The Solution: PRICI
A unified, rules-based framework that makes extraction expensive and investment rewarding
Why PRICI is Different
❌ Conventional Approach
Politicians get discretionary authority:
- Infrastructure budgets
- Industrial policy grants
- Tax incentives for “strategic sectors”
Public Choice Reality:
Politicians optimise for re-election, not productivity → Pork-barrel spending, politically connected winners, short-term visible projects → Priced-in inefficiency
✅ PRICI Approach
Remove discretion through deterministic rules:
- Formula-based conduct regulation
- Self-executing once calibrated
- Targets behavior, not sectors
- Minimal political interference
Result:
Capital flows to verified productive use without discretionary government spending prone to capture
The Formula: Simple Essence, Complex Implementation
For Inflationary Environments (PRICI Standard)
For Stagnation Environments (PRICI-Lite)
Price component removed for zero-inflation scenarios
How PRICI Addresses Each Mechanism
Against Sellers’ Inflation (Market Power)
PI Component at Work:
Catches unjustified price increases relative to sector median
- Firms can’t sustain high markups without offsetting investment
- High PI + Low IC = Penalty band
- Creates “soft regulatory cap” without rigid price controls
Forces Choice:
Moderate pricing OR increase productive deployment
Against Financialisation (Short-Termism)
ES Component at Work:
Directly targets extraction behavior
- Measures all forms of distributions vs. sustainable earnings
- Multi-year smoothing (3 years) prevents timing games
- ES > 1.0 = automatic penalty (extracting more than generating)
Forces Choice:
Reduce extraction OR increase investment to offset
Against Monopsony Power (Wage Suppression)
IC Component (Median Wage) at Work:
Explicitly rewards median wage increases
- Not just executive compensation (median is key)
- Weighted significantly in formula (e.g., 40% in Spain calibration)
- Bypasses labor law reform political gridlock
Forces Choice:
Share productivity gains with workers OR face penalties on extraction
Against Innovation Inflation
Combined Formula at Work:
Addresses both Profit Capture and Process Capture pathways
- Profit Capture: High PI + High ES without IC = Penalty (can’t extract efficiency gains)
- Process Capture: IC excludes “complexity rent,” rewards genuine investment
Forces Choice:
Diffuse value through prices, investment, OR wages
The Win-Win-Win Structure
1. 🌍 Societal Win
- Capital flows to verified productive use (CapEx, R&D, wages)
- Not discretionary government spending (prone to capture)
- Human capital investment via median wage component
- Value diffusion addresses all four mechanisms
2. 🏢 Corporate Win
- Clear, predictable rules (not arbitrary enforcement)
- Safe harbours (invest and you’re protected)
- Better than policy uncertainty
- Compliant firms face no burden
3. 🏛️ Political Win
- Delivers tangible results (wages, investment) without managing budgets
- Role is “reasonable regulator” not “picking winners”
- Insulated from corruption allegations
- Can claim credit for growth
Evidence It Works
📊 Spain Macroeconomic Simulation
Real-world simulation targeting services inflation and investment slowdown
Results vs. Baseline:
- ✅ GDP growth: +0.25 percentage points
- ✅ Inflation: -0.30 percentage points
- ✅ Investment: +0.60 percentage points
- ✅ ROI: 35:1 to 70:1
What happened: Tightened PI thresholds in tourism/hospitality, weighted IC 40% toward median wages. Result: inflation moderated, investment recovered, consumption strengthened.
🛒 Asda vs. John Lewis
Two firms, similar sector, opposite conduct patterns
Asda
Penalty Zone
John Lewis
Safe Harbor
Pattern revealed: Asda extracted £2.1bn (ES=1.03) while workers lagged peer wages. John Lewis suspended distributions, raised staff pay 10%. Conventional metrics missed this entirely.
Understanding the Scope
This is NOT:
- ❌ Another regulatory tweak
- ❌ Sector-specific intervention
- ❌ Price controls
- ❌ Traditional competition policy
This IS:
- ✅ System-defining institutional reform
- ✅ Comparable to Basel III for banking
- ✅ Comparable to independent central banks
- ✅ Unified solution to multiple diagnosed but unsolved market failures
Explore the Framework
Dive deeper into PRICI’s technical specifications and real-world applications
PRICI Standard
For inflationary environments
PRICI_Lite
For stagnation scenarios
Calculator
See real company scores
The Mechanisms
Market failures explained
Given 30 years of diagnosed but unsolved market failures, trillions in lost output, and proven catastrophic costs—the credible alternative to PRICI is… what?