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Issue No. 100 (November 15, 2006) -- Mark Satin, Editor

Building the commons

How to improve capitalism without changing the profit motive or human nature

Another midterm election has come and gone. And although some politicians were willing to address some big issues (see review of Obama book HERE), it is curious -- and sad -- that almost no one, in or out of public life, is willing to address the defects in our economic system.

Oh, there are still radicals calling for hard-core socialism or extreme economic decentralization (see review of Korten book HERE). But those visions are so unattractive to most Americans that they’re non-starters.

For several years now, a group of thinkers centered around the Tomales Bay Institute, in northern California, has been asking itself how capitalism can be -- not uprooted, as the socialists and extreme decentralists would have it -- but “improved” or “upleveled” or “upgraded.”

They are not your usual economic malcontents:

  • Peter Barnes is co-founder of the Working Assets Money Fund (yes, a real businessman -- and a successful one, too) and a former correspondent for Newsweek and the New Republic
  • David Bollier is a senior fellow at the Norman Lear Center at the University of Southern California, and was one of the original project directors at the New America Foundation, the influential radical-centrist think tank in Washington DC
  • Jonathan Rowe, founder of the Tomales Bay Institute, is a contributing editor of the Washington Monthly and a former staff writer for the Christian Science Monitor

Now, at last, one of them -- Peter Barnes -- has written a manifesto. It is called Capitalism 3.0: A Guide to Reclaiming the Commons (Berrett-Koehler Publrs., release date 28 October 2006), and it does what no one has attempted to do for a long time. It explains how capitalism can be made more environmentally conscious, more protective of future generations, and more economically advantageous for average Americans.

Radical middle approach

Barnes’s approach is -- on the surface, at least -- radical middle.

“For years the Right has been saying . . . that government is flawed.,” he writes. “For just as long, the Left has been insisting that markets are flawed. . . . They’re both right. . . . But if that’s the case, what are we to do?

“Is there, perhaps, a missing set of institutions that can help us?”

Add a commons sector!

Barnes’s big breakthrough is this: To improve capitalism, you don’t need to constrain corporations’ profit-making abilities (as many hard-core socialists would) or change people’s values (as many radical decentralists would).

“All” you really need to do is add a new sector (or “set of institutions”) to the corporate and governmental sectors.

He calls it the “commons sector.”

The commons, he explains, is ostensibly an “unorganized melange of nature, community, and culture.” Much of it isn’t traded, or marketable, or quantifiable.

But if you look closely, it is as real as refrigerators. It includes “air and water, habitats and ecosystems, languages and cultures, science and technologies, social and political systems,” and even the “social trust that underlies financial markets.”

It is our “joint inheritance,” and it arguably belongs to each of us equally.

And it is incredibly valuable! Economists who’ve tried to put a price tag on everything have found that the U.S. “common assets” sector (natural assets + social assets) is worth over $60 trillion, as compared to the “private assets” sector of $40 trillion and the “state assets” sector of $10 trillion.

Commons into “common property”

So if we want to bring capitalism into the 21st century, Barnes explains -- if we want to make it responsive to future generations, ecological constraints, and issues of fairness -- then we need to turn pieces of our incredibly valuable commons into common property.

We need to “propertize” (not “privatize”) parts of the commons and, where necessary, attach “valves” to it (i.e., charge entities for its use) so we don’t run it into the ground . . . and so we can all benefit from its use.

We’ve already begun doing this to some extent, without understanding or appreciating the exciting implications of what we’re doing.

For example, the Nature Conservancy holds land (or easements on land) in perpetual trust. It protects more than 15 million acres that way.

Or, for example, the Alaska Permanent Fund invests part of that state’s oil revenues on behalf of all Alaskans -- and pays equal yearly dividends to all Alaskans.

Trusts to manage our common property

Barnes wants us to invent “competent institutions” to manage more, way more, of our common property.

Competent institutions would have to do two things, he says. If they’re managing natural assets, they’d have to be capable of limiting use (because “the air can safely absorb only so much carbon dioxide”).

On the other hand, if they’re overseeing our rich inheritance of ideas and cultural creations, they’d have to be capable of maximizing access and minimize private “tollbooths” (since ideas and culture have “endless potential for elaboration and reuse”).

Only trusts, he says, are fully capable of doing either of those things.

Corporations and governments both tend to maximize short-term gains, he says (for stockholders and voters, respectively). Corporations’ and governments’ time horizons are short. And future generations hold little sway in either venue.

Common property trusts would, by contrast, “have long time horizons and a legal responsibility to future generations. [Their] trustees could make hard decisions without committing political suicide.”

Finding appropriate trustees would be essential, Barnes says.

Some might be appointed by the President, like governors of the Fed. Others might be appointed by other government officials, or be elected, or be self-perpetuating like some nonprofit boards.

Variety is good, Barnes says, “we don’t live in a one-size-fits-all world. The important thing is that, once selected, trustees should have secure tenure, and -- like judges -- lengthy terms.”

The trusts in our future

If you want to get a good quick sense of what a commons sector could add to our society, just look at six representative trusts Barnes proposes in his book:

[Trusts of national community]

American Permanent Fund -- This fund could obtain income partly by selling pollution permits and partly by charging corporations for use of the public trading system, “just as investment bankers do.” (Barnes suggests charging publicly traded corporations 1% of their stock each year for 10 years.) Soon it could have a diversified portfolio worth trillions of dollars. If its trustees were mandated to pay equal yearly dividends to all U.S. citizens, then “America would truly be an ‘ownership society.’”

Children’s Opportunity Trust -- This trust could distribute its proceeds to all children equally, “so the next round of economic play could be more competitive. . . . After children turn 18, they could withdraw from their accounts for further education, a first home purchase, or to start a business.” Proceeds could come from owners of estates over a certain size (perhaps $1 million) -- half their estates could be passed to their own children, but “the other half would be distributed among all children. Their own offspring would still start on third base, but others would at least be in the game.”

[Trusts of nature]

Local Land Trusts -- Civic or countywide land trusts could shield urban or rural land from degradation. They could either own the land outright or own easements that restrict how land is used. (Many successful examples already exist, some quite large.)

Regional Air Trusts -- If pollution rights were assigned to air trusts representing pollutees and future generations, the trusts could then sell those rights to polluters, and the trusts could capture the “commons rent.” They might then split the proceeds between annual per capita dividends to citizens and expenditures on public goods.

[Trusts of culture]

National Arts Trust -- Instead of supplying copyright protection for free, the federal government could charge a royalty on sales of electronically reproduced music, films, and video games. The proceeds could be distributed, through the Arts Trust, to local arts councils, which would then support local arts institutions and artists.

National Spectrum or Airwaves Trust -- According to the New America Foundation, the market value of the airwave licenses we’ve already given free to broadcasters is about half a trillion dollars! The federal government could make broadcasters pay for their licenses in the future, with proceeds going to the Spectrum Trust. That trust could allocate funds to all credible political candidates for the purchase of TV and radio ads -- thereby dramatically leveling the political playing field.

Problems with Barnes’s book

I wish I could report that Barnes’s book is the definitive book on the commons, but it’s not.

Although it is clearly written, it’s poorly organized. The same points are repeated ad nauseam, and in no logical order.

It is less a coherent argument than a meandering series of assertions. And some of the assertions take one’s breath away. For example, how, short of a violent revolution, can we ever induce corporations to just give away 10% of their stock (see “American Permanent Fund” above)?

Again and again, Barnes tries to have it both ways on the question of corporate capitalism.  In some passages he makes an excellent case that the commons sector is compatible with hard-driving, efficient, corporate America (e.g., “Capitalism 3.0 will preserve the driving force of American capitalism . . . not only by leaving [profit-maximizing] alone but also by giving all Americans, via the American Permanent Fund, a financial stake in its success”).

But in other passages he presents the commons and corporate sectors as inexorably opposed, as when he states that we won’t be able to move swiftly in a more commons-oriented direction until an “anticorporate” mood sweeps the nation.

In fact, if you read closely, you’ll find that Barnes often tends to excessively demonize capitalism. Much of the bad behavior he attributes to contemporary capitalism can be observed in Shakespeare and Voltaire. His attack on the “publicly traded stock corporation” is so wildly one-sided that it doesn’t belong in a serious book about economics. He not only attacks Coca-Cola drinks, he attacks iPods, and looks forward to farmers "cutting out middlemen."

I actually don’t care what Barnes’s personal take on all that is, but what I do object to is Barnes confounding his personal passions with his larger argument to such an extent that supporters of the commons come out looking anti-high-tech and anti-complex-urban-civilization.

Why saddle us -- and by “us” I mean all of us who might gravitate to the commons -- with the burden of that oh-so-1960s take on life? Especially since the express purpose of the commons (well expressed by Barnes in other parts of his book) is to make capitalism, and America, work better?

Until then . . .

At some point, a manifesto on the commons will be written by someone who’s less interested in making paste of Capitalism 2.0 (and less scathing of iPods and shopping malls), and more interested in helping to launch a pragmatic version of Capitalism 3.0 in our imperfect world.

For that someone -- Jonathan Rowe, are you listening? -- and for all of the rest of us in the meantime, Barnes’s book can be powerfully stimulating. Even with its faults it is more stimulating than what the Democrats, the Republicans, the hard left, and the radical decentralists have been giving us. Even with its faults, it is a lifeline.



For some thoughtful pieces on the commons by the Tomales Bay colleagues of Peter Barnes, see David Bollier, Reclaiming the American Commons (Web page); Jonathan Rowe, Our Dangerous Distance Between the Private and the Commons,” Christian Science Monitor (May 27, 2004); and Jonathan Rowe, The Majesty of the Commons,” Washington Monthly (April 2002).

At least two Web sites are devoted to the commons, the Tomales Bay Institute’s On the Commons and the Tides Foundation’s Friends of the Commons. For an unabashed neo-Henry-Georgist approach to commons issues, see Alanna Hartzok’s Earth Rights Institute Web site.

For Peter Barnes's and Jonathan Rowe's responses to this article, click HERE and look under "December 1, 2006."


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