigration every nickel they can spare from buying contraceptives, with ageing, declining populations of the poor, and rich with a strong enough throttle on the institutions that they can prevent any increase of the tax rates. Places like what Cockaigne was in 9,401, teetering on the brink of bloody revolution. Places where sclerotic ideologues insist that “socialism is for workers, not bludgers!”
Huh. My previous understanding of Cockaigne was that it was a UK style welfare state where almost everyone was trapped in barely survivable welfare, therefore represented poorly executed socialism. However, now that you state it baldly, running popular socialist institutions badly and on an insufficient budget is indeed a classic tactic of those who deplore socialism, so it all makes sense. You were doing a traditional SF “if this goes on” scenario and I did the traditional SF reader scenario of missing the whole commentary due to different having cultural assumptions, being over-focused on the action, and also being slow on the uptake.
Is it possible to get to a higher DL in FB via genocidal Malthusian purging followed with ever increasing conspicuous consumption, or is the population base absolutely necessary?
It added to the confusion that the members maintained that they were socialists living in a well-run, wealthy socialist utopia, and the recipients were simply not members of their society but a bunch of illegal immigrants that they were supporting as charity cases “bloomin’ gen’rous, too!”.
I think so. With access to cheap interstellar transport you can keep your consumer base on other planets and maintain your technical specialisation by trade. After all, the Empire maintains DL 8.5 with only about fifty million people. Eliminating the poor and then replacing them by breeding more rich people doesn’t sound like a quick or efficient way to amass a sufficiency of rich consumers.
The reason that the colonies that ended up in the Suite and at DL 8.0 did so is that they were well placed at DL 7.5 when cheap trade became available in the 520s. There hasn’t yet been time to get to DL 8 by any of the longer or slower routes.
Neither quick nor efficient, no, but totally the sort of boneheaded maneuver humans attempt in groups. Interesting settings might result.
To swap to a Doylist perspective:
[*] A place that has removed those without capital, but is now swapping back and forth between a faction that want immigration to bump up the population and one that wants to extend the purge, and the tribulations of those caught in the middle.
[*] A place trying to deliberately engineer conspicuous consumption to pump demand, but the consumption in question is being used to cover all sorts of dangerous and unscrupulous activities, and the PCs are left trying to find out exactly how the 5000 acre bespoke fairy forest is a weapon.
[*] A place where you are required to create an escrow account for big $$ to reproduce to develop the human capital of the child, immigration of skilled professionals is encouraged and they are well paid, there are no social services, and folks not born there cannot vote. Almost everyone there is satisfied with the arrangement but neighboring governments consider them spongers.
And so forth.
Sure. I just meant that colonies doing it this way won’t be among the front-runners.
Among those ways is to pay labour more than its marginal product, diverting part of the revenue of capital to subsidise wages.