Peter Barnes1 co-founder, president, or a director of various socially responsible businesses, wants “capitalism 3.0” to replace “capitalism 2.0,” the existing economic “operating system.” He complains that corporations, with no resistance from “our” government, are privatizing the commons, profiting from it and externalizing the costs.
He defines “the commons” as assets we all share by inheriting or creating them together and subdivides them into three sectors, nature, community, and culture. Together they represent our “common wealth” (a most insightful concept), in contrast to our “private wealth,” the latter representing all the property we inherit or accumulate individually. Private wealth collectively in the U.S. was estimated to be around $48.5 trillion in 2005. What do you think our total American common wealth is? Economists can’t begin to estimate it in its entirety, but what they can estimate, Barnes tells us, comes to about $70 trillion. Is it any wonder then why, as Barnes asks, corporations on the one hand take valuable stuff “worth trillions of dollars” from the commons for short-term profit and on the other hand dump bad stuff into nature’s commons and pay nothing?
His proposal relies heavily on the idea of property rights because our U.S. Constitution guarantees them, they shape economies, they produce value or wealth, and, most importantly, there’s no requirement that they be concentrated in profit-maximizing hands, thus opening up the possibility of “propertizing” the commons without privatizing it (another very insightful idea). He proposes that the government assign common property rights to institutions, distinct from government and corporations that would be set up as trusts to manage the common property. A few such trusts already exist in the U.S, such as a trust in Marin County, California where ranchers can sell easements to it. For natural assets with their limited sources, the institutions would need to be capable of limiting their use. For the other two sectors with their endless potential, public access would need to be maximized and public usage fees minimized.
He introduces the idea of “commons tax credits” as a means for funneling more money into trusts by raising taxes in the uppermost tax bracket and giving its wealthy taxpayers the choice either to pay the extra tax to the government or to one or more qualified trust funds.
Barnes adapts the economist’s concept of rent, or money paid because of scarcity, to his proposed trusts for nature. The trusts would sell pollution rights to polluters and get the rent in return. The trusts would limit the number of rights sold to increase the cost of their rent. For corporate polluters the cost would be high enough to create an incentive to pollute less. Some of the rent would be converted into per-capita dividends for consumer citizens. Consumers of pollution-laden products would get back smaller dividends. Moreover, rent would be recycled from over users, who tend to be the wealthier ones, to under users, who tend to be the poorer ones. This shifting of income would help alleviate what Barnes calls a pathological flaw of capitalism 2.0, the wide income gap between high and low-income groups.
Barnes also shows how there could be per-capita dividends from trusts created for the commons’ other two sectors. For example, treating the capital market as common property, a trust could charge a usage fee to publicly traded corporations for selling stocks and for having been given various rights such as limited liability, perpetual life, copyrights, patents, and the like.
Over time the “propertizing” of the commons would amass a portfolio worth trillions of dollars that could be used to fund three “universal birthrights;” a regular dividend to everyone, an opportunity endowment for each new child, and health insurance for everyone. Clearly, Barnes’ proposal is a very expansive one and, superficially at least, a seductive one. Barnes appeals to capitalists, wage earners, lawyers, economists, commons entrepreneurs, and others to help build the commons sector into a full-fledged capitalism 3.0 and shows how it can benefit each of these diverse groups.
Barne’s proposals are among the most unique I’ve ever read on capitalism. His advocacy of pollution rights, though, really troubles me. Every human being has a sacred obligation to nature and a moral obligation to generations yet unborn to respect nature.
- Barnes, P. Capitalism 3.0: A Guide to Reclaiming the Commons, San Francisco: Berrett-Koehler, 2006. [↩]