If wage labor is unraveling and UBI is insufficient, my hypothesis is that the next market of value rests in the domain economists call the informal economy, and within that, a more specific subset of it around civic-labor.

Civic-labor includes all the forms of work that keep communities functional but are not priced by markets or integrated into formal employment systems. 

Economists have long known that GDP is a narrow measurement tool. Simon Kuznets, the economist who developed GDP in the 1930s, warned the U.S. Congress that nations should not confuse GDP growth with societal well-being. But as industrial capitalism matured, GDP became synonymous with national progress because it captured what markets could price.

What it could not price fell out of the frame, and to their credit, feminist economists later pointed out that the majority of unpaid care work, which was disproportionately performed by women,  contributed trillions of dollars of value that is never reflected in national accounts. 

The United Nations, and the OECD have attempted to quantify the monetary value of unpaid care work, and the estimates are staggering. Even conservative methodologies suggest that unpaid care labor would constitute one of the largest sectors of the global economy if measured formally. But it remains invisible because it is not transacted.

We tend to define “value” by its transactionability rather than its necessity. If something can be bought or sold it is considered economically real. If it can't be bought or sold, we treat it as sentiment or some type of charity. This bias is not morally neutral. It causes societies to overinvest in activities that produce priceable outputs and underinvest in those that produce resilience and cohesion.

It is no coincidence that modern societies have become richer in material goods but poorer in mental health and civic engagement. The things we measure improve, and the things we neglect decay. That shouldn’t be surprising to anyone.

Civic-labor resides in that neglected domain. What makes civic-labor distinct from other informal economic activities is that it produces public goods rather than private goods. Public goods are non-rival and non-excludable.  They have the intent to benefit everyone, even those who do not directly contribute to their provision.

A cleaned park benefits every resident, and a cared-for elder reduces healthcare burdens for the state. These are positive externalities, but because markets cannot easily capture them, they remain underproduced.

The existence of this value blind spot raises an uncomfortable question: if civic-labor is essential, why have modern societies not integrated it into the economic system? In agrarian societies, care and civic work were embedded in households and local communities. In industrial societies, these functions were partially absorbed by the welfare state and partially monetized (e.g., professional childcare, assisted living facilities). 

But industrial societies maintained the fiction that wage labor was the primary mechanism of contribution. When market logic expanded into domains historically governed by family or community, it changed the meaning of those activities. Care became commoditized. Elderly relatives became “cases” in facilities. Children became consumers of standardized educational services. The civic fabric thinned as responsibility shifted from communities to systems.

But even as the welfare state grew, it never fully replaced civic-labor. Welfare bureaucracies cannot do what neighbors do. Governments cannot perform the thousands of micro-acts of care and coordination that make communities resilient. Civic-labor is inherently relational and localized. It requires empathy, trust, improvisation, familiarity, and contextual knowledge  that bureaucracies and markets struggle to produce.

But because civic-labor remains structurally unpriced, it is routinely undervalued. When budget cuts hit municipalities, the first programs to be defunded are often parks, libraries, after-school support, youth programs, arts, and community engagement programs...all because their value is hard to quantify.

When nonprofits struggle for grants, it is usually because funders want “impact metrics”, not relational infrastructure. When families collapse under the weight of unpaid caregiving demands, it is because society has not recognized caregiving as real labor.

There have been attempts to measure and compensate civic-labor indirectly. Volunteer hours, for instance, are often tracked for grant reporting purposes. In the United States, some nonprofits assign a standardized dollar value to volunteer time based on Bureau of Labor Statistics data, but this is mostly symbolic and used for accounting optics rather than compensation. 

Disaster response organizations like the Red Cross document volunteer hours to demonstrate community contribution, but volunteers seldom receive economic credit for their time. These systems recognize civic-labor on paper without integrating it into economic mechanisms.

Why has this persisted? Because integrating civic-labor into the economy requires a mechanism for verification, issuance, and redemption.  These are the three core functions of any currency. Traditional markets handle these through price signals and transactions. Civic-labor has never had an equivalent infrastructure. As a result, it has remained trapped in a category economists euphemistically call “non-market production”.

Automation changes the stakes. If machines can handle much of the monetized economy, then the domain of non-monetized human contribution becomes more important, and not less. Civic-labor is what remains when production is automated. It is the substrate of human social life. Ignoring it becomes untenable in a society where people seek meaning and belonging outside of wage labor. The next logical step is to build mechanisms that make civic-labor legible without turning it into wage labor or commodifying it in ways that strip it of its relational value.

Before proposing such mechanisms, I want to examine some of the historical attempts to do so, including the development of time banks, mutual credit systems, and local currencies.  The purpose of exploring them is to understand why they succeeded in principle but failed in scale. 

When societies encounter a mismatch between what markets value and what communities need, they often conduct small-scale experiments to fill the gap. These experiments are not always framed as “economic systems”, but they are attempts to create exchanges where market pricing fails. Over the last century, three major classes of experiments have attempted to recognize non-market labor. Time banks, local currencies, and mutual credit systems. Each tells us something about why civic-labor can be valued, and each reveals design flaws that should be avoided.

Time banking emerged in the late twentieth century as a direct challenge to wage based valuation. Edgar Cahn, who pioneered the model in the United States, argued that some forms of work are essential to a functioning society but cannot be priced by markets because they are relational rather than transactional. In the time bank system, every hour of labor is counted equally, regardless of skill or specialization.

One hour of tutoring equals one hour of gardening equals one hour of childcare. This equality-of-hours principle was radical because it rejected the idea that markets are the only valid method of valuing labor. It implicitly said that care, mentorship, and community support are not worth less simply because markets refuse to price them highly.

Time banks demonstrated that people are willing to contribute meaningful labor when given recognition and reciprocity rather than wages. They also revealed latent reservoirs of community capacity. Retirees offered mentoring and childcare, teenagers offered tech support and physical assistance, and parents exchanged services that would otherwise be costly or inaccessible. In communities where social fragmentation or economic depression limited opportunity, time banks became a source of dignity and connection.

But time banks encountered their limits. The most obvious was redemption depth. Earning hours was easy, but spending them was harder. The universe of redeemable services was constrained by the size and consistency of the local network.

If a time bank had fifty members, an individual might struggle to convert hours into services they actually needed. If they needed dental work, rent support, or medical care, time bank hours did not help. These systems also lacked integration with municipal institutions. Cities did not accept time credits for transit, utilities, permits, etc. Schools did not recognize them for continuing education. Without institutional acceptance, time banks remained parallel economies rather than integrated ones.

Local currencies and mutual credit systems emerged for different reasons. Local currencies like Ithaca HOURS in New York or the Brixton Pound in London were designed to keep money circulating within communities rather than leaking out to national or global corporate chains. These currencies had modest success in supporting local businesses and reinforcing local identity.

They also fared relatively well during certain economic downturns because they created micro-liquidity independent of national monetary constraints. However, these systems struggled with liquidity and administrative sustainability. Merchants accepted them unevenly, volunteers became burnt out, and redemption options remained narrow.

Mutual credit systems like LETS (Local Exchange Trading Systems) pursued a more abstract goal by creating credit without centralized issuance. Members received credit when providing services and went into debit when receiving services, with balances ideally clearing over time.

LETS was conceptually elegant because it showed that money does not require state authority or commodity backing, but earned legitimacy through reciprocal trust networks. But LETS systems faced scaling problems that mirrored those of time banks, as they had limited redemption pathways, cumbersome accounting, difficulty in balancing credit over long time horizons, and a lack of institutional anchor points capable of absorbing credit surpluses or deficits.

These experiments were limited not because people lacked willingness to help one another, but because the cognitive overhead was too high and the institutional integration was too shallow. Participants had to think too much about whether credits would be spendable. They had to evaluate the subjective value of every transaction. They had to manage balances and obligations mentally.

In a wage system, workers know that wages can be converted into rent, food, healthcare, and utilities. In mutual credit systems, participants must constantly assess whether their credits have redemption value in the future. The result is hesitation and eventually attrition.

This brings us to a key insight, which is that most people do not want to think like economists. Economic systems that require constant cognitive calculation impose “mental transaction costs”. Behavioral economists have shown that humans will ignore even valuable opportunities if they require too much planning or negotiation. The success of fiat currency lies partly in its simplicity, because a dollar can be spent almost anywhere, without negotiation, without calculation, and without elaborate trust assessments. It is the legibility and liquidity of dollars that make them powerful.

Local currencies, mutual credit systems, and time banks often failed because they lacked easy redemption, institutional anchoring, and low-friction mental models. A currency backed by civic-labor must learn from these failures.

It must be simple enough to use without specialized knowledge. It must be redeemable at predictable value for services people actually need. It must integrate with institutions that already provide public goods. And it must expand rather than contract the redemption universe.

Complexity is the enemy of adoption.
Simplicity means respecting human cognition.

A civic-labor currency that says, “One hour of verified civic-labor equals one civic credit, and civic credits can be used to access public services, transit, utilities, childcare, education discounts, or other civic benefits” is legible. People do not need to calculate conversion rates or trade balances. They do not need to wonder whether credits will be accepted next week. They do not need to think like mutual credit theorists. They simply perform civic work and redeem civic benefits.

This simplicity becomes especially powerful when combined with institutional acceptance. If a city accepts civic credits for public transit, a volunteer cleaning up their neighborhood can literally ride the train for free because of their civic contribution. If a hospital accepts civic credits for preventative health programs, an elder caregiver can access health screenings. If a school accepts civic credits for after-school enrollment, civic-labor supports child development. These redemption categories turn civic credits from symbolic tokens into economic instruments.

The lesson from alternative economic experiments is twofold. First, there is widespread willingness to engage in non-market labor when reciprocity and recognition are present. Second, economic systems that demand high cognitive load or lack institutional integration will plateau.

The path forward is not to replicate LETS or time banks at scale, but to build a civic-labor based currency that is easy to understand and institutionally anchored.

If we return to the central conceptual claim that modern societies are moving toward a bifurcated economy, we should realize that this is not a normative proposition about what should happen, but an analytical observation about what is already happening.

The economy is bifurcating because the forces that once held it together through the wage system such as the labor-capital relationship and the identity structure of modern work, are weakening. Meanwhile, as automation expands, the civic functions of society are growing in importance...not shrinking.

To see this clearly, I should clarify what is meant by “two circuits of value”. The first circuit is the market circuit, which includes the domain of production, consumption, profit, and price. It encompasses private firms, supply chains, capital markets, retail, manufacturing, professional services, and the vast array of monetized interactions that generate GDP. 

The second circuit is the civic circuit, which includes the domain of contribution, care, stewardship, coordination, and meaning. This circuit encompasses everything that sustains communities but does not neatly fit into market pricing which includes caregiving, mutual aid, mentorship, volunteerism, neighborhood vigilance, community organizing, democratic participation, and relational support.

For most of our recent history, these circuits were not perceived as distinct because wage labor connected them. Individuals earned wages in the market circuit and used those wages to participate in the civic circuit. Even when civic-labor was unpaid, its invisible costs could be subsidized by the wages earned through formal employment. 

A parent could care for their children because another parent earned enough to pay rent. A retiree could mentor young people because they had accumulated savings. A neighbor could volunteer for disaster response because their job provided vacation time. Wage labor acted as the bridge between circuits because it financed civic participation indirectly.

Automation fractures this bridge. When fewer people earn stable wage income, or when wage income becomes insufficient to support civic participation, the bridge between the market and civic domains begin to erode. The result is not simply unemployment but a structural misalignment between market value and civic necessity. The market circuit continues to generate wealth, but it does not necessarily generate participation and communal belonging. The civic circuit continues to generate resilience, but it lacks the mechanisms to translate that resilience into recognized value.

The bifurcation becomes especially visible when examining how societies respond to crises. During natural disasters or social upheavals, markets often stall or become chaotic, while civic labor intensifies. Neighbors check on each other, mutual aid networks form, volunteers deliver food and medicine, and communities self-organize. 

The COVID-19 pandemic offered abundant evidence of this dynamic. When hospitals overflowed, volunteers made masks, delivered groceries, performed wellness checks on elderly neighbors, and organized digital support networks. None of this activity counted toward GDP, but it represented the core of our societal resilience to the disaster.

Meanwhile, markets handled logistics, production, and supply chains. Both circuits were necessary. Both were valuable. But only one had economic instruments that facilitated its efficiency and its perceived social value. 

In quieter times, the bifurcation is less dramatic but still present. Mentoring programs, after-school activities, elder care, neighborhood watches, civic clubs, faith communities, and youth organizations all represent civic-labor that markets do not price. If these functions disappear, communities do not collapse overnight, but their texture erodes. Loneliness increases, trust declines, polarization intensifies, and institutions weaken as a result. 

Modern societies face well documented epidemics of loneliness and social fragmentation, even as GDP rises. This is not a coincidence. It reflects an imbalance between economic circuits. The market circuit accumulates financial capital while the civic circuit accumulates relational debt.

Because the market circuit has been so dominant in our metrics and imagination, we often mistake it for the entire economy. Economists often describe the economy as a circular flow between households and firms, mediated through wages and consumption. This model conveniently ignores the household’s production of care and the civic sphere’s production of public goods. These omissions reflect a system that prioritizes price over necessity.

The most important point to grasp is that the bifurcated economy is not a design choice but a structural outcome of technological change. As AI and robotics increase the capacity of the market circuit to produce goods and services with minimal human labor, the civic circuit becomes more central to human existence. 

People will not stop needing meaning, structure, identity, belonging, and recognition. They will not stop needing care, mentorship, guidance, and community. If anything, these needs intensify in times of rapid technological and social change. The market circuit cannot satisfy them because markets cannot monetize them without distorting their nature. You cannot commodify friendship or mentorship without degrading it. You cannot professionalize all forms of care without making it inefficient or unaffordable.

If the market circuit cannot absorb displaced labor and the civic circuit cannot monetize its own value, how do we maintain societal coherence? The answer is not to merge the circuits or to force all value into market pricing. The answer is to give the civic circuit its own economic instruments, just as the market circuit has its own currencies, institutions, and metrics. We can’t replace money with an alternate ideology, but we can acknowledge that the civic economy is real and that it requires parallel mechanisms for recognition if it is to function in a post-wage society.

It is also important to note that bifurcation is not the same as dualism. Dualism implies conflict or opposition. Bifurcation implies specialization. The market circuit can focus on efficiency and wealth creation. The civic circuit can focus on relational care and social cohesion. Both circuits contribute to human flourishing, but in different ways.

Problems arise when societies attempt to force one circuit to perform the role of the other. Expecting markets to produce a sense of belonging is as misguided as expecting civic groups to produce consumer electronics.

Another important distinction is that bifurcation is not a return to pre-industrial communitarianism. It does not imply that the state will recede or that the market will collapse. It implies that the value of human contribution will no longer be mediated solely by wages. In the same way that the gold standard gave way to fiat currency when economic systems outgrew the limitations of commodity money, wage labor is giving way to a broader palette of value mechanisms as societies outgrow the limitations of monetized labor.

The bifurcated economy sets the stage for the development of currencies that are not backed by assets or fiat, but by civic-labor itself. These currencies are not intended to replace dollars or euros but to operate alongside them, providing the civic circuit with tools it currently lacks. Just as GDP measures the productivity of the market circuit, a civic currency could measure the vitality of the civic circuit. And just like how central banks stabilize financial markets, municipal and nonprofit institutions could stabilize civic credit markets.

The design space is wide open for a currency backed by civic-labor. But before we design it, we should explore the rationale behind quantifying civic-labor value and how it can evolve in a post-automation society.

Chapter 3 - The Structure of a Public-Sector Currency

If wage labor is unraveling and UBI is insufficient, my hypothesis is that the next market of value rests in the domain economists call the informal economy, and within that, a more specific subset of it around civic-labor.

Civic-labor includes all the forms of work that keep communities functional but are not priced by markets or integrated into formal employment systems. 

Economists have long known that GDP is a narrow measurement tool. Simon Kuznets, the economist who developed GDP in the 1930s, warned the U.S. Congress that nations should not confuse GDP growth with societal well-being. But as industrial capitalism matured, GDP became synonymous with national progress because it captured what markets could price.

What it could not price fell out of the frame, and to their credit, feminist economists later pointed out that the majority of unpaid care work, which was disproportionately performed by women,  contributed trillions of dollars of value that is never reflected in national accounts. 

The United Nations, and the OECD have attempted to quantify the monetary value of unpaid care work, and the estimates are staggering. Even conservative methodologies suggest that unpaid care labor would constitute one of the largest sectors of the global economy if measured formally. But it remains invisible because it is not transacted.

We tend to define “value” by its transactionability rather than its necessity. If something can be bought or sold it is considered economically real. If it can't be bought or sold, we treat it as sentiment or some type of charity. This bias is not morally neutral. It causes societies to overinvest in activities that produce priceable outputs and underinvest in those that produce resilience and cohesion.

It is no coincidence that modern societies have become richer in material goods but poorer in mental health and civic engagement. The things we measure improve, and the things we neglect decay. That shouldn’t be surprising to anyone.

Civic-labor resides in that neglected domain. What makes civic-labor distinct from other informal economic activities is that it produces public goods rather than private goods. Public goods are non-rival and non-excludable.  They have the intent to benefit everyone, even those who do not directly contribute to their provision.

A cleaned park benefits every resident, and a cared-for elder reduces healthcare burdens for the state. These are positive externalities, but because markets cannot easily capture them, they remain underproduced.

The existence of this value blind spot raises an uncomfortable question: if civic-labor is essential, why have modern societies not integrated it into the economic system? In agrarian societies, care and civic work were embedded in households and local communities. In industrial societies, these functions were partially absorbed by the welfare state and partially monetized (e.g., professional childcare, assisted living facilities). 

But industrial societies maintained the fiction that wage labor was the primary mechanism of contribution. When market logic expanded into domains historically governed by family or community, it changed the meaning of those activities. Care became commoditized. Elderly relatives became “cases” in facilities. Children became consumers of standardized educational services. The civic fabric thinned as responsibility shifted from communities to systems.

But even as the welfare state grew, it never fully replaced civic-labor. Welfare bureaucracies cannot do what neighbors do. Governments cannot perform the thousands of micro-acts of care and coordination that make communities resilient. Civic-labor is inherently relational and localized. It requires empathy, trust, improvisation, familiarity, and contextual knowledge  that bureaucracies and markets struggle to produce.

But because civic-labor remains structurally unpriced, it is routinely undervalued. When budget cuts hit municipalities, the first programs to be defunded are often parks, libraries, after-school support, youth programs, arts, and community engagement programs...all because their value is hard to quantify.

When nonprofits struggle for grants, it is usually because funders want “impact metrics”, not relational infrastructure. When families collapse under the weight of unpaid caregiving demands, it is because society has not recognized caregiving as real labor.

There have been attempts to measure and compensate civic-labor indirectly. Volunteer hours, for instance, are often tracked for grant reporting purposes. In the United States, some nonprofits assign a standardized dollar value to volunteer time based on Bureau of Labor Statistics data, but this is mostly symbolic and used for accounting optics rather than compensation. 

Disaster response organizations like the Red Cross document volunteer hours to demonstrate community contribution, but volunteers seldom receive economic credit for their time. These systems recognize civic-labor on paper without integrating it into economic mechanisms.

Why has this persisted? Because integrating civic-labor into the economy requires a mechanism for verification, issuance, and redemption.  These are the three core functions of any currency. Traditional markets handle these through price signals and transactions. Civic-labor has never had an equivalent infrastructure. As a result, it has remained trapped in a category economists euphemistically call “non-market production”.

Automation changes the stakes. If machines can handle much of the monetized economy, then the domain of non-monetized human contribution becomes more important, and not less. Civic-labor is what remains when production is automated. It is the substrate of human social life. Ignoring it becomes untenable in a society where people seek meaning and belonging outside of wage labor. The next logical step is to build mechanisms that make civic-labor legible without turning it into wage labor or commodifying it in ways that strip it of its relational value.

Before proposing such mechanisms, I want to examine some of the historical attempts to do so, including the development of time banks, mutual credit systems, and local currencies.  The purpose of exploring them is to understand why they succeeded in principle but failed in scale. 

When societies encounter a mismatch between what markets value and what communities need, they often conduct small-scale experiments to fill the gap. These experiments are not always framed as “economic systems”, but they are attempts to create exchanges where market pricing fails. Over the last century, three major classes of experiments have attempted to recognize non-market labor. Time banks, local currencies, and mutual credit systems. Each tells us something about why civic-labor can be valued, and each reveals design flaws that should be avoided.

Time banking emerged in the late twentieth century as a direct challenge to wage based valuation. Edgar Cahn, who pioneered the model in the United States, argued that some forms of work are essential to a functioning society but cannot be priced by markets because they are relational rather than transactional. In the time bank system, every hour of labor is counted equally, regardless of skill or specialization.

One hour of tutoring equals one hour of gardening equals one hour of childcare. This equality-of-hours principle was radical because it rejected the idea that markets are the only valid method of valuing labor. It implicitly said that care, mentorship, and community support are not worth less simply because markets refuse to price them highly.

Time banks demonstrated that people are willing to contribute meaningful labor when given recognition and reciprocity rather than wages. They also revealed latent reservoirs of community capacity. Retirees offered mentoring and childcare, teenagers offered tech support and physical assistance, and parents exchanged services that would otherwise be costly or inaccessible. In communities where social fragmentation or economic depression limited opportunity, time banks became a source of dignity and connection.

But time banks encountered their limits. The most obvious was redemption depth. Earning hours was easy, but spending them was harder. The universe of redeemable services was constrained by the size and consistency of the local network.

If a time bank had fifty members, an individual might struggle to convert hours into services they actually needed. If they needed dental work, rent support, or medical care, time bank hours did not help. These systems also lacked integration with municipal institutions. Cities did not accept time credits for transit, utilities, permits, etc. Schools did not recognize them for continuing education. Without institutional acceptance, time banks remained parallel economies rather than integrated ones.

Local currencies and mutual credit systems emerged for different reasons. Local currencies like Ithaca HOURS in New York or the Brixton Pound in London were designed to keep money circulating within communities rather than leaking out to national or global corporate chains. These currencies had modest success in supporting local businesses and reinforcing local identity.

They also fared relatively well during certain economic downturns because they created micro-liquidity independent of national monetary constraints. However, these systems struggled with liquidity and administrative sustainability. Merchants accepted them unevenly, volunteers became burnt out, and redemption options remained narrow.

Mutual credit systems like LETS (Local Exchange Trading Systems) pursued a more abstract goal by creating credit without centralized issuance. Members received credit when providing services and went into debit when receiving services, with balances ideally clearing over time.

LETS was conceptually elegant because it showed that money does not require state authority or commodity backing, but earned legitimacy through reciprocal trust networks. But LETS systems faced scaling problems that mirrored those of time banks, as they had limited redemption pathways, cumbersome accounting, difficulty in balancing credit over long time horizons, and a lack of institutional anchor points capable of absorbing credit surpluses or deficits.

These experiments were limited not because people lacked willingness to help one another, but because the cognitive overhead was too high and the institutional integration was too shallow. Participants had to think too much about whether credits would be spendable. They had to evaluate the subjective value of every transaction. They had to manage balances and obligations mentally.

In a wage system, workers know that wages can be converted into rent, food, healthcare, and utilities. In mutual credit systems, participants must constantly assess whether their credits have redemption value in the future. The result is hesitation and eventually attrition.

This brings us to a key insight, which is that most people do not want to think like economists. Economic systems that require constant cognitive calculation impose “mental transaction costs”. Behavioral economists have shown that humans will ignore even valuable opportunities if they require too much planning or negotiation. The success of fiat currency lies partly in its simplicity, because a dollar can be spent almost anywhere, without negotiation, without calculation, and without elaborate trust assessments. It is the legibility and liquidity of dollars that make them powerful.

Local currencies, mutual credit systems, and time banks often failed because they lacked easy redemption, institutional anchoring, and low-friction mental models. A currency backed by civic-labor must learn from these failures.

It must be simple enough to use without specialized knowledge. It must be redeemable at predictable value for services people actually need. It must integrate with institutions that already provide public goods. And it must expand rather than contract the redemption universe.

Complexity is the enemy of adoption.
Simplicity means respecting human cognition.

A civic-labor currency that says, “One hour of verified civic-labor equals one civic credit, and civic credits can be used to access public services, transit, utilities, childcare, education discounts, or other civic benefits” is legible. People do not need to calculate conversion rates or trade balances. They do not need to wonder whether credits will be accepted next week. They do not need to think like mutual credit theorists. They simply perform civic work and redeem civic benefits.

This simplicity becomes especially powerful when combined with institutional acceptance. If a city accepts civic credits for public transit, a volunteer cleaning up their neighborhood can literally ride the train for free because of their civic contribution. If a hospital accepts civic credits for preventative health programs, an elder caregiver can access health screenings. If a school accepts civic credits for after-school enrollment, civic-labor supports child development. These redemption categories turn civic credits from symbolic tokens into economic instruments.

The lesson from alternative economic experiments is twofold. First, there is widespread willingness to engage in non-market labor when reciprocity and recognition are present. Second, economic systems that demand high cognitive load or lack institutional integration will plateau.

The path forward is not to replicate LETS or time banks at scale, but to build a civic-labor based currency that is easy to understand and institutionally anchored.

If we return to the central conceptual claim that modern societies are moving toward a bifurcated economy, we should realize that this is not a normative proposition about what should happen, but an analytical observation about what is already happening.

The economy is bifurcating because the forces that once held it together through the wage system such as the labor-capital relationship and the identity structure of modern work, are weakening. Meanwhile, as automation expands, the civic functions of society are growing in importance...not shrinking.

To see this clearly, I should clarify what is meant by “two circuits of value”. The first circuit is the market circuit, which includes the domain of production, consumption, profit, and price. It encompasses private firms, supply chains, capital markets, retail, manufacturing, professional services, and the vast array of monetized interactions that generate GDP. 

The second circuit is the civic circuit, which includes the domain of contribution, care, stewardship, coordination, and meaning. This circuit encompasses everything that sustains communities but does not neatly fit into market pricing which includes caregiving, mutual aid, mentorship, volunteerism, neighborhood vigilance, community organizing, democratic participation, and relational support.

For most of our recent history, these circuits were not perceived as distinct because wage labor connected them. Individuals earned wages in the market circuit and used those wages to participate in the civic circuit. Even when civic-labor was unpaid, its invisible costs could be subsidized by the wages earned through formal employment. 

A parent could care for their children because another parent earned enough to pay rent. A retiree could mentor young people because they had accumulated savings. A neighbor could volunteer for disaster response because their job provided vacation time. Wage labor acted as the bridge between circuits because it financed civic participation indirectly.

Automation fractures this bridge. When fewer people earn stable wage income, or when wage income becomes insufficient to support civic participation, the bridge between the market and civic domains begin to erode. The result is not simply unemployment but a structural misalignment between market value and civic necessity. The market circuit continues to generate wealth, but it does not necessarily generate participation and communal belonging. The civic circuit continues to generate resilience, but it lacks the mechanisms to translate that resilience into recognized value.

The bifurcation becomes especially visible when examining how societies respond to crises. During natural disasters or social upheavals, markets often stall or become chaotic, while civic labor intensifies. Neighbors check on each other, mutual aid networks form, volunteers deliver food and medicine, and communities self-organize. 

The COVID-19 pandemic offered abundant evidence of this dynamic. When hospitals overflowed, volunteers made masks, delivered groceries, performed wellness checks on elderly neighbors, and organized digital support networks. None of this activity counted toward GDP, but it represented the core of our societal resilience to the disaster.

Meanwhile, markets handled logistics, production, and supply chains. Both circuits were necessary. Both were valuable. But only one had economic instruments that facilitated its efficiency and its perceived social value. 

In quieter times, the bifurcation is less dramatic but still present. Mentoring programs, after-school activities, elder care, neighborhood watches, civic clubs, faith communities, and youth organizations all represent civic-labor that markets do not price. If these functions disappear, communities do not collapse overnight, but their texture erodes. Loneliness increases, trust declines, polarization intensifies, and institutions weaken as a result. 

Modern societies face well documented epidemics of loneliness and social fragmentation, even as GDP rises. This is not a coincidence. It reflects an imbalance between economic circuits. The market circuit accumulates financial capital while the civic circuit accumulates relational debt.

Because the market circuit has been so dominant in our metrics and imagination, we often mistake it for the entire economy. Economists often describe the economy as a circular flow between households and firms, mediated through wages and consumption. This model conveniently ignores the household’s production of care and the civic sphere’s production of public goods. These omissions reflect a system that prioritizes price over necessity.

The most important point to grasp is that the bifurcated economy is not a design choice but a structural outcome of technological change. As AI and robotics increase the capacity of the market circuit to produce goods and services with minimal human labor, the civic circuit becomes more central to human existence. 

People will not stop needing meaning, structure, identity, belonging, and recognition. They will not stop needing care, mentorship, guidance, and community. If anything, these needs intensify in times of rapid technological and social change. The market circuit cannot satisfy them because markets cannot monetize them without distorting their nature. You cannot commodify friendship or mentorship without degrading it. You cannot professionalize all forms of care without making it inefficient or unaffordable.

If the market circuit cannot absorb displaced labor and the civic circuit cannot monetize its own value, how do we maintain societal coherence? The answer is not to merge the circuits or to force all value into market pricing. The answer is to give the civic circuit its own economic instruments, just as the market circuit has its own currencies, institutions, and metrics. We can’t replace money with an alternate ideology, but we can acknowledge that the civic economy is real and that it requires parallel mechanisms for recognition if it is to function in a post-wage society.

It is also important to note that bifurcation is not the same as dualism. Dualism implies conflict or opposition. Bifurcation implies specialization. The market circuit can focus on efficiency and wealth creation. The civic circuit can focus on relational care and social cohesion. Both circuits contribute to human flourishing, but in different ways.

Problems arise when societies attempt to force one circuit to perform the role of the other. Expecting markets to produce a sense of belonging is as misguided as expecting civic groups to produce consumer electronics.

Another important distinction is that bifurcation is not a return to pre-industrial communitarianism. It does not imply that the state will recede or that the market will collapse. It implies that the value of human contribution will no longer be mediated solely by wages. In the same way that the gold standard gave way to fiat currency when economic systems outgrew the limitations of commodity money, wage labor is giving way to a broader palette of value mechanisms as societies outgrow the limitations of monetized labor.

The bifurcated economy sets the stage for the development of currencies that are not backed by assets or fiat, but by civic-labor itself. These currencies are not intended to replace dollars or euros but to operate alongside them, providing the civic circuit with tools it currently lacks. Just as GDP measures the productivity of the market circuit, a civic currency could measure the vitality of the civic circuit. And just like how central banks stabilize financial markets, municipal and nonprofit institutions could stabilize civic credit markets.

The design space is wide open for a currency backed by civic-labor. But before we design it, we should explore the rationale behind quantifying civic-labor value and how it can evolve in a post-automation society.

Chapter 3 - The Structure of a Public-Sector Currency