Token economics is a theory concerning the production, distribution, and consumption of value. It is also called ecological economics. According to this theory, the value is determined by the act of exchange rather than by the production of value itself. This theory is closely related to the work of Pigov but adds an additional dimension to it. The book is presented as a treatise by J. T. Austin.
Token economics is a system of economic activity based on the systematic negotiation of demand function using non-monetary means. The reinforcers are commodities or symbols which may be exchanged for other commodities or other reinforcers. Production of value is not a primary component of this theory. Rather, it is the determination of prices that determines value. In short, the market price of a commodity is not the final value, but only the mean price, discounted by the time factor.
The assumption of a competitive market is central to the working of this theory. Competitive markets provide an environment in which production of value can take place. Price level theory then enters the picture. By allowing production to vary according to the value of inputs, it is possible to determine the appropriate level of output. Value pricing is then based upon the equilibrium of prices.
The three components of this theory are the production, availability and costs of production. The concept of a market, which is essentially a place where the prices of goods and services can be determined, is central to the overall workings of the economy. Production is said to take place when the resources are available to produce them. The term ‘abundance’ is used to describe a situation where there is an abundance of a product, or that all sources of a resource have been exhausted. In scarce economies, such as those that face problems in competing to supply the needed inputs, production may be stimulated to meet the demand, leading to increased levels of output.
Production, in turn, is defined as the process by which raw materials and finished goods are produced. A good production process, according to this school of thought, equates to a higher gross value. Cost of production, on the other hand, is said to be the difference between the actual cost of production and the theoretical cost. Imperfect competition, imperfect knowledge of quality, and other factors contribute to imperfections in the production process and in the pricing of goods and services. The concept of perfect competition is irrelevant for tokens as it considers costs of production to always remain equal to theoretical costs.
Abundance, or scarcity, is an issue of contention between economies. Some believe that an economy is too abundant while others consider that there is not enough to go around. By offering a scarce good, such as money, the economy creates the perception that there are plenty of people willing to invest in it. The trick is in marketing the scarce product, creating demand, and allowing the investment to be protected until the product becomes widely available. This is the heart of the token economy.
Market creation is important for the process of economics. Without a marketplace to offer goods and services to consumers, economics cannot proceed. Prices, production, distribution, and technology are all part of the process of economics. Market prices, production equities, and technology all impact on the way we live.
Many economists stress the significance of historical data in the study of economics. For many students, however, economic data is often hard to come by. In order for them to effectively learn about economic process, they need to refer to primary sources. Such references include primary sources such as treatises on economics, newspapers and magazines, and even their high school teacher. All of these primary resources help to build one’s understanding of the process of economics.