Commons Sector

Peter Barnes: Capitalism 3.0: Preface (pages ix.-xvi)

Part 2 of the book focuses on capitalism as it could be, a version I call Capitalism 3.0. The key difference between versions 2.0 and 3.0 is the inclusion in the latter of a set of institutions I call the commons sector. Instead of having only one engine — that is, the corporate-dominated private sector — our improved economic system would run on two: one geared to maximizing private profit, the other to preserving and enhancing common wealth. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 1: Time to Upgrade (pages 3-14)

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.

Besides the commons, I use a few similar-sounding terms that should be clarified here as well.

• By common wealth I mean the monetary and nonmonetary value of all the assets in the commons. Like stockholders’ equity in a corporation, it may increase or decrease from year to year depending on how well the commons is managed.
• By common property I mean a class of human-made rights that lies somewhere between private property and state property. Like private property, common property arises when the state recognizes it. Unlike private property, it’s inclusive rather than exclusive — it strives to share ownership as widely, rather than as narrowly, as possible.
• By the commons sector I mean an organized sector of our economy. It embraces some of the gifts we inherit together, but not all. In effect, it’s a subset of the given commons that we consciously organize according to commons principles. It’s small at the moment, but the point of this book is that we should enlarge it. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 5: Reinventing the Commons (pages 65-78)

Thus far I’ve argued that 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.

To be sure, building an economic sector from scratch is a formidable task. Fortunately, the commons sector needn’t be built from scratch; it has an enormous potential asset base just waiting to be claimed. That asset base is the commons itself, the gifts of nature and society we inherit and create together. As we’ll see, these gifts are worth more than all private assets combined. It’s the job of the commons sector to organize and protect these gifts, and by so doing, to save capitalism from itself. ...

Organizing Principles of the Commons Sector

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.

I say set of institutions because there will and should be variety. The commons sector should not be a monoculture like the corporate sector. Each institution should be appropriate to its particular asset and locale.

Some of the variety will depend on whether the underlying asset is limited or inexhaustible. Typically, gifts of nature have limited capacities; the air can safely absorb only so much carbon dioxide, the oceans only so many drift nets. Institutions that manage natural assets must therefore be capable of limiting use. By contrast, ideas and cultural creations have endless potential for elaboration and reuse. In these commons, managing institutions should maximize public access and minimize private tollbooths.

Despite their variations, commons sector institutions would share a set of organizing principles. Here are the main ones.

• LEAVE ENOUGH AND AS GOOD IN COMMON

As Locke argued, it’s okay to privatize parts of the commons as long as “enough and as good” is left for everyone forever. Enough in the case of an ecosystem means enough to keep it alive and healthy. That much, or more, should be part of the commons, even if parts of the ecosystem are private. In the case of culture and science, enough means enough to assure a vibrant public domain. Exclusive licenses, such as patents and copyrights, should be kept to a minimum.

• PUT FUTURE GENERATIONS FIRST

Corporations put the interests of stockholders first, while government puts the interests of campaign donors and living voters first. No one at the moment puts future generations first. That’s Job Number One for the commons sector.

In practice, this means trustees of common property should be legally accountable to future generations. (We’ll see how this might work in chapter 6.) They should also be bound by the precautionary principle: when in doubt, err on the side of safety. And when faced with a conflict between short-term gain and long-term preservation, they should be required to choose the latter.

• THE MORE THE MERRIER

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.

This organizing principle applies most clearly to commons like culture and the Internet, where physical limits are absent and increasing use unleashes synergies galore. It also applies to social compacts like Social Security and Medicare, which require universal participation. In these compacts, financial mechanisms express our solidarity with other members of our national community. They’re efficient and fair because they include everybody. Were they to operate under profit-maximizing principles, they’d inevitably exclude the poor (who couldn’t afford to participate) and anyone deemed by private insurers to be too risky.

• ONE PERSON, ONE SHARE

Modern democratic government is grounded on the principle of one person, one vote. In the same way, 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 SOME LIQUIDITY
  Currently, private property owners enjoy a near-monopoly on the privilege of receiving property income. But as the Alaska Permanent Fund shows, it’s possible for common property co-owners to receive income too.

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.

Common property liquidity has to be designed carefully, though. Since common property rights are birthrights, they shouldn’t be tradeable the way corporate shares are. This means commons owners wouldn’t reap capital gains. Instead, they’d retain their shared income stakes throughout their lives, and through such stakes, share in rent, royalties, interest, and dividends. ... read the whole chapter