Alloc

Allocs are a digital post-scarcity currency used on Earth. It is distributed through a universal basic income (UBI) large enough to lead a decent life, especially as many public and even private services do not require payment at all. While it is economically inefficient to make many of these goods free and most certainly would not be sustainable in any modern-day economy in the real world, the Earth in To the Stars produces so much that it is not really a big deal to offer many products for free for mostly socialistic reasons such as keeping social unrest down.

Certain forms of monetary policy exist such as increased allocations given for "productive" work (as deemed by Governance), particularly military service. Moreover, price setters, of which include Governance are advised by AIs (notably PAL) to fix the prices for many goods and services on Earth and resist making too many changes to these fixed prices. This is done in order to ensure that Earth's economy stays the same from year to year. This consistency ameliorates many effects of the business cycle such as short term recessions. This ultimately ensures that the quality of life for those living on Earth is, more or less, the same year over year.

The value of an Alloc is itself tied to the Nominal GDP (NGDP) of Earth; thus it can be regarded as a sort of NGDP voucher. This leads to Allocs being under near constant deflation since it is expected that the NGDP of Earth grow year to year. This for typical economies would be horrible since it deincentivizes spending since the value of a single Alloc is always growing, spending it today would be losing out on value you could've had from growth in the future. This ultimately leads to the bank having to loan out money at a negative interest rate. Of course, no bank would ever want to pay someone to borrow money and no one would realistically want to anyways, since they could just get more by letting their money sit at home since it already is worth more everyday and no loans are made at all.

This is mitigated in TtS because firstly all money is electronic and secondly, Governance directly controls the banking system; thus, Governance can simply enforce loans to be made. In practice, however, Governance opts for timed expirations on Allocs which reset on every transaction. This is implemented using different classes of Allocs with varying expiration times, some longer and some shorter. Governance simply controls how much of each kind of Alloc is put into distribution to control how quickly people spend their money and thus how much money circulates around in the wider economy.

In practice, Allocs almost never expire because not spending ones Allocs is essentially wasting them. People tend to plan to spend all their Allocs, and if will also try to find extra things to spend on if necessary since even an impulse buy is better than an expired Alloc.

This timed expiration puts into context Ryuoko's behavior in Chapter 23 when she thinks to Clarisse, "Speaking of which, I should probably put some consideration into what I should do with my spare Allocs." Another notable example is in Chapter 32 where Ryuoko states, "why don’t we go somewhere a bit more upscale for dinner? I’ve got a lot of Allocs now, and I don’t know how to spend it all."

Another important implication in the timed expiration of Allocs is that barring special long-term or indefinite duration Allocs reserved for use by Governance or major organizations, there is no way for to effectively save money except by "buying" certain specialized investment vehicles. This is precisely how Ryuoko's parents managed to "save" up Allocs to give to Ryuoko at the end of Chapter 14.

Of course, the last problem with deflation is that it not only increases the real value of any holdings of the currency, but also any debts in that currency. In most modern economies in the real world, this would be a problem since to some extent, locking up a lot of money in the wealthy in terms of the increasing the value of the debts other people owe them is bad for the economy since wealthy individuals typically spend less with each extra dollar they hold than poorer individuals (poor people just have more things they need to buy in general). In TtS, there is much less inequality for a large number of reasons and Governance actively seeks to keep this inequality at a low level; therefore, money not circulating around due to increasing debts is not as big a deal.

Before the contact war and to a large extent still in TtS, 50% of the population of Earth is unemployed. They simply aren't necessary with the high amount of AIs and automation. Only certain skilled workers are necessary to produce all the goods and services that everyone wants. This isn't particularly important since UBI given out alleviates demand issues in the economy and the supply is plentiful. Most of the economy ends up being structured around keeping inequality low (such as by making sure skilled workers don't become super rich like the Hyperclass) and aggregate demand consistent.

An important takeaway from this is Ryuoko's family is actually quite unusual in this regard since it has multiple people in well-paying jobs.

Recently, basic Alloc distribution has been decreased due to the Contact War. Military requirements given by MAISL encouraged PAL to start more strongly considering economic efficiencies which lead to some previously free services now costing Allocs. As the war drags on, these economic efficiencies will be tolerated less and less as efficiency is prioritized over comfort.

Mandatory Session did indeed serve a good purpose, though. Instituted at the start of the current war, it was intended for the eventuality that the war got so serious that the government was obliged to switch the economy from what they called "eudaimonic" back into a scarcity mode. If that ever happened, family Allocs would start being tied to productivity, essentially making productive activity nonvoluntary. And if things truly got bad, they might even have to go back to something capitalistic.

—Chapter 1: "A Wish"