For those interested in a vision of a sane economy, member K.D summarised her key learnings from Peter Barnes’ landmark 2007 book Capitalism 3.0. Acting on his beliefs, Peter kindly donated the book to the commons, allowing it to be downloaded (pdf). It can be purchased here. Most of these are direct transcriptions from the book.
A GUIDE TO RECLAIMING THE COMMONS, PETER BARNES
My initial ruminations focused on climate change caused by human emissions of heat-trapping gases. Some analysts saw this as a “tragedy of the commons,” a concept popularized forty years ago by biologist Garrett Hardin. According to Hardin, people will always overuse a commons because it’s in their self-interest to do so. I saw the problem instead as a pair of tragedies: first a tragedy of the market, which has no way of curbing its own excesses, and second a tragedy of government, which fails to protect the atmosphere because polluting corporations are powerful and future generations don’t vote. This way of viewing the situation led to a hypothesis: if the commons is a victim of market and government failures, rather than the cause of its own destruction, the remedy might lie in strengthening the commons. But how might that be done?
Part 2 proposes a number of new property rights, birthrights, and institutions that would enlarge the commons sector in one way or another. I like to think that these proposals blend hope and realism. Among them are:
• A series of ecosystem trusts that protect air, water, forests and habitat;
• A mutual fund that pays dividends to all Americans—one person, one share;
• A trust fund that provides start-up capital to every child;
• A risk-sharing pool for health care that covers everyone;
• A national fund based on copyright fees that supports local arts;
• A limit on the amount of advertising.
= Nature, Community and Culture
In this book I use the commons as a generic term, like the market or the state. It refers to all the gifts we inherit or create together.
This notion of the commons designates a set of assets that have two characteristics: they’re all gifts, and they’re all shared. A gift is something we receive, as opposed to something we earn. A shared gift is one we receive as members of a community, as opposed to individually.
Examples of such gifts include air, water, ecosystems, languages, music, holidays, money, law, mathematics, parks, the Internet, and much more.
There’s another quality to assets in the commons: we have a joint obligation to preserve them. That’s because future generations will need them to live, and live well, just as we do. And our generation has no right to say, “These gifts end here.”
Assets in the commons are meant to be preserved regardless of their return to capital. Just as we receive them as shared gifts, so we have a duty to pass them on in at least the same condition as we received them. If we can add to their value, so much the better, but at a minimum we must not degrade them, and we certainly have no right to destroy them.
But there’s no inherent reason why commons can’t be managed as commons.
Just as our Constitution sets the rules for our democracy, so our economic operating system sets the rules for capitalism.
The economic system that creates glittering wealth also spawns what he called illth—poverty, pollution, despair, illness. It makes life comfortable for some, but does so at considerable discomfort to others.
Illth = negative externalities.
Contemporary climate change is, quintessentially, a problem of negative externalities.
Many negative externalities aren’t even the result of meeting genuine human needs.
A thneed is a thing we want but don’t really need.
Why do we have so much illth and so many thneeds? Because our economic operating system is far out of balance.
On one side, representing owners of capital, are powerful profit-maximizing corporations. On the other side, representing future generations, nonhuman species, and millions of humans with unmet needs, are— almost nothing.
The system lacks institutions that preserve shared inheritances, charge corporations for degrading nature, or boost the “demanding” power of people whose basic needs are ignored. Hence the system generates ever more illth, waste, and ever-widening disparities between rich and poor.
Main premises to upgrading the economic operating system:
We have a contract with the next generation to pass on the gifts we have jointly inherited.
We are not alone – non-human species have a right to be here too
Illth = poverty, pollution, despair, illness – happens and needs to be addressed
Fix the code, not the symptoms
Revise wisely – fix what needs to be fixed
Money isn’t everything – humans also need connection to family and community, closeness to nature, and meaning in life.
Get the incentives right – reward the desired behaviour.
DECLINE OF COMMONS
The rationale for private property is that it boosts economic production, but the commons has a rationale, too: it provides sustenance for all. Both sides must be respected.
Enclosure = in which property rights are literally taken or given away, is half the reason for the commons’ decline; the other half is a form of trespass called externalizing—that is, shifting costs to the commons. Externalizing is as relentless as enclosure, yet much less noticed, since it requires no active aid from politicians. Corporations add illth = poverty, pollution, despair, illness – to the commons without permission or payment.
The one-two punch of enclosure and externalizing is especially potent. With one hand, corporations take valuable stuff from the commons and privatize it. With the other hand, they dump bad stuff into the commons and pay nothing. The result is profits for corporations but a steady loss of value for the commons.
= the publicly traded stock corporation. This is an institution with a board of directors, a set of executive officers, and a fluctuating set of shareholders to whom the directors and officers are legally accountable. These corporations have an explicit mission: to maximize return to stock owners.
By the mid-nineteenth century, corporations could live forever, engage in any legal activity, and merge with or acquire other corporations. In 1886, the U.S. Supreme Court declared that corporations were “persons” entitled under the Fourteenth Amendment to the same protections as living citizens.
In effect, a corporate franchise became a perpetual grant of sovereignty, with the sovereign powers consisting of immortality, self-government, and limited liability.
These changes not only gave corporations great economic power; they conferred political power as well. Unlike average citizens, corporations have large flows of money at their disposal. With this money they can hire lobbyists, sway public opinion, and donate copiously to politicians. They can also sue, or threaten to sue, whenever it serves their needs. The one thing they can’t do is vote, but with all their extra powers, voting is hardly necessary.
FROM SHORTAGE TO SURPLUS CAPITALISM
A century ago, our chief scarcity was goods. It thus made sense to sacrifice other things in pursuit of goods, and capitalism was masterful at doing this. Today we’re waist-deep in thneeds, and our scarcities are different. Among the middle classes, the top scarcities, I’d say, are time, companionship, and community. Among the poor, there remains a lack of goods, but that lack isn’t due to a shortage of production capacity—it’s due to the poor’s inability to pay. The critical scarcity here, in other words, is income.
In the early capitalist era, land, resources, and places to dump wastes were abundant; aggregated capital was the scarcest factor. That’s why rules and practices developed that put capital above all else.
We shifted into surplus capitalism, or what I call Capitalism 2.0. In this version, there’s no limit to what corporations can produce; their problem is finding buyers. A sizeable chunk of GDP is spent to make people want this unneeded output. And credit is lavishly extended so they can buy it.
The world is awash with capital, most of it devoted to speculation. By contrast, healthy ecosystems are increasingly scarce. If anything deserves priority, it’s nature’s capital, yet capitalism rolls on with financial capital as its king.
LIFE UNDER SHORTAGE AND SURPLUS CAPITALISM
Supply and demand
Marginal value of more stuff
1.0 Shortage Capitalism
Demand exceeds supply
2.0 Surplus Capitalism
Supply exceeds demand
Waste sinks, time, habitat, income, companionship, community
PATHOLOGIES OF CAPITALISM
The anachronistic software that governs capitalism today leads, willy-nilly, to three pathologies:
1. the destruction of nature,
2. the widening of inequality, and
3. the failure to promote happiness despite the pretense of doing so.
Capitalism as we know it is devouring creation. It’s living off nature’s capital and calling it growth.
Much of what we label private wealth is taken from, or coproduced with, the commons. However, these takings from the commons are far from equal. To put it bluntly, the rich are rich because (through corporations) they get the lion’s share of common wealth; the poor are poor because they get very little.
Why isn’t economic growth making us happier? There are many possibilities, and they’re additive rather than exclusive. One is that, once material needs are met, happiness is based on comparative rather than absolute conditions. surplus capitalism foments anxiety. surplus capitalism speeds up life and creates great stress. We experience envy, greed, and dissatisfaction.
SUMMARY OF CAPITALISM SO FAR:
Let’s summarize the history of capitalism thus far. Since arising in the eighteenth century, capitalism has changed the face and chemistry of the earth. It keeps doing so, despite signals of planetary peril, like a runaway steam engine without a governor. It has built mountains of private wealth, but much of that wealth was taken from the commons, and a great deal of it adds little to our happiness. Its main actors, profit-maximizing corporations, are essentially out of control, and the fruits of their exertions are dispensed in a highly unequal way.
LIMITS OF GOVERNMENT TO PROTECT THE COMMONS
Government could use regulation, taxation, and public ownership. Can these traditional methods effectively preserve common wealth for our children? NO – many limits – see book.
The reason capitalism distorts democracy is simple. Democracy is an open system, and economic power can easily infect it. By contrast, capitalism is a gated system; its bastions aren’t easily accessed by the masses. Capital’s primacy thus isn’t an accident. It’s what happens when capitalism inhabits democracy.
The reason our political system works this way isn’t that our politicians are particularly venal. Rather, the cause is structural. Industries that benefit from government favors are wealthy and well- organized. They earn high and immediate returns from lobbying expenditures and campaign donations. And just because the money isn’t spent on outright bribes doesn’t mean there aren’t quid pro quos. Politicians and corporations have a symbiotic relationship. Politicians need money and corporations want favors. Neither side is dumb or shy. Politicians who hope for long careers won’t often offend money suppliers. At a minimum they’ll give them access, and in politics access is nine-tenths of the battle.
By contrast, ordinary citizens are cash-poor, unorganized, and ill-informed. They amble to the polls a few times per decade, if that. Of all the players in politics, they’re the easiest to fool. And though politicians do read opinion polls, these rarely concern the arcane favors corporations seek. Hence, disciplined cash-rich corporations easily prevail over ordinary citizens.
Three points are worth making here.
First, ownership isn’t the same thing as trusteeship. Owners of property—even government owners—have wide latitude to do whatever they want with it; a trustee does not. Trustees are bound by the terms of their trust and by centuries-old principles of trusteeship, foremost among which is “undivided loyalty” to beneficiaries.
Second, in a capitalist democracy, the state is a dispenser of many valuable prizes. Whoever amasses the most political power wins the most valuable prizes. The rewards include property rights, friendly regulators, subsidies, tax breaks, and free or cheap use of the commons. The notion that the state promotes “the common good” is sadly naive.
Third, while free marketers are fond of saying that capitalism is a precondition for democracy, what they neglect to add is that capitalism also distorts democracy. Like gravity, its tug is constant. The bigger the concentrations of capital, the stronger the tug.
We face a disheartening quandary here. Profit-maximizing corporations dominate our economy. Their programming makes them enclose and diminish common wealth. The only obvious counterweight is government, yet government is dominated by these same corporations.
Does this mean there’s no hope? I don’t think so.
The window of opportunity is small, but not nonexistent. Throughout American history, anti-corporate forces have come to power once or twice per century. In the nineteenth century, we had the eras of Jackson and Lincoln; in the twentieth century, those of Theodore and Franklin Roosevelt. Twenty-first century equivalents will, I’m sure, arise.
It may take a calamity of some sort—another war, a depression, or an ecological disaster—to trigger the next anti-corporate ascendancy, but sooner or later it will come. Our job is to be ready when it comes.
What constitutes readiness? Three things, I believe.
First, we must have a proper view of government’s role. That role isn’t to run the economy, or even to manage the commons directly; it’s to assign common property rights to trustworthy guardians who will.
Second, we must have a plan to fix our economic operating system, not just to put patches on symptoms.
And third, we must recognize that the duration of any anti-corporate ascendancy will be brief, and that we must use that small window to build institutions that outlast it. Laws, regulations, and taxes are easily rescinded or weakened when corporations don’t like them. Property rights, by contrast, tend to endure, as do institutions that own them.
LIMITS OF PRIVATISATION TO PROTECT THE COMMONS
Second alternative for saving the commons: privatism, or privatization. I argue that private corporations, operating in unconstrained markets, can allocate resources efficiently but can’t preserve them. The latter task requires setting aside some supplies for future generations—something neither markets nor corporations, when left to their own devices, will do. The reason lies in the algorithms and starting conditions of our current operating system.
Our current operating system is dominated by three algorithms and one starting condition. The algorithms are:
(1) maximize return to capital,
(2) distribute property income on a per-share basis, and
(3) the price of nature equals zero.
The starting condition is that the top 5 percent of the people own more property shares than the remaining 95 percent.
It’s the combination of these algorithms that causes the wheels of capitalism to devour nature and widen inequality among humans. At the same time, nothing in the algorithms requires or encourages corporations, either individually or collectively, to preserve anything.
Some things have tried to affect this – but not worked – enlightened managers, socially responsible shareholders (shareholder activism), mandatory responsibility.
Another option is free market environmentalism – where the price of nature is now not zero, and it costs big bucks to pollute or degrade ecosystems.
Nature can be protected through property rights, provided they’re clearly defined and the cost of enforcing them is low.
Pollution is a two-sided problem involving a polluter and a pollutee. If one side has clear property rights (for instance, if the polluter has a right to emit, or the pollutee has a right not to be emitted upon), and transaction costs are low, the two sides will come to a deal that reduces pollution.
For fans of privatism, Coase’s theorem was an intellectual break- through. It gave theoretical credence to the idea that the marketplace, not government, is the place to tackle pollution. Instead of burdening business with page after page of regulations, all government has to do is assign property rights and let markets handle the rest.
The question for me is, what’s the best way to assign property rights when our goal is to protect a birthright shared by everyone?
It’s possible to propertize a natural inheritance without privatizing it, The basic idea is to turn pieces of the commons into common property rather than corporate property. This would let us charge corporations higher (and truer) prices for using the commons, while sharing the benefits of those higher prices broadly. And it would ensure that the quantity of usage rights sold—which is to say, the level of pollution allowed—is set with the interests of future generations foremost in mind.
REINVENTING THE COMMONS
Capitalism 2.0—or surplus capitalism— has three tragic flaws: it devours nature, widens inequality, and fails to make us happier in the end. It behaves this way because it’s programmed to do so. It must make thneeds, reward property owners disproportionately, and distract us from truer paths to happiness because its algorithms direct it to do so. Neither enlightened managers nor the occasional zealous regulator can make it behave much differently.
In this part of the book I advance a solution. The essence of it is to fix capitalism’s operating system by adding a commons sector to balance the corporate sector. The new sector would supply virtuous feedback loops and proxies for unrepresented stakeholders: future generations, pollutees, and nonhuman species. And would offset the corporate sector’s negative externalities with positive externalities of comparable magnitude. If the corporate sector devours nature, the commons sector would protect it. If the corporate sector widens inequality, the commons sector would reduce it. If the corporate sector turns us into self-obsessed consumers, the commons sector would reconnect us to nature, community, and culture. All this would happen automatically once the commons sector is set up. The result would be a balanced economy that gives us the best of both sectors and the worst of neither.
Each of us is the joint recipient of a vast inheritance. This shared inheritance includes air and water, habitats and ecosystems, languages and cultures, science and technologies, social
We ignore common wealth because it lacks price tags and property rights.
An example may help explain this. Suppose you buy a house for $300,000, and without improving it, sell it a few years later for $400,000. You pay off the mortgage and walk away with a pile of cash. Your private wealth increases. But think about what caused the house to rise in value. It wasn’t anything you did. Rather, it was the fact that your neighborhood became more popular. That, in turn, resulted from population shifts, a new highway perhaps, an improved school, or the beautification efforts of neighbors. In other words, your increased wealth is a capture of socially created value. It shows up as private wealth but is really a gift of society.
It’s time to notice our shared gifts. Not only that, it’s time to name them, protect them, and organize them. – through PROPERTY RIGHTS
Property rights are useful human inventions. They’re legally enforceable agreements through which society grants specific privileges to owners. Among these are rights to use, exclude, sell, rent, lend, trade, or bequeath a particular asset. These assorted privileges can be bundled or unbundled almost any which way. It’s largely through property rights that economies are shaped.
CREATING THE COMMONS SECTOR
I’ve come to believe that it’s more disrespectful of the sky to pollute it without limit or payment than to turn it into common property held in trust for future generations. Hence, I favour propertization, but not privatization.
Property rights, especially the common kind, require competent institutions to manage them. What we need today, then, along with more common property, is a set of institutions, distinct from corporations and government, whose unique and explicit mission is to manage common property.
The commons sector should not be a monoculture like the corporate sector. Each institution should be appropriate to its particular asset and locale.
Despite their variations, commons sector institutions would share a set of organizing principles. Here are the main ones.
It’s OK to privatise parts of the commons as long as ‘enough and as good’ is left for everyone else forever.
Put future generations first. As opposed to what happens now: Corporations put the interests of stockholders first, while government puts the interests of campaign donors and living voters first.
Whereas private property is inherently exclusive, common property strives to be inclusive. It always wants more co-owners or participants, consistent with preservation of the asset.
the modern commons sector would be grounded on the principle of one person, one share.
In the case of scarce natural assets, it will be necessary to distinguish between usage rights and income rights. It’s impossible for everyone to use a limited commons equally, but everyone should receive equal shares of the income derived from selling limited usage rights.
Include common property liquidity = income. Income sharing would end private property’s monopoly not only on liquidity, but also on attention. People would notice common property if they got income from it. They’d care about it, think about it, and talk about it. Concern for invisible commons would soar.
Under Capitalism 2.0, private corporations devour unorganized commons with help from the state. The playing field is heavily tilted.
During the transition phase, the state assigns rights to commons institutions, just as it does to corporations. The playing field begins to level off.
Finally, under Capitalism 3.0, private corporations and organized commons enhance and constrain each other. The state maintains a level playing field.
It seems to me that, if anything is divine, it should be gifts of creation. Morally, they’re gifts we inherit together and must pass on, undiminished, to future generations. Economically, they’re irreplaceable and invaluable capital. Protection of these shared assets should trump transient private gain. Broad benefit should trump narrow benefit. The commons should trump capital. This should be written
into our economic operating system and enforced by the courts.
TRUSTS – COMMON PROPERTY TRUSTS
Trusts are centuries-old institutions devised to hold and manage property for beneficiaries. The essence of a trust is a fiduciary relationship. Neither trusts nor their trustees may ever act in their own self-interest; they’re legally obligated to act solely on behalf of beneficiaries.
Trusts are bound by numerous rules, including the following:
•Managers must act with undivided loyalty to beneficiaries.
•Unless authorized to act otherwise, managers must preserve the corpus of the trust. It’s okay to spend income, but not to diminish principal.
•Managers must ensure transparency by making timely financial information available to beneficiaries.
These rules are enforceable.
A trustee isn’t the same thing as a steward. Stewards care for an asset, but their obligations are voluntary and vague. By contrast, trustees’ obligations are mandatory and quite specific. Trusteeship is thus a more formal and rigorous responsibility than stewardship.
Introducing a generic institution, the common property trust. It’s a special kind of trust that manages assets that come from the commons and are meant to be preserved as commons.
One job of common property trusts is to preserve habitat and landscapes, but such trusts can also play another role—controlling the flow of pollution into ecosystems. In this case, what they’d be managing isn’t the ecosystems themselves, but human economic activity around the ecosystems.
Common property trusts are fiduciary institutions. They have long time horizons and a legal responsibility to future generations.
These trusts would fundamentally change our economic operating system. What are now unpriced externalities would become property rights under accountable management. If a corporation wanted to pollute, it couldn’t just do so; it would have to buy the rights from a commons trust. The price of pollution would go up; corporate illth creation would go down. Ecosystems would be protected for future generations. More income would flow to ordinary citizens. Nonhuman species would flourish; human inequality would diminish. And government wouldn’t be enlarged—our economic engine would do these things on its own.
HANDLING POLLUTION & MORE THROUGH PROPERTY RIGHTS
Coase supposed that a single polluter or his neighboring pollutee possessed a right to pollute or not be polluted upon. He further supposed that the transaction costs involved in negotiations between the two neighbors were negligible. He made these suppositions half a century ago, at a time when aggregate pollution wasn’t planet-threatening, as it now is.
Given today’s altered reality, it might be worth updating Coase’s suppositions to make them relevant to this aggregate problem. Here, in my mind, are the appropriate new suppositions:
•Instead of one polluter, there are many, and instead of one pollutee, there are millions—including many not yet born.
•The pollutees (including future generations) are collectively represented by trusts.
•The initial pollution rights are assigned by government to these trusts.
•In deciding how many pollution permits to sell, the trustees’ duty isn’t to maximize revenue but to preserve an ecosystem for future generations. The trusts therefore establish safe levels of pollution and gradually reduce the number of permits they sell until those levels are reached.
•Revenue from the sale of pollution permits is divided 50 percent for per capita dividends (like the Alaska Permanent Fund) and 50 percent for public goods such as education and ecological restoration.
If we make these suppositions, what then happens? We have, first of all, an economic model with a second set of books. Not all, but many externalities show up on these new ledgers. More importantly, we begin to imagine a world in which nature and future generations are represented in real-time transactions, corporations internalize previously externalized costs, prices of illth-causing goods rise, and everyone receives some property income.
Here’s what such a world could look like:
•Degradation of key ecosystems is gradually reduced to sustainable levels because the trustees who set commons usage levels are accountable to future generations, not living shareholders or voters. When they fail to protect their beneficiaries, they are sued.
•Thanks to per capita dividends, income is recycled from overusers of key ecosystems to underusers, creating both incentives to conserve and greater equity. Clean energy and organic farming are competitive because prices of fossil fuels and agricultural chemicals are appropriately high.
•Investment in new technologies soars and new domestic jobs are created because higher fuel and waste disposal prices boost demand for clean energy and waste recycling systems.
•Public goods are enhanced by permit revenue.
What has happened here? We’ve gone from a realistic set of assumptions about how the world is—multiple polluters and pollutees, zero cost of pollution, dangerous cumulative levels of pollution—to a reasonable set of expectations about how the world could be if certain kinds of property rights are introduced.
These property rights go beyond Coase’s, but are entirely compatible with market principles. The results of this thought experiment show that the introduction of common property trusts can produce a significant and long-lasting shift in economic outcomes without further government intervention.
= money paid because of scarcity
Rent rises when an increase in demand bumps into a limit in supply. Rent due to such bumping isn’t good or bad; it just is. We can (and should) debate the distribution of that rent, but the rent itself arises automatically. And it’s important that it does so, because this helps the larger economy allocate scarce resources efficiently.
Landowners benefit from what Mill called the unearned increment—the rise in land value attributable not to any effort of the owner, but purely to a socially created increase in demand bumping into a limited supply of good land.
By the twentieth century, economists had largely lost interest in rent; it seemed a trivial factor in wealth production compared to capital and labor. But the twenty-first century ecological crisis brings rent back to center-stage. Now it’s not just land that’s scarce, but clean water, undisturbed habitat, biological diversity, waste absorption capacity, and entire ecosystems.
This brings us back to common property rights. The definition and allocation of property rights are the primary factors in determining who pays whom for what.
You crank down pollution—and wondrously, commons rent goes up. And so does everyone’s dividend. (See figure 6.2.) This macroeconomic phenomenon—that less pollution yields more income for citizens—is the ultimate knockout punch for commons trusts. It aligns the interests of future generations with, rather than against, those of living citizens. By so doing, it lets us chart a transition to sustainability in which the political pressure is for faster pollution reduction rather than slower.
There’s one further argument for recycling commons rent through trusts. As rent is recycled from overusers of the commons to underusers, income is shifted from rich to poor. That’s because rich households, on average, use the commons more than poor households.
Sharing commons rent through per capita dividends isn’t just the best way to bring our economy into harmony with nature, it’s also the best way to reduce poverty. That’s because there’s no other pool of money of comparable size to which poor people have a legitimate claim.
Universality is also what distinguishes the commons sector from the corporate sector. The starting condition for the corporate sector, as we’ve seen, is that the top 5 percent owns more shares than everyone else. The starting condition for the commons sector, by contrast, is one person, one share.
Without great difficulty, we could add three birthrights to our economic operating system: one would pay everyone a regular dividend, the second would give every child a start-up stake, and the third would reduce and share medical costs. Whether we add these birthrights or not isn’t a matter of economic ability, but of attitude and politics.
We can distinguish between predistribution of property and redistribution of income. Under income redistribution, money is taken from “winners” and transferred to “losers.” Understandably, this isn’t popular with winners, who tend to control government and the media. Under property predistribution, by contrast, the playing field is leveled by spreading property ownership before income is generated. After that, there’s no need for income redistribution; property itself distributes income to all. According to Rawls, while income redistribution creates dependency, property predistribution empowers.
But how can we spread property ownership without taking property from some and giving it to others? The answer lies in the commons—wealth that already belongs to everyone. By propertizing (without privatizing) some of that common wealth, we can make everyone a property owner.
What’s interesting is that, for purely ecological reasons, we need to propertize (without privatizing) some natural wealth now. This twenty-first century necessity means we have a chance to save the planet, and as a bonus, add a universal birthright.
DIVIDENDS FROM COMMON ASSETS & COMMON PROPERTY TRUSTS
These trusts could crank down pollution and earn money from selling ever-scarcer pollution permits. The scarcer the permits get, the higher their prices would go. Less pollution would equal more revenue.
Culture is a joint undertaking—a co-production—of individuals and society.
All thinkers and writers draw on stories and discoveries that have been developed by countless men and women before them. To paraphrase Isaac Newton, each generation sees a little farther because it stands on the shoulders of its predecessors. In this way, all new work draws from the commons and then enriches it. To keep art and science flourishing, we have to make sure the cultural commons is cared for.
In addition, unlike most natural commons, the cultural commons is inexhaustible.
Today, unfortunately, this cultural commons, like the commons of nature and community, is being enclosed by private corporations.
The danger is that corporations will deplete the soil in which culture grows. The remedy is to reinvigorate the cultural commons.
What we need is a parallel economy for non-corporate art.
What if, instead of supplying copyright protection for free, we charged a royalty on sales of electronically reproduced music, films, and video games? This could be supplemented by charging broadcasters for their exclusive licenses, and advertisers for their invasions of our brains.
Under this system, corporations would give back to a commons they now take from for free. More art would be live and local, and more artists would be employed. We’d have corporate and authentic culture at the same time.
Mind-time is precious to me. I resent it when random outsiders, trying to sell thneeds, get inside my brain. I resent it even more when they get inside my children’s brains. What they claim is free speech, I experience as mental trespassing, and so do millions of others. As Kalle Lasn has written, “Our mental environment is a commons like air or water. We need to protect it from unwanted incursions.”
Advertising—and by this I mean all forms of commercial attention-seeking—is part of the dark side of surplus capitalism.
Advertising isn’t just an occasional trespass of one person against another; it’s a continuous trespass of relatively few corporations (the one hundred or so that do the most advertising) against all the rest of us. These companies want to—indeed have to—increase their sales, and for this they need access to our minds. But mind-time is a scarce resource.
Because of this scarcity, every neuro-minute occupied by an ad is one less neuro-minute available for our own thoughts and feelings. Every ad thus has an opportunity cost, a cost we experience but advertisers don’t pay.
Ads also have other side effects. They bias us to high-priced branded products, to junk foods rather than healthy foods, and to spending rather than saving. They diminish our self-esteem by suggesting that we never have enough or look good enough. And ultimately, they diminish our natural wealth by increasing pollution and depleting resources.
What if we managed advertising as we manage, or could manage, physical pollution? If corporations want to pollute our minds, they’d have to pay for the right to do so. As with physical pollution, the transactions could be brokered by a trust. This guardian of our inner commons would set caps on total trespasses and sell tradeable advertising permits to corporations. Our psychic costs would then show up as advertisers’ monetary costs. There’d be less advertising, more peace of mind.
The airwaves, also known as the broadcast spectrum, are a gift of nature that modern technology has turned into a valuable resource.
The Internet is a human-made commons that, for all intents and purposes, can be used without limit. It’s arguably the most remarkable technological achievement of the twentieth century, given that it revolutionizes commerce, community, and culture in one swoop. As with other valuable commons, it’s coveted by private corporations.
Enclosure of the commons has also been occurring in the world of science. To release science from corporate control, we need to take a twofold approach: apply more stringent standards for issuing patents, and provide more public funds for research (with the proviso that publicly funded discoveries stay in the public domain).
THE COMMONS UNDER ASSAULT
All three branches of the commons—nature, community, and culture—are under similar assault from corporations, and all need to be fortified.
The means of fortification will vary with the particular commons. When commons are scarce or threatened, we ought to limit aggregate use, assign property rights to trusts, and charge market prices to users. When commons are limitless (like culture, the Internet, and potentially the airwaves), our challenge is the opposite: to provide the greatest benefit to the greatest number at the lowest cost. To create scarcity where it doesn’t need to exist diminishes rather than enlarges our well-being.
In both limited and unlimited commons, corporate and commons algorithms clash. In limited commons, the corporate algorithm says: use as much as you can as quickly as you can, because if you don’t, someone else will. The commons algorithm, by contrast, says: preserve the asset for future generations, enhance it whenever possible, and live off income rather than principal. In unlimited commons, the corporate algorithm says: restrict use and charge what the market will bear. The commons algorithm, by contrast, says: the more users the merrier, and the cheaper the better. In both situations, the commons algorithm conflicts head-on with the corporate one, and that’s the point.
EXAMPLES OF COMMONS SECTOR
Surface water trusts
Municipal wi fi
American Permanent Fund
Children’s opportunity trust
Commons tax credits
Global atmosphere trust
ROLE OF GOVERNMENT
When it comes to building the new commons sector, there’s plenty for everyone to do. Government in particular has four important roles to play:
1. Until it assigns responsibility for a commons to someone else, government is the default trustee, and should be held to trusteeship standards.
2. Government is the initial assigner and ultimate arbiter of property rights. Instead of privatizing nearly everything, it should assign more property rights to commons trusts and give commons rights precedence over capital’s.
3. Only government can broker inter- and intragenerational compacts like Social Security and Medicare. We need government to do this again for health insurance and the Children’s Opportunity Trust.
4. Government can help finance the reacquisition and restoration of previously privatized pieces of the commons. State and local governments in particular have the authority to issue long-term tax-exempt bonds, which can be used to acquire private land and water rights.
What’s particularly nice about Capitalism 3.0 is that we can install it one piece at a time. We needn’t shut the machine down, or delete the old operating system, before installing the new one. Indeed, we’re not even replacing most of the old operating system, which is fine as it is. Rather, we’re attaching add-ons, or plug-ins, that allow for a gradual and safe transition. A formula for describing this is:
Corporations + Commons = Capitalism 3.0
If money circulates too unequally, the new code will alter the circulation, not by redistributing income but by predistributing property. It will make similar adjustments when there’s too much corporate distortion of culture, communities, or democracy itself.
What’s also nice about the new operating system is that, once installed, it can’t be easily removed. That’s because it relies on property rights rather than government programs that are subject to political ebb and flow.
This third version of capitalism is a logical successor to the first two. In Capitalism 1.0 we had a shortage of goods, in Capitalism 2.0 a surplus. In Capitalism 3.0 we’ll have plenty, but not too much.
We’ll have more things we truly need—healthier ecosystems, communities, culture—and fewer thneeds. We’ll have a proper balance between our “me” and our “we” sides. We’ll be more connected and less isolated, more secure and less stressed. Overall, I’d venture, we’ll be happier.
We’ll have some new traffic rules on this road. Rights now enjoyed exclusively by private capital will be matched, or even trumped, by rights held in trust for future generations. Similarly, the ability of private wealth owners to receive income and inheritances will be matched by the ability of everyone to receive them. And risks we now face individually, such as illness, will be tempered by shared risk pools that exclude no one.
The biggest change will be in the third algorithm I described in chapter 4: the price of nature will no longer be zero. To internalize many of the costs they now externalize. This, in turn, will drive them to invest and consume in ways that, over time, do less harm to nature. Businesses will invest in clean and renewable energy technologies. Farmers will use fewer chemicals, and local food will outcompete food grown far away. Consumers will shift from driving alone in gas-guzzlers to more convivial forms of transport and less dashing about. Housing will move from sprawling suburbs to small towns and tall cities.
Not everything, however, will change. Winners in the market- place will still enjoy privileges. Government won’t over-regulate our private lives or businesses. Nobody’s private property will be expropriated. Markets will remain dynamic.
And, for businesspeople, here’s the best part: Capitalism 3.0 will preserve the driving force of American capitalism, the profit-maximizing algorithm.
But Capitalism 3.0 also has a higher purpose: to help both capitalism and the human species achieve their full potential. To do that, our economic machine must stop destroying the commons and start protecting it. At the same time, it must lift the bottom 95 percent of humans at a faster rate than it raises the top 5 percent.