Capitalism 3.0: A Guide to Reclaiming the
Commons by Peter Barnes, Berrett-Koehler Publishers, Inc.,
2006
Peter Barnes and four friends started Working
Assets Money Fund in 1983. They asked me to be the fund manager’s
securities lawyer and help them do a direct limited offering of its
shares. I very much enjoyed working with Peter on some innovative
capital formation tools and admire his thinking and commitment. This is
what I got out of his book.
“Capitalism 2.0” names the problem that
needs solving: our economic system that relies on increasing
consumption. It is destroying nature, widening the gap between the few
very rich and the many very poor, and failing to increase our
happiness. Peter shows that the solution will not come from government,
because it is controlled by the persons causing the problem. Corporate
shareowners are also dismissed as a source of change.
The book’s subtitle is “A Guide to Reclaiming the
Commons.” The “commons” means all the tangible or intangible “things”
that do not belong to an individual, a corporation or other private
entity. The commons belong equally to all individuals, including future
generations. Over the centuries, many things that once were in the
commons have been taken as private property or used for private
purposes. The rest of us lose when a part of the commons is taken, such
as with land and the airwaves. We also lose when the commons are used
for private purposes, such as the use of air and water to dispose of
waste.
What his book proposes, the “Capitalism 3.0” of its
title, is that individual trusts be created to hold each element of the
commons. The trustees would not only protect the trust property for
future generations but they would also collect fees for its use and
distribute them as dividends to all U.S. residents. The aggregate of
the distributions from all these trusts could be enough to bring
everyone above the poverty level.
Peter has included newly created elements in the
commons. One that relates to our work is the existence of a regulated
stock market. He figures that it provides liquidity for corporations
and the wealthy shareowners worth about $5 trillion.
The regulated stock market commons illustrates how
a trust would work. Publicly traded companies could be required to
deposit up to ten percent of their shares as fees for the privilege of
using the market. The trust would receive and distribute dividends on
these shares equally to everyone living in the United States.
This example can be continued to show the “devil is
in the details” for the commons trust concept. The U.S. stock market
has been losing listings the last couple of years, as corporations
choose the London Stock Exchange or other foreign stock markets. Some
argue that the cause is SEC regulation of publicly traded companies,
particularly after the Sarbanes-Oxley law in 2002, together with the
threat of class action or derivative lawsuits brought on behalf of
investors. Others say the flight for offshore public offerings is to
avoid the high fixed commissions imposed by American investment
bankers. Having to turn over 10% of the shares to a trust could
arguably result in near abandonment of the very commons that the trust
is intended to preserve.
I believe there is a missed opportunity in Peter’s
argument against a solution coming from shareowner action. He shows
that existing shareowners routinely vote with management. What is
missing is how that ownership structure could be changed, especially for
younger businesses that are most likely to seek profitable new ways to
solve social issues. Our own work is in broadening the ownership of
business and in building a more direct relationship between the owners
and their stewards in management. Peter places capitalism and community
in conflict. He suggests the trusts of commons as a way to serve the
community, leaving capitalism to service individual acquisition and
consumption. We believe that businesses can market their ownership to
their own communities, resulting in both service to the community and an
investment return to the individual shareowners.
While Peter proposes a very major shift in our
whole political economy, he also deals with
“how-do-we-get-there-from-here.” Research for the book found many
existing trusts of commons, mostly for land and water use. The
suggestion for action now:
“While we wait for an historic shift at
the national level, we can
build and experiment at lower levels. We can test different kinds of
trust, nonprofits, and informal associations, seeing how closely they
can hew to commons principles. Then, when history is ready for
bigger changes, we’ll be ready too.”
A chapter on “What You Can Do” has suggestions for
entrepreneurs, lawyers, economists, religious leaders and politicians --
what they can be doing now. Then, we wait. “Once or twice per century,
there are brief openings during which noncorporate forces reign. . . .
We must be ready when it comes to build a strong, self-perpetuating
commons sector, not easily dismantled when the political wheel turns
again.”
Capitalism 3.0 is a clear, well-thought-out
analysis of the problems and a plan for protecting our world and society
for future generations, while alleviating poverty. Drawing upon John
Rawls A Theory of Justice, Peter proposes the “predistribution of
property,” to provide more people with a source of income, rather than
the redistribution of income that is practiced through taxation and
welfare. However, predistributing assets into trusts means interposing
an elite class to take care of the rest of us. The trustees would
manage the commons, for the benefit of humans and other creatures now
and for all time to come. Those of us being protected would have no
direct participation in making policy or running the operations.
Peter acknowledges the contribution of Louis O.
Kelso, whose books are the subject of another of these commentaries.
Like Lou’s ESOP, CSOP and other stock ownership plans, Peter would place
ownership of the commons in a trust, an institution sealed away from any
participation by the persons it is intended to benefit. Unfortunately,
our history shows that institutions get twisted over time. They need
the continuous struggle with their constituency to stay within their
principles and adapt to changing conditions. Direct ownership, with
democratic participation in decisions, clearly has a record of
difficulties, disappointments and even disasters. However, “It has been
said that democracy is the worst form of government except all the
others that have been tried.” (Winston Churchill)
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