Friday, June 30, 2017

Capitalism 3.0

Capitalism 3.0 is a 2006 book by Peter Barnes, Co-Founder, Working Assets. It is subtitled "A Guide To Reclaiming The Commons". It is 216 pages, 10 chapters in 3 parts of 4, 4, 2 chapters, with a preface and an appendix. It is a very easy read. There are many interesting facts and people of whom I had not heard before. And there is also a sensible scheme to protect the commons from the predation of capitalism.

Being a successful businessman and entrepreneur, Barnes unappologetically believes in capitalism and the power of markets. But he also sees the downside of the corporate operating system: short-sighted focus on profits, and no thought whatsoever for future generations, the planet, or all the other species with whom humans share the earth. So to counterbalance the unrestrained greed of the corporate sector, Barnes proposes the establishment of a commons sector. This is the 3rd or 4th economics book I have read recently in which The Commons plays a major role.


In the preface, we meet the guy who in 1968 coined the phrase "The Tragedy of the Commons", Garrett Hardin. He was an ecologist. Per Wikipedia, "Hardin blamed the welfare state for allowing the tragedy of the commons; where the state provides for children and supports over-breeding as a fundamental human right, Malthusian catastrophe is inevitable." He sounds like a real charmer. Pretty old school - he was a neomalthusian. Ugh, also from his Wikipedia article: "A major focus of his career, and one to which he returned repeatedly, was the issue of human overpopulation. This led to writings on controversial subjects such as advocating abortion rights, which earned him criticism from the political right, and advocating eugenics by forced sterilization,[citation needed] and strict limits to non-western immigration, which earned him criticism from the political left".

Barnes sees The Commons as victim of the market and government - the only 2 options Hardin believed could manage a commons.

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.
This lead him to a seminal question: "who should own the sky?". He proposes that we all own the sky, as a commons. He created the Sky Trust proposal, and his book before this one, "Who Owns the Sky?: Our Common Assets And The Future Of Capitalism", 2003.

Barnes traces his business career. He grew up helping his "father crunch numbers". He was a journalist for Newsweek and The New Republic. He was president of Working Assets, which donates 1% of its top line (gross) to "nonprofit groups working for a better world". Hunh, Credo Mobile is part of Working Assets. All of which lead him to some hard questions about capitalism.

Is capitalism a brilliant solution to the problem of scarcity, or is it itself modernity’s central problem?

...

When capitalism started, nature was abundant and capital was scarce; it thus made sense to reward capital above all else. Today we’re awash in capital and literally running out of nature.


Part 1 is titled "The Problem". It explores our current system, which Barnes labels "Capitalism 2.0.", including some of its history.

Chapter 1, "Time to Upgrade" likens our world economic system to a computer operating system that needs an upgrade. I have said many times that money, and by implication, the economy, is a software system whose parameters we can tweak until we get it to be something we all can live with, so I like his metaphor. We meet our old friend Jared Diamond yet again. His book "Collapse", blogged here, is totally a cautionary tale for our times.

past human civilizations (Sumer, Rome, the Maya, Easter Island) did on a smaller scale what our own economic system seems bent on doing planet-wide: they destroyed their resource bases and crashed. The pattern is hauntingly familiar. First, the civilization finds a formula—agriculture, irrigation, fishing, capitalism—for extracting value from ecosystems. Because the formula works so well, the civilization’s leaders become blindly attached to it. Eventually, the key resources on which the formula depends become depleted and the inflexible civilization collapses like a house of cards.
Barnes sums up the challenge:
The question our generation faces is: will we change our economic system voluntarily, or let the atmosphere change it for us?
Barnes defines The Commons:
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.

These diverse gifts are like a river with three tributaries: nature, community, and culture.

Here is the worth 1000 words pic. We should always remember how rich we are.

Barnes defines 2 terms, neither of which I like very much:

  1. Illth, from John Ruskin - the opposite of wealth: poverty, pollution, despair, illness. Barnes equates illth with economics' "negative externalities", which I continually encounter in reading about what is wrong with economics.
  2. Thneed, from Dr. Seuss - "a thing we want but don't really need ... (Significantly, needs are generic, while thneeds are typically branded.)". As in the last economics book I read, consumerism is presented as a large part of our problem.
Chapter 1 ends with Barnes laying out the "premises of this book".
  1. WE HAVE A CONTRACT. Each generation has a contract with the next to pass on the gifts it has jointly inherited.
  2. WE ARE NOT ALONE. ... Not only do our children and grandchildren matter, so do other beings and their offspring.
  3. ILLTH HAPPENS.
  4. FIX THE CODE, NOT THE SYMPTOMS.
  5. REVISE WISELY. NBDF: if it's Not Broke, Don't Fix it.
  6. MONEY ISN’T EVERYTHING, Money is the blood of our economic system; it shouldn’t be the soul.
  7. GET THE INCENTIVES RIGHT.


Chapter 2 is titled, "A Short History of Capitalism". How did we get where we are? "Two parallel threads emerge: the decline of the commons and the ascent of private corporations.".

The enclosure of the commons accelerated beginning in the 17th century.

The rationale for private property is that it boosts economic production, but the commons has a rationale, too: it provides sustenance for all.
As early as the American Revolution, Thomas Paine recognized that there should be "indemnification for that loss", i.e., enclosure. He proposed this in the form of a national fund, to be paid to all citizens on attaining their 21st year, and every year after they turn 50 - Social Security v0.5. Throughout the history of the US, a tug-of-war has gone on between market forces seeking to enclose the commons, and forces of conservation trying to preserve the commons. It continues to this day.

The commons is mainly assaulted on the source side by enclosure, while on the sink side it is assaulted by externalization - this pollution doesn't show up in any economic models, so how about we just dump it in your air, or water, or ground?

Meanwhile, corporations have continued to grow in size and power. I did not realize that the Supreme Court ruled corporations to be "persons" under the 14th ammendment all the way back in 1886.

In 1955, sales of the Fortune 500 accounted for one-third of U.S. gross domestic product; by 2004 they commanded two-thirds.
I like his concept of Capitalism 1.0, shortage capitalism, vs Capitalism 2.0, surplus capitalism. Here I've been trying to figure out how we get to a post-scarcity utopia, while according to Barnes, we got to post-scarcity in the 1950s - now we just need the utopia to go with it.

Capitalism 2.0 was accompanied by the great servants of consumerism: marketing and advertising - it is no wonder "Mad Men" was set in the 1950s.

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.
We should not forget that 2 of the largest current net presences, FaceBook & Google, both get most of their revenue from their online ads.

This chart gives a good characterization of the 2 flavors of capitalism encountered so far.

Barnes concludes his short history of capitalism by noting the "Three Pathologies of Capitalism":

  1. the destruction of nature;
  2. the widening of inequality;
  3. the failure to promote happiness despite the pretense of doing so.
On inequality, and globalization:
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.

...

The whole point of globalization is to increase the return to capital by enabling its owners to find the lowest costs on the planet. Hence the stagnation at the bottom alongside the surging wealth at the top.


Chapter 3 is titled "The Limits of Government". Our "Tragedy of the Commons" guy thought only the government or markets could protect a commons. This chapter explores why government probably is not up to the challenge.

I like this view of the American experiment:

America has been engaged in two experiments simultaneously: one is called democracy, the other, capitalism. It would be nice if these experiments ran separately, but they don’t. They go on in the same bottle, and each affects the other. After two hundred years, we can draw some conclusions about how they interact. One is that capitalism distorts democracy more than the other way around.

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.

And we all know this has gotten far worse since 2006, particularly thanks to the disastrous Citizens United Supreme Court decision in 2010 which opened floodgates of political contributions. Studies show your average congressman does what his donors want, not what his constituents want. My feeling is that publicly financed elections are the only solution to this problem, but I'm sure the rich will still be able to find ways to subvert legislators. You would still have the army of lobbyists in DC, which leads us to our next problem: "regulatory capture":
A new agency is created to regulate an industry that’s harming the public. At first the agency acts boldly, but over time its zeal wanes. Reformers who originally staffed the agency are replaced by people who either worked in the industry earlier, or hope to do so after a stint in government. Industry-packed “advisory committees” multiply, while industry-funded “think tanks” add a veneer of legitimacy to profit-driven proposals. Lobbyists meet constantly with agency staffers.
Can we ban lobbyists? Seems pretty anti-1st amendment to me. Hmmm ...


Chapter 4 is titled "The Limits of Privatizaton". Can markets do a better job of protecting the commons via privatization? Barnes gives a more detailed definition of capitalism as an 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.
These are the rules of the corporations that make up the capitalistic system that is eating the world. Barnes explores 3 ways that corporations could "rise above their profit maximizing algorithm":
  1. enlightened managers might choose a higher goal than profit. A nice idea, but Barnes suspects that in the real world "Corporate communications departments would try to maximize the appearance of social responsibility for the lowest actual cost. We’d see beautiful ads and reports, but little change in core behavior."
  2. shareholders might insist on it. More of this is happening, but I think that in general the investor class is into that "Maximize return to capital" algorithm.
  3. government might require it. But, as we saw with 0 bankers going to jail after the 2008 financial crisis, if the government won't jail individuals, then the corporations are happy to pay fines as a cost of business.
Finally, Barns discusses "free market environmentalism". Started by freshwater economist Ronald Coase in 1960, it posits that "nature can be protected through property rights, provided they’re clearly defined and the cost of enforcing them is low.". Barnes likes the idea, but finds it unworkable. "First and foremost, it lacks a solid rationale for how property rights to nature should be assigned." So rather than privatization, Barnes proposes propertization, which brings us to Part 2.


Part 2 is titled "A Solution". Chapter 5 is titled "Reinventing the Commons". Barnes introduces the commons sector. Its job: to oppose the capitalist system, particularly the 3 pathologies we met in Chapter 2.

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.

...

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. [My bold]

Barnes estimates that, as of 2005, common assets, natural and social, were at least 50% larger than private and government assets combined. I think that could be off by a factor of maybe 10 or so - as Barnes points out, there are so many common things we take for granted that belong to us all: the natural world, the Internet, stock exchanges, laws, communications media, the arts and other culture, scientific and technical knowledge, universities, libraries, accounting procedures, transportation infrastructure. As I said earlier, we should always remember how incredibly rich we are.

Barnes discusses "organizing principles of the commons sector". He sees a lot of variation in commons institutions. The most important characteristic of a common asset is whether it is limited or inexhaustible.

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.
Some of the organizing principles:
  • leave enough and as good in common;
  • put future generations first;
  • the precautionary principle: when in doubt, err on the side of safety;
  • 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. In addition to the internet and culture, this principle also applies to social contracts like Social Security and Medicare;
  • one person, one share;
  • include some liquitity.


Chapter 6 is titled "Trusteeship of Creation"; it traces the Nature branch of The Commons. Barnes contrasts the the natural world, which is irreplaceable, with consumer goods, which "tend to be massproduced and highly disposable"

The question is whether creation’s irreplaceable gifts are different enough to merit different treatment by our economic operating system. A strong case can be made that they are.
But the current system values capital above all else. We learn of Marjorie Kelly and her book "The Divine Right of Capital" (2003). "Kelly locates many places where capital’s supremacy is written into our codes." It's interesting, there is only one law where capital is constrained, and that is the Endangered Species Act.

Barnes reviews several land trusts, some of which are centuries old. He gives us this definition of a trust:

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.
Trustees are held to a higher standard than corporate managers or "stewards".
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.
Barnes shows the commonsensical nature of his approach by invoking standard double-entry accounting principles. When we credit a corporation's account with natural resources, where does the corresponding debit show up? "In fact, there aren’t any accounts that could be debited. " Creating common property trusts provides the account for the debit, so that common resources can then be managed by normal business practices.

Barnes defines "commons rent" in a way I have not heard rent defined before: "it’s money paid because of scarcity."

We meet the "underappreciated American economist Henry George". Hmmm, "underappreciated" doesn't seem right to me, he has an institute in his name in NYC and a foundation in his name in London, both presumably promulgating his ideas, FTW! He did not quite make it into the 20th century.

Seeing both the riches and the miseries of the Gilded Age, he asked a logical question: Why does poverty persist despite economic growth? The answer, he believed, was the appropriation of rent by landowners. Even as the economy grew, the property rights system and the scarcity of land diverted almost all the gains to a landowning minority.
Following George's lead, Barnes makes "a bold assertion":
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.


Chapter 7 is titled "Universal Birthrights"; it traces the Community branch of The Commons. We all know the universal birthrights proclaimed in the Declaration of Independence: "life, liberty, and the pursuit of happiness". Interesting, I didn't know that Jefferson got these from John Locke, whose version was "life, liberty, and property". The Constitution gives us more birthrights.

We revisit Monopoly, "a reasonable simulacrum of capitalism". But, where's my $200 for passing Go? Plus, to be like the real world, "Imagine ... a twenty-player version of Monopoly in which one player starts with half the property".

Another example showing a different "economic operating system" is the pro sports leagues. "Each league shifts money from the richest teams to the poorest, and gives losing teams first crack at new players." What fun is a sport without at least a somewhat level playing field?

Barnes sees waves of birthrights:

If we were to analyze the expansion of American birthrights, we’d see a series of waves. The first wave consisted of rights against the state. The second included rights against unequal treatment based on race, nationality, gender, or sexual orientation. The third wave—which, historically speaking, is just beginning—consists of rights not against things, but for things—free public education, collective bargaining for wages, security in old age. They can be thought of as rights necessary for the pursuit of happiness.

...

Universality is also what distinguishes the commons sector from the corporate sector.

Barnes looks at what should go into this third wave:
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.

Why attitude? Americans suffer from a number of confusions. We think it’s “wrong” to give people “something for nothing,” despite the fact that corporations take common wealth for nothing all the time. We believe the poor are poor and the rich are rich because they deserve to be, but don’t consider that millions of Americans work two or three jobs and still can’t make ends meet. Plus, we think tinkering with the “natural” distribution of income is “socialism,” or “big government,” or some other manifestation of evil, despite the fact that our current distribution of income isn’t “natural” at all, but rigged from the get-go by maldistributed property.

For the 1st new birthright, a universal dividend, Barnes takes the Alaska Permanent Fund as his model.
We could, for instance, have an American Permanent Fund that pays equal dividends to long-term residents of all 50 states. The reason is, we jointly own many valuable assets.
In discussing the 2nd new birthright, a start-up stake for every child, he raises an important fact about inheritance. The early US did away with the European tradition of primogeniture. Having the oldest son inherit all the capital is a great way to keep it concentrated, which is not what the founding fathers wanted, and is not what we want either.

To fund this new birthright, we will of course need new taxes, preferably on the rich, of course.

To top things off, I like to think that the contributors—millionaires and billionaires all—will feel less resentful about repaying their debts to society if their repayments go directly to children, rather than to the Internal Revenue Service. They might think of the Children’s Opportunity Trust as a kind of venture capital fund that makes startup investments in American children.
It is sad reading his justification for the 3rd new birthright, universal healthcare. 11 years later and a small step in the right direction will probably be wiped out soon :-(


Chapter 8 is titled "Sharing Culture"; it traces the Culture branch of The Commons. Barnes discusses the IP bugaboo, and comes up with a statement late in the chapter that sums up my attitude.

To create scarcity where it doesn’t need to exist diminishes rather than enlarges our well-being.
When your local public library tells you they have only 3 copies of an eBook, what can you do but shake your head? They have infinite copies!

Wow, I'm going to get a pic of this and tweet it.

DISNEY STORIES TAKEN FROM THE PUBLIC DOMAIN: Aladdin; Atlantis; Beauty and the Beast; Cinderella; Davy Crockett; The Legend of Sleepy Hollow; Hercules; The Hunchback of Notre Dame; The Jungle Book; Oliver Twist; Pinocchio; Robin Hood; Snow White; Sleeping Beauty; The Three Musketeers; Treasure Island; The Wind in the Willows.

DISNEY STORIES ADDED TO THE PUBLIC DOMAIN: None.

...

Then there’s the Music Performance Trust Fund, set up in 1948. To settle a dispute with the musicians’ union, the recording industry agreed to pay a small royalty from recording sales into a fund supporting live concerts in parks, schools, and other public venues. The fund was, and continues to be, administered by an independent trustee. In 2004 it sponsored over eleven thousand free concerts throughout the United States and Canada.

Meanwhile, we all know about the FBI investigating copyright infringement and the $250,000 fines. This whole enforcement infrastructure certainly does not come for free. "Yet the companies’ price tag for it is exactly zero. (They do pay taxes, but so does everybody else.)"

Another similar imposition on the cultural commons comes from the great engine of Capitalism 2.0, advertising. I don't think I've seen this analyzed before particularly, and I agree 1000% with Barnes attitude on the subject.

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.”

...

Children in America see, on average, one hundred thousand television ads by age five; before they die they’ll see another two million.

...

Every ad thus has an opportunity cost, a cost we experience but advertisers don’t pay.

...

What if we managed advertising as we manage, or could manage, physical pollution?

...

But if we dampened an overheated economy by lowering the volume of advertising, we’d get the benefits of higher interest rates without the pain. In fact, households might save money by buying less.

Wow, a new knob to turn to throttle an overheated economy, to add to the Fed interest rate.

My wife and I do a pretty good job dodging ads. We watch most content on Netflix, iTunes, YouTube, or time-delayed on DVR. All are pretty much commercial free. Watching real-time sports is the main time I'm hit with advertising. My browser has an ad blocker. Plus I think that, in general, I am pretty good at ignoring ads. But Barnes made a telling point: "Every ad has an opportunity cost." The time I spent watching an ad I could have spent doing something else, potentially profitable. So the ad maker clearly owes me for my time.

Barnes also discusses the airwaves, the internet, and scientific patents as part of the cultural commons.

Barnes concludes reviewing the 3 branches of The Commons.

Fortify, Then Enhance

The larger lesson of this chapter is that 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.

...

After we fortify, we should enhance; just as we take from the commons, so should we give back. Art and music can be reproduced by corporations, but they don’t come from corporations; they come from the commons. Folk music, country music, jazz, blues, garage bands—these are the roots of our musical heritage. We must nourish the soil in which these roots grow. This, not copyright extension, is the way to enrich culture.


Part 3 is titled "Making It Happen". Chapter 9 is titled "Building the Commons Sector". Here's another 1000 word pic.

I think I've seen the concept of the "time bank" before, a search of this blog didn't turn it up. Time banks provide a complementary currency, which seems to be a trending topic in this blog.

Note that the "Spectrum Trust" is a trust administering the airwaves.

Barnes identifies another very important thing which must be returned to the commons: political campaign financing. "By privatizing our airwaves, in other words, we’ve effectively privatized our democracy." The effect of the alternative fact machine Faux "News" on our political discord cannot be understated.

As we near the end of the book, Barnes begins to try to win the gold medal by discussing more ways to make higher taxes palatable to the rich.

The premise behind a commons tax credit is that wealthy Americans owe more to the commons than they currently pay to the government in taxes. That being so, a commons tax credit would work like this. The federal government would raise the uppermost tax bracket by a few percentage points. At the same time, it would give affected taxpayers a choice: pay the extra money to the government, or contribute it to one or more qualified commons trusts.
Barnes defines 4 roles for government to play in building the commons.
  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.


Chapter 10 is titled "What You Can Do". I think he is completely correct about the importance of property rights. 3 things to start with:

We should, first of all, start noticing and talking about our common wealth. Whenever we see it, we should point to it and let the world know to whom it belongs. [I find this to be a very easy topic to bring into most conversations.]

Second, we should demand more birthrights and property rights than we have now. Rights that belong to everyone. Rights built into our operating system. Rights that protect future generations as well as our own.

The reason I stress property rights is that, in America, property rights are sacred. They’re guaranteed by the Constitution. Once you have them, they can’t be taken without fair compensation. These protections have greatly benefited those who own private property. They should also benefit those who share common wealth.

Third, we should imagine and design multiple pieces of the commons sector—that is, organized forms we want the commons to take. And we should build and test our models wherever possible.

Barnes now addresses various groups of people, with suggestions appropriate to each role.
  • Parents.
  • Wage Earners.
  • Capitalists. Ha ha. Barnes gives it another shot.
    Well, let me be blunt: you do get too much. But don’t get your dander up; I’m not saying you’re a scoundrel. I’m saying, rather, that capitalism as we know it over-rewards people who own private property. It’s a system flaw, not a personal flaw. Its harm lies not so much in the luxuries it bestows on you as in the necessities it denies to others and the distortions it brews throughout society.

    I don’t expect you to surrender all your excess rewards at once. That would be asking more of you than I’m prepared to ask of myself. But I do ask you to consider doing two things: (1) Give back some of your excess takings now, and the rest when you die. And (2), if fellow citizens ask for a system upgrade that rewards noncapital owners more fairly, don’t fight them. Let them have it. It will work. And it will be good for your kids and the planet.

  • Commons Entrepreneurs.
  • Lawyers. "forge new property rights for the commons."
  • Economists.
  • Religious Leaders.
  • Politicians.
Corporations + Commons = Capitalism 3.0

Like the governor of James Watt’s steam engine, these add-ons will curb our current engine’s unchecked excesses.

...

All Americans will benefit both from nature’s health and from the health of corporations.


The Appendix is titled "Key Features of Corporate, State, and Commons Sectors". Yay, a nice table! I will be lazy and include it as a pic rather than hand coding it in HTML.

Reviewing, I did not mention above Barnes' discussions of "intergenerational pacts". Social Security was #1, with current workers paying retired workers and counting on the next generation of workers to do the same for them.


This was a fun and easy read. A little disappointing that it is 11 years later and I am just hearing about it - meaning, I'm afraid that these memes are not getting much traction. And yet, when you read this book, it all seems so commonsensical.

2 or 3 times, Barnes addressed himself to the "capitalists" - the 1%, the .01%. Basically he kind of says, "Can you all just be a little reasonable?" But probably they won't. I think the most important thing we need to figure out right now is, what is wrong, mentally, morally, spiritually, humanly, with the ultra-rich. and how can we help them fix themselves? Cory Doctorow's attitude in "Walkaway" makes more and more sense - that in their heart of hearts, the ultra-rich know that they really do not deserve their over-the-top wealth - so they are compelled to suppress that fact however they can, pretend that the system is fair, and continue to pile on wherever possible.

But even worse than that are GOP politicians, particularly in the south. Their policies, particularly regarding health care and the medicaid expansion, seem to indicate to me that they really don't care if the bottom 20% financially of their population dies. They may actually view it as a feature. And their base goes along with it because, proportionately, a larger %age of those who die will be people of color - despite the fact that, when you look at absolute numbers, the number of poor whites affected is 3-4x the number of poor people of color. A sound man in a club told me that poor white southerners "would get their d--k cut off if it meant black guys got their d--k and their hand cut off". I have used the word "genocide" in posts, I do not think it is unwarranted.

I think every system of government should have 1 goal: to maximize the outcome of every child. In the US 20% of people & children are nutritionally challenged, and every day a growing child doesn't get enough nutrition is a day they grow fewer brain cells. And every day they don't have access to quality education, the Internet, culture, capital, ... is a day they have fewer opportunities to grow their minds.

I really liked this book comparing the economy to an operating system - because that's what it is. It is a software system that we can tweak or refactor until we get something that works for everyone. The 1% & .01% will all still be richer than any Roman emperor, but we won't be starving and oppressing children. I think we need to get the simulations working to where we can show how it can be done. Surely our real-life game of Monopoly would be more fun for all if the rules were fairer.

After this book, Barnes published 2 more:

I think I will make the latest 1 my next economics read. It will be interesting to see how the ideas of this book have evolved. Plus should be a quick read, and hopefully a shorter review.

[2017-07-14 5:47pm] I forgot to mention. In "Doughnut Economics", Kate Raworth discusses the 4 "realms of provisioning" central to the embedded economy: household, commons, market and state. Barnes gives us a really good way to empower the commons realm - by propertization, as property rights are well understood and tightly integrated into our laws. But what about the household? Does Barnes have any ideas on how to empower and realize the value of the household realm? I'll look for this in his most recent book.

2 comments:

greg said...

Hi Chris. Really like your reviews.


Comments: Malthus came up with a very ugly truth. But is is a truth. Due to diminishing returns, at a given GDP per capita, an increase in population requires an even greater increase in (cost of) input. And cost of disposal. (Remember Thermo? Global warming means decreasing efficiency.)


“Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children." Ancient Indian Proverb


Not only are corporations ‘persons,’ they are persons with more rights than people. What ever their crimes, they are mostly only subject to fines. Only the crime of bankruptcy earns them the possibility of capital punishment, and often it only earns them ‘reorganization.’


There is another pathology of Capitalism: The goal of the Capitalist is to maximize profit. If the capitalist can maximize profit by enriching society, he will enrich society. If the Capitalist can maximize profit by exploiting society, he will exploit society. The widening inequality is evidence that the Capitalist is now doing more of the latter.


Citizens United was a disaster. At a concert, everyone has the right to speak, but only the band has access to the amplifiers.


I think it was a Princeton study which showed that a Congressman’s electorate only got what they wanted it when his donors wanted it, too. His donors didn’t always get what they wanted, but they never got what they didn’t want.


I think anti-gerrymandering would be helpful. It would make representatives at least more responsive to their electorate. That and public financing. Not the cure, but a help. The problem with public financing is finding room for the fringe parties. Some formula… Also, our system reduces a political system which is at least two dimensional to one dimension. This is a problem which the Right is now exploiting.


I don’t know about banning lobbyists. Some sort of fairness doctrine, to guarantee some access to the rest of us? 1st Amendment should support that. Maybe a case could be made…


The Capitalist must externalize costs at every opportunity. Competitive pressures demand it. One of the functions of government is to mitigate competitive pressures which, by effectively sponsoring monopolies, it is doing in a counterproductive way. Currently, each corporation is in a race to exploit the commons before other corporations do it first. (Imagine a bunch of people, locked in an airtight room…)


One problem with evaluating the commons is that the pricing mechanism requires a market, and is disturbed when that market is not free. How do you compare one 350,000,000th of the nation’s forests to the price of a cheeseburger!?


I like the discussion in Chapter 6.


To Be Continued

greg said...

The American confusions are at least aggravated by corporate propaganda, and start from our history of causal appropriation of the frontier by private interests. One of the principles of libertarianism is basically: ‘First come gets served.’ https://en.wikipedia.org/wiki/Media_cross-ownership_in_the_United_States


Strictly speaking, the government is trustee to public lands. They’re supposed to get fair price for their use and exploitation, but they don’t.


I think a UGI from these trusts is quite appropriate. ( Universal health Care also qualifies as a UGI. And I like that.) It would have to be carefully managed though, because the feedback loop is positive: Greater exploitation => greater income to the trusts => larger UGI. So, maybe you could change that by…? Have to think about it. It might not be large enough for everybody. Maybe just children. The problem is that raw resources, before value is added in the production of goods, are massively (and necessarily) underpriced.


This is part of the problem with the commons: It is necessarily underpriced, in order to drive the engine of society. This needs explanation: Suppose a barrel of oil contained $200 worth of energy. Would I buy it for $200? No. That would be useless to me. But if I can buy it for $60, and get $200 worth of energy, its worth $140. So the lower the price of the oil, the more valuable it is to me, the buyer. Along those lines, the cheaper we can exploit nature, the commons, the more we can drive our economy. And that is why we have put a price of $0 on the commons. (And in fact negative, in some cases when its exploitation is subsidized.) This does suggest a way to regulate growth rate in an economy... Only now, that we are pushing the limits of nature’s ability to sustain us, are we recognizing that there is a real price to the things that nature has, does, and will supply us. Only now, are we recognizing that there is a real debt that we owe and have to pay. Hopefully, it is not too high, and does not come due all at once.


A universal land tax, a la George? Adjustments would have to be made for agriculture.


The GOP, especially the Southern GOP, think they are justified in their cruelty.


Thanks again, Chris. Editing issues lead me to stop here.

Charlie