Rachel's Democracy & Health News #886  [Printer-friendly version]
December 21, 2006


[Rachel's introduction: A provocative new book, Capitalism 3.0,
aims to diminish the power of corporations by establishing a new
"commons sector" within the economy -- creating new institutions to
form a countervailing force.]

By Peter Montague

Books full of new ideas are rare, but here's one worth chewing on:
Peter Barnes's Capitalism 3.0. The book is original, readable and
provocative. It will definitely hold your attention.

But let's get one thing straight. Despite the title of his book, Peter
Barnes is no radical. He is an entrepreneur and investor who co-
founded Working Assets, the telephone company. He says, "As a
businessman and investor, I've benefited personally from the primacy
of capital and am not keen to end it." (pg. 24) On the other hand, he
recognizes that, "Capitalism as we know it is devouring creation. It's
living off nature's capital and calling it growth."(pg. 26) So, "to
save capitalism from itself," (pg. 66) the book offers a whole slew of
new ideas. the goal of which is to give capitalism a "software
upgrade" to fix what Barnes sees as the system's three major flaws:
(1) its disregard for nature; (2) its disregard for future
generations; and (3) its disregard for the poor.

Barnes's analysis of the problem is succinct: the history of
capitalism reveals two threads: the decline of "the commons" and the
rise of the corporation. These two threads are linked because
corporations make money largely by taking things from "the commons"
(or dumping wastes into the commons) without paying compensation to
its owners (all of us).

By "the commons" Barnes means "all the things we inherit or create
together," which none of us owns individually. The commons is like a
river with three forks:

1. Nature, which includes air, water, DNA, photosynthesis, seeds,
topsoil, airwaves, minerals, animals, plants, antibiotics, oceans,
fisheries, aquifers, quiet, wetlands, forests, rivers, lakes, solar
energy, wind energy... and so on;

2. Community: streets, playgrounds, the calendar, holidays,
universities, libraries, museums, social insurance [e.g., social
security], law, money, accounting standards, capital markets,
political institutions, farmers' markets, flea markets, craigslist...

3. Culture: language, philosophy, religion, physics, chemistry,
musical instruments, classical music, jazz, ballet, hip-hop,
astronomy, electronics, the Internet, broadcast spectrum, medicine,
biology, mathematics, open-source software... and so forth. (pg. 5)

The commons is a set of assets that have two characteristics: they're
all gifts, and they're all shared. (pg. 5) Taken together, all the
assets in the commons are our "common wealth." Furthermore, the
commons are essential and indispensable; they provide sustenance for
everyone. If we fail to protect them, we're sunk.

Barnes points out that, "There's another quality to assets in the
commons: we have a joint obligation to preserve them. That's because
future generations will need them to live, and live well, just as we
do. And our generation has no right to say, 'these gifts end here.'
This shared responsibility introduces a moral factor that doesn't
apply to other economic assets: it requires us to manage these gifts
with future generations in mind." (pg. 5-6)

Our economic system (which Barnes called "capitalism 2.0, or "surplus
capitalism") is destroying all three forks of the commons river, and
the destruction is happening in two ways:

(1) corporations are "enclosing" (privatizing) the commons (bottling
water and selling it, for example; or using the airwaves without
paying the owners (all of us) anything; or taking our common-heritage
stories, such as Snow White, copyrighting them, and selling them back
to us);

(2) corporations are trespassing on the commons by "externalizing"
their costs -- dumping toxic wastes into air and water, for example.

Enclosure (privatization) and externalizing give a one-two punch: both
activities create corporate profits, simultaneously diminishing the

Because of this one-two punch, and because corporations grow ever-
larger without limit, capitalism creates three serious problems:

1. Nature is being destroyed.

2. Enormous inequalities have arisen -- the rich keep getting richer,
leaving everyone else behind. Today the wealthiest 5% of us owns more
than the other 95% of us. This makes a mockery of democracy, and of
the idea that we all start life with similar opportunities;

3. Happiness is in short supply. Despite the enormous capacity of
corporations to produce wealth (by enclosing and trespassing into the
commons), people say they are no happier now than they were 40 years
ago. Surplus capitalism has speeded up life, and made many of us
insecure about our future. So what's the point of all this economic
activity if it isn't improving people's quality of life? "We need
rest, relaxation, and time for companionship and creativity. Surplus
capitalism can't give us enough of those things," Barnes points out.

Now we get to the meat: Barnes says these problems cannot be fixed by
government regulation, taxation, or public ownership. Government is
too easily corrupted by money and power; Barnes sees no way around
this harsh reality.

** Regulatory agencies are routinely captured by the people they are
supposed to regulate.

** Green taxes will never be set high enough to make a difference, and
besides they disproportionately burden the poor.

** Public ownership is no guarantee that an asset will be managed for
the benefit of future generations, nonhuman species, or ordinary
people -- just look at the way grazing rights and mineral rights on
public lands have been mismanaged for more than 100 years. The state
does not promote the "common good" -- it rewards the wealthy and the

"We face a disheartening quandary here. Profit-maximizing corporations
dominate our economy. Their programming makes them enclose and
diminish common wealth. The only obvious counterweight is government,
yet government is dominated by these same corporations." (pg. 45)

The old counterweight to corporate power -- organized labor -- has
been "decimated" and the other counterweight -- the mass media -- have
been turned into corporate mouthpieces. Campaign finance reform will
not work because, "Occasionally a breakthrough [has been] made in
campaign financing -- for example, corporations are now barred from
giving so-called soft money to political parties -- but corporate
money soon finds other channels to flow through. The return on such
investments is to simply too high to stop them." (pg. 47)

Barnes goes on to explain (chapter 4) why corporations can never be
made "socially responsible," can't be made less destructive by "free
market environmentalism," and won't be reformed by massive programs of
libertarian privatization.

This is a bleak picture, indeed, but one that longtime Rachel's
readers will probably greet with a nod of the head.

Peter Barnes's solution? A 30-to-50-year strategy:

"Throughout American history, anticorporate forces have come to power
once or twice per century.... it may take a calamity of some sort --
another war, a depression, or an ecological disaster -- to trigger the
next anticorporate ascendancy, but sooner or later it will come. Our
job is to be ready when it comes."

"What constitutes readiness? Three things, I believe," says Peter

** First, we must have a proper view of government's role. That role
isn't to run the economy, or even to manage the commons directly; it's
to assign common property rights to trustworthy guardians who will.

** Second, we must have a plan to fix our economic operating system,
not just to put patches on symptoms.

** Third, we must recognize that the duration of any anticorporate
ascendancy will be brief, and that we must use that small window to
build institutions that outlast it." (pg. 47)

Barnes's basic idea is "to fix capitalism's operating system by adding
a commons sector to balance the corporate sector." The corporate
sector can't be fixed or controlled by government, but perhaps it can
be counter-balanced by creating a large and robust "commons sector" as
part of the next phase of capitalism, which Barnes calls capitalism

Barnes points out that, when we try to put a monetary value on the
commons, it far exceeds in size the totality of private wealth. The
commons is an enormous asset that we presently allow corporations to
use free -- they take valuable goods from it and the dump their
garbage into it, all for free. Barnes believes that, if we could
create "property rights" in the commons, and then charge corporations
for using the commons we could revolutionize the way the commons are
viewed and treated; we could create a stream of income for all
citizens, most especially benefiting the poor; and by strictly
controlling access to the commons, we could protect them for future
generations and for nonhuman creatures.

We already have many good examples of property rights in common
assets. The Alaska Permanent Fund, is an example Barnes likes. As oil
is extracted from the ground in Alaska, a small tax goes into a
special fund, which is invested in stocks and bonds. Each year, every
citizen of Alaska receives a check in the mail from the Permanent
Fund, valued at roughly $1000. To someone who makes $50,000 per year,
that $1000 may mean little; but to someone who earns $10,000 per year,
that bonus can make a real difference.

Barnes's point is to create a set of "common property rights" --
rights owned by all of us. He wants to "propertize" but not
"privatize" the commons, on the model of the Alaska Permanent Fund.
Another example is MALT, the Marin Agricultural Land Trust in Marin
County, Calif. Family-owned sheep, dairy and cattle ranches in Marin
-- on the close northern edge of San Francisco -- have managed to
remain in the ranching business by selling conservation easements to
MALT. Ranchers give up the right to develop their land, and the public
gets a lasting pastoral landscape and a viable agricultural economy.
Some 40,000 acres has been preserved by MALT -- about one-third of all
the agricultural land in the county.

In his next-to-last chapter, Barnes describes a whole range of
institutions -- many already functioning well -- that embody common
property rights for the purpose of protecting our common wealth.

By establishing common property rights, Barnes would create a "commons
sector" within the economy. He envisions it growing very large and
thus providing a countervailing force to the corporate sector. This
large commons sector is what would distinguish capitalism 3.0 from our
present economy. (More details -- and some questions -- next time.)