While the purpose of markets is to unite supply with demand, when we study them, we can notice something quite curious: the markets we currently engage in mostly feature only supply signals. Goods and services and their prices are aggressively marketed, while demand signals are virtually absent from the market. Very seldom do we see advertised offers to buy something at a certain price even though every trade will eventually need a buyer.

This illustrates that our marketplaces are primarily driven by supply. When our markets are so skewed in favor of one side of trade over the other, this could indicate that there is a profound imbalance in the way our markets are built. This in turn could have a detrimental effect on our society as a whole. After all, it would seem logical that it is our needs that should generate the supply, not the other way around.

When we study what a supply-driven economy means in practice, we can see its many problems. When the creation of supply is not driven by strong demand signals, producers will have to speculate about what to produce and how much of it. Without firm contracts, this will ultimately come down to educated guesses.

Since production of a good starts long before the eventual customer pays for it, producers are forced to take out bank loans or inject speculative capital to start production. Since producers are seldom in charge of the entire supply chain, to reach their customers they need distributors and retailers. How well information flows through this supply chain will determine how effectively the supplier can estimate the eventual demand.

To create demand for the product, more capital is needed for an advertising campaign. These campaigns can be so sophisticated and aggressive that they create artificial demand for products we don’t actually need. A big reason why the world is full of unnecessary products is that there was never any genuine demand for them to begin with. Even more waste is created when producers misread the market completely and nobody buys the final product. Making such a mistake is not difficult when the demand signals are absent from the marketplace.

Our supply-driven economy wastes natural resources on a massive scale. At a time when human consumption already exceeds the planet’s carrying capacity, we have to do something about the problem. By switching to a demand-driven economy, we can allocate our valuable natural resources much better. This is what the subscription-based economy aims to do. The UBI enters the economy specifically to fulfill the basic needs of the population.

So, what would our world look like if our economy was driven by demand
rather than supply?

Let’s say that by preordering a good or a service using a UBI subscription, customers would receive a 10% discount from the final price. This would induce everybody to make their purchases in advance. First a customer would put out a buy order for the product, and various producers and retailers would then compete on price and quality over who gets to fill that order. This could result in additional savings for the consumer and help producers reach their customers without the need of an advertising campaign.

Since customers would be forced to wait for their goods to be manufactured, this should in and of itself reduce many impulse purchases. The wait times would also encourage people to plan and prioritize what they actual need much more carefully.

In a system in which customers pay for their needs in advance, a store can immediately order a replacement from the wholesaler, who in turn orders another one from the distributor, who orders another from the producer, who orders the raw materials that went into the product from the various vendors. Before the original customer has even picked up the product from the store, everybody upstream has not only received a message about it, they have received an advance payment to deliver the item.

Every stage of the supply chain, from the suppliers of the raw materials to the distributors and retailers, can use this valuable demand signal to better organize their daily operations to maximize efficiency. Knowing what customers want, and when, makes planning so much easier.

The producers, in turn, would get a firm buy order for the product and the necessary funds to make the products. This allows businesses to escape bank loans and other interim financing and lowers the cost of capital. This in turn lowers the barriers for entry as new ventures can compete with established firms. Competition, in turn, keeps inflation in check and increases citizens’ purchasing power. Everybody wins, nothing goes to waste, and we are one step closer to achieving mutual prosperity.

On a global scale, a demand-driven economy could create massive savings in the use of natural resources. The largest savings would come from all the unnecessary products that would never be made in the first place.

Now, the wait times would be an inconvenience for the customers, which means that in practice, the supply chain should hold some inventory. Here we approach a system already in use by large retail chains that use sophisticated supply chain software to keep their shelves stocked with as little excess inventory as possible. With existing products these companies can, in fact, already control production based on the exact consumer demand the product creates minute by minute.

Every time a customer picks up a product from a shelf and it’s sold at the checkout, the demand signal ripples through the entire supply chain from the retailer all the way to the producers of the raw materials to move just the right number of products through the long and complicated logistics chain. The purpose of this is to avoid creating excess inventories, which only tie up capital and produce waste if demand suddenly drops for the product.

The problem for most participants in the marketplace is that we don’t have access to this specialized software and the demand signals remain unknowable to most of us. When prioritized demand signals informs all production, all guess work and speculation go out the window and are replaced by verified facts and firm commitments.

In the ideal marketplace–the one we intend to build–all demand and supply signals are visible and accessible to every participant. This information will benefit not only the individuals but the community at large, as everybody can make better informed decisions on how to behave in the marketplace.

Some parts of this information can be anonymized, consolidated and shielded to guarantee people’s privacy and the competitive edge of competing organizations. Overall the information should be accurate and the same for everybody.

AI could be used to augment our ability to navigate such a complex marketplace and optimize the way our individual supply and demand are connected. With its ability to process massive amounts of data, the suggestions generated by the AI could be an indispensable tool in getting what we want from the marketplace.

Individuals and organizations are the metabolic nodes of the economy. Their regular supply and demand represent their metabolic rate, which they need to keep up to maintain their homeostasis. Since the metabolic flow of energy/matter within the system should ultimately be circular in nature, the output of one node should be the input of another.

By keeping the market informed about changes in their metabolism, the nodes help us optimize the flow of energy/matter within the system. Optimizing the flow reduces waste and friction within the system, which can greatly increase the well-being of all the participants.

For a citizen to maintain their individual homeostasis, they could, for example, inform the marketplace that they need A in housing, B in food and C in transportation to put out X in labor. A corporation, in turn, would list their need of X in labor, which they need to put out D in services in a given timeframe.

When we know the exact input and output of every metabolic node, our marketplace becomes very efficient in allocating the resources available. Waste can be eliminated and frivolities weeded out, since all production is geared towards supporting the most important needs in their order of priority.

When we plot the entire economy this way, we see it as a giant circulatory system where one node’s output is another node’s input. In the next chapter, we study how our body allocates resources and how we can apply some of the same principles found in the circulation system to the human economy.

In a genuinely free and fair marketplace, everybody has equal access to the vital supply and demand signals so they can behave accordingly. Every citizen has a clear idea of the supply and demand of the goods and services they need. For the first time a human could actually behave like the elusive Homo economicus found only in economic text books. The data from the marketplace give a comprehensive understanding of the economy, which can be used for rational decision-making.

A demand-driven economy is yet another important part of the culture of mutual prosperity: when all production is in service of our basic needs in their prioritized order, no one needs to go hungry or homeless. This is the kind of marketplace that saves precious natural resources and allows us to do more with less.