Capitalism 3.0 by Peter Barnes

Capitalism 3.0: A Guide to Reclaiming the CommonsCapitalism 3.0: A Guide to Reclaiming the Commons by Peter Barnes
My rating: 4 of 5 stars

You don’t need to accept all of the author’s left-wing enthusiasms in order to embrace his central idea, which may very well be exactly what the doctor ordered for our ailing Mother Earth.

I was pointed to this book by a reference in The Commonwealth of Life: Economics for a Flourishing Earth by Peter G. Brown, and, intrigued by the idea of tweaking capitalism to make it more Earth-friendly, I hastened online to get myself a copy. When I started reading, I was quickly drawn in by Barnes’s brisk, conversational writing style. As a former journalist who wrote for Newsweek and The New Republic, Barnes has ample writing chops and his book is well organized, well researched, and fast-paced. He does not tarry over his points; he makes them quickly and moves on.

After journalism, Barnes moved on to another career: green entrepreneur. In 1976 he cofounded a worker-owned solar energy company, and in 1983 the Working Assets Money Fund. He is a capitalist, but from the beginning he set out to do well by doing good, and developed much firsthand knowledge of the interplay of business and government. It is this knowledge that he has drawn upon to propose a new way of organizing capitalist society so that the profits of business are no longer made at the expense of the “commons”—that is, the total stock of unowned common wealth that constitutes the heritage of all human beings, including intellectual property, civil institutions, and the natural world. Barnes argues that just as the enclosure of the commons in Britain led to widespread poverty and suffering, so the “enclosure” of these modern commons by private companies has led to many of the ills of modern life, notably the various environmental threats that loom over us, such as deforestation, overfishing, and global warming.

How does a business “enclose” commons in the modern world? Anytime a commercial operation extracts goods from the environment, or dumps waste into it, without paying for the full cost of doing so, it has appropriated part of that common wealth to itself without compensating the owners of that wealth—that is, the community to whom that commons belongs, which may be local, regional, or global. According to Barnes, this is where most of the commercial profit in the world comes from, so in a sense the great fortunes made by some capitalists have been purloined from their true owners, people who lacked the awareness and organization to be able to assert their rights and push back.

A more just and more environmentally responsible world will be one in which the owners of the world’s commons can and do assert their rights, so that extraction and dumping can occur only after negotiation, and not as a one-sided appropriation. The specific mechanism for achieving this, Barnes suggests, is the conversion of all these commons into trusts: legal entities that hold the property rights to the commons in question, and who manage the trust so as to preserve and augment its value for its beneficiaries, who include not just the present generation but also all future generations. A defining feature of a trust is that it must live off its income and not erode its capital. The trustees are responsible for achieving this, as well as for making regular reports to the beneficiaries and for distributing dividends. To achieve income from a commons, the trustees may allow extraction and dumping in it, but only to an extent consistent with the aims of the trust, which are always focused on the long term.

In this model, a commercial operator, say a logging company, instead of being granted logging rights by a government over public lands, as happens today in British Columbia, would have to negotiate with the trustees who control any tract of land held in trust. The trustees, if they believe that logging is consistent with the long-term aims of their trust, will stipulate the conditions under which the logger may operate on their land, including money compensation for removing trees and doing other damage. Acting on behalf of the owners of the property, the trustees have a strong legal position with respect to commercial operators, and also have a strong incentive to monitor operations on their land. The logger, forced to pay more for what he’s extracting, will be driven to harvest efficiently and with minimal impact to the land, in order to avoid being pressed for more compensation.

Will this make lumber more expensive? Yes. Our cost of living will go up—and, according to Barnes, it should go up, because our environmental peril has been brought about precisely because its “cost” or value has been set, effectively, at zero. If we’re paying more for lumber we’ll use it more sparingly and more wisely—more “green”ly. We might take more care to reuse lumber from demolished buildings instead of carting it to landfills or burning it.

The trust model works equally well for dumping. A trust established over a river basin, say, could prohibit all dumping in the river, or negotiate with individual farmers and businesses over dumping rights, which again would be allowed only to an extent consistent with the aims of the trust. In the case of farming, the cost of food would go up—as it should.

What happens to the money that forms the revenue stream of such a trust? Apart from the funds needed to operate the trust itself, the revenue would be distributed as dividends to its beneficiaries, and its beneficiaries will be the general public that has an interest in that trust, be it local, regional, national, or global. The guiding principle would be “one person, one share.” Barnes points to the Alaska Permanent Fund as a model. In 1976 Alaska created a fund to capture some of the revenue of oil companies for the benefit of state residents. Since then it has invested oil royalties and pays a yearly dividend to every Alaskan. In 2012 that dividend was $878; in 2008 it reached a high of $2,069. Barnes argues that in a world increasingly parceled into commons trusts, every person will be receiving such dividends, and these will help to offset any increases in the cost of living.

Indeed, Barnes goes further. He believes that one of the negative effects of what he calls Capitalism 2.0 or “surplus capitalism”—the capitalism that has powered consumer society since, he thinks, about 1950—is the growing disparity between rich and poor. In the United States, the wealthiest 5% of the people own more assets than the bottom 95% combined. Since this wealth has been accumulated largely at the expense of the commons, Barnes thinks it just that a portion of the revenue of commons trusts be devoted to funding social programs such as public health-care and education.

In this I found myself more reluctant to follow him. Barnes extols Canada’s socialized medical system, which does indeed have its strong points, but it’s at least questionable whether socialized anything is really superior to what can potentially be provided by private individuals. In Canada the nomenklatura class have instant access to the best care, while the great unwashed have long wait times for even basic services; meanwhile it’s illegal to provide medical services for cash. The system is certainly better than nothing, but here and in social programs generally I think Barnes may have given in to the temptation of believing that government has the answers—a temptation that he avoids when it comes to the environment. For Barnes notes that government has generally been a poor watchdog for the environment because politicians are beholden to corporate donors and also because bureaucrats themselves succumb to “regulatory capture”, and find their own interests increasingly aligned with those of industry. If government is not the answer for the environment, it’s not clear to me why it’s the answer for health or education.

But these socialist dreams are not central to Barnes’s theme. The basic idea is of the emergence of a whole new economic sector—the commons sector—which will act as an equal power along with government and business. The environment and other commons will now have a seat at the bargaining table, a voice in policy, and advocates in court. Through commons trusts, the interests of coral reefs, mahogany forests, and our unborn great-grandchildren could be given their proper weight in how we manage our shared planet. This is a tremendously powerful idea, and eminently practical. No matter what else we might do for the environment, we should be doing this.

Mr. Barnes: I’m with you. I will promote this idea. I will seek out ways that I can help commons trusts come into being and prosper. Your book is very good, but maybe too short for the wealth of ideas it contains. The philosophy and morality and economics of all this need to be worked out in greater detail. Maybe I can help with that too.

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