Review of the Book:
Capitalism 3.0: A Guide to Reclaiming the Commons
by Peter Barnes

H. William Batt

[This book is published by Berrett-Koehler, 2006. This review
is reprinted from GroundSwell, January-February 2007]

Peter Barnes, Co-Founder of Working Assets in 1982, has moved on to offer his most recent idea to rescue an economic system run amok, this titled Capitalism 3.0: A Guide to Reclaiming the Commons. The same author, writing Who Owns the Sky some five years ago, suggested the creation of a “skyowners trust” as a way to address the problem of greenhouse gas emissions and a curb on carbon-generating global warming.

Now his concern is much deeper, and addresses a capitalist economic design which he believes needs a radical restructuring. Using the metaphor of a computer operating system, Capitalism 3.0 suggests how our economy can be upgraded to insure its healthy and responsible functioning. Capitalism 2.0 he demarcates as beginning in the 1950s with the ascendancy and dominance of corporations. No longer is it possible for shareholders to hold corporate structures responsible for their actions, nor can government meet the challenge either. Still another system of countervailing power must be devised to hold them in check against their own inherent rapaciousness. This new set of institutions, he believes, can rise from the growing design of trusts, as these organizations can be the guardians of what has historically been called the “Commons.” It is, after all, the commons that is most threatened by commodification and privatization. The elements of the Commons are not only nature, but also community and culture, and enumerated in detail at www.onthecommons.org.

There are ample instances of trust designs; they are found in every economic sector – the only requirement for their creation is that it must have something with a marketable price. Moreover they can be at all economic and political levels, local, regional, and national. Among the examples offered at the local level are land trusts first of all, but also community gardens, municipal Wi-Fi, farmers’ markets, public spaces, car-free zones, and time banks. At the regional level one can sometimes find trusts for watersheds, air-sheds, and even fauna and flora habitats. The following have been conceived and sometimes implemented at the national level: the Alaska permanent fund, health insurance programs, royalty funds, spectrum trusts and credit programs.

What all these designs have is common ownership of an asset or service, one which can constitute a monopoly in a given area or market. This allows the rent that flows from its service to be held in such a way that it can be employed for a social good. Barnes’ view is that the growth in the volume and strength of these entities can operate such that they will counter the overwhelming dominance of corporate power presently holding free market economies hostage. The essence of corporations is their single inexorable mission to secure returns for their stockholders and yet with limited liability. A trust, in contrast, would be able to take a broader view of any element within its purview, even though it sacrifices private returns to member–owners. In one of his several graphic depictions of this arrangement, trusts are placed on one side of a see-saw and corporations on the other.

Government as much as private enterprise, he avows, is limited in its capacity to address the social good. Governments are necessarily responsive to the most focused interests of its constituencies; they fail to protect broader and long term needs. To this reviewer, his willingness to give up on the capacity of government is a weakness of the book, but it no doubt stems from his first hand attempts to deal with governments in several past ventures. It is difficult, therefore, for me to argue he is wrong. Other solutions abound in current debate – public financing of elections, term limits, better disposition of media resources, are among the most commonly mentioned. But concentrations of power have always been a subject of challenge; the founding fathers of this nation sought to address the problem by employing a federal system of governments along with checks and balances at each level. Peter Barnes sees a need for further fracturing of institutional structures as a way to protect at least some elements of the traditional commons that are now threatened. American society is a very different system than it was more than two centuries ago.

Creating trusts entails commodification of common attributes in what he labels “propertization.” Propertizing the Commons, just as with private sector elements, allows it to be better protected in law and for more open markets to obtain. But Commons are propertized without being privatized. The privatization of many aspects of what have historically been common assets has allowed rent to flow to those so fortunately situated to attain it. Propertizing Commons guarantees that rents will remain shared, but it still can put many parties at an economic disadvantage. Entry barriers to enjoying the goods and services of commons may be lower, but those that have the means to privatize such markets are still advantaged. Society remains unequal, and essentially unjust, insofar as such a two-tier system prevails. It’s better perhaps than the winner-take-all economy emerging at the moment, but it is hardly a guarantee of equal birthrights of land to everyone.

One can argue that capturing rents for the use of selected clienteles is certainly a step in the direction of restoring elements of the Commons. Designs such as these are what characterized the historic Georgist communities such as Arden, Delaware and Fairhope, Alabama. Are the schemes that Barnes proposes then any less Georgist? Some readers among the Georgist community deny that Barnes is a Georgist, and regard his proposals as moving farther away from a Georgist society. Insofar as rents are only selectively recouped and for selected populations, they divide people into selected Commons. How different are these from private marinas owned as cooperatives or country clubs owned by members? Professor Fred Foldvary, a widely read Georgist scholar, holds ideas about government and communities not much different.

In January, I was fortunate in being able to question Peter Barnes about the extent of his commitment to a Georgist utopia, however far removed from current reality one might sense it to be. He was very reassuring. The book itself pays homage to George in more than one spot, and in both a personal avowal and in signing my copy – “In honor of Henry George,” he confirmed his view that the ideas expressed in this book were not his final statement. Rather, they should be viewed as a means within current reach, a partial solution to what is a pervasive and daunting threat to the contemporary American polity. Given his druthers, it would appear that he too would prefer to see an across-the-board recovery of rents for the provision of public goods and services. But that isn’t within reasonable reach at present. Meanwhile the polity is in need of imminent if not drastic surgery.

So as land trusts, community gardens, spectrum rent auctions, and perhaps other public commodities continue slowly to gain legitimacy, the economy and the polity will continue to diversify in ways that may be closer to Peter Barnes’ vision than to that of Henry George. Nonetheless, Capitalism 3.0 brings within the scope of discourse the prospect of a Capitalism 4.0 that at some point might have an even stronger Georgist tone.