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Capitalism 3.0: A Guide to Reclaiming the Commons
From the cofounder of Working Assets comes a visionary plan to upgrade capitalism.
195 pages, Hardcover
First published January 1, 2006
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August 2, 2011
Barnes writes that today’s capitalism is structurally flawed and these flaws are bringing down the modern economy. By describing and enumerating two previous “versions” of capitalism; 1.0 (past) and 2.0 (present), Barnes is able to demonstrate that a major flaw of contemporary capitalism is a failure to “adequately value and manage the commons.” These public goods, including the atmosphere, water, oceans and other such things that are essential to sustainable human well-being cannot be privatized without serious injustices and market failures. Barnes’ “updated” version of capitalism (3.0) would recognize the commons as a “separate and distinct sector of the economy that deserves to be valued and ‘propertized’ – but not privatized.”
Robert Costanza reviews Barnes’ theory and agrees that Barnes’ solution of creating “trusts” to manage common property rights is the most effective, and efficient way of managing the flaws in capitalism.
Robert Costanza reviews Barnes’ theory and agrees that Barnes’ solution of creating “trusts” to manage common property rights is the most effective, and efficient way of managing the flaws in capitalism.
June 2, 2013
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.
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.
May 23, 2024
I wanted very badly to find a new philosophical Idea in this book, and I can't say I didn't. For environmentalist modes of taxation, this is a great start. My only problem was a lack of energy spent addressing questions I had about how "accountability to future generations" would work. I feel like the questions should be addressed with a more in-depth book, and this book was a great start.
November 1, 2008
This is a book that I started reading last year sometime but never finished before it was due back at the library. I enjoyed what I read of it, though, and the concepts that the author introduced have been floating around in my head lately as we experience our current market meltdown and people (myself included) are asking where we should go from here. I'd like to look it up again and actually read the whole thing this time. His main suggestions have to do with creating public trusts in order to protect things like the environment, the arts, etc. (I can't remember all the examples) that have very little protection under current corporate law, but that are important to the common good of a society. (Warning: the following summary is based on what I can remember from reading part of the book more than a year and a half ago, and may be mingled with ideas that I've picked up other places.)
He argues that the capitalism that we live with today was born in an era when resources were scarce for everyone, largely due to a lack of technology. It worked then because resources were universally difficult enough to obtain (and to process into useful goods) that growth of capital was always a good thing. Today we have the technology to rape the earth, and are doing just that because the capitalism we live with still values growth of capital above all else. It's written into our very laws.
He tells a number of stories of corporations that have been sued, and lost in court, for putting other interests (being nice to the earth, being nice to people, etc.) above the bottom line. Corporate law says that corporations must be operated in such a way as to do their very best to increase the value of the company so that as much money as possible gets sent back to the shareholders. Any other consideration is secondary to that goal. Even corporations that write other goals and priorities into their charters may be sued for not growing the company enough, and even if that doesn't happen, they're usually bought out in the end by large multinationals that have no qualms about slave labor or dumping of toxins, as long as it's not in the CEO's neighborhood.
The author, therefore, advocates setting up some legal protections for the commons. He uses (interestingly enough) the Federal Reserve Board as an example of an institution set up in our country to advocate for a specific piece of our civilization that's important to the common good: the smooth running of our country's economy. Current financial crisis aside, this board is set up in such a way that experts in that field advocate for that particular thing, with no real opportunity to personally benefit from the policies they advocate or don't advocate. The author suggests forming similar bodies to advocate for other sectors.
My list of GoodReads friends runs the political gamut, and I'm interested to hear other people's takes on these ideas. Please comment if you have anything to say!
He argues that the capitalism that we live with today was born in an era when resources were scarce for everyone, largely due to a lack of technology. It worked then because resources were universally difficult enough to obtain (and to process into useful goods) that growth of capital was always a good thing. Today we have the technology to rape the earth, and are doing just that because the capitalism we live with still values growth of capital above all else. It's written into our very laws.
He tells a number of stories of corporations that have been sued, and lost in court, for putting other interests (being nice to the earth, being nice to people, etc.) above the bottom line. Corporate law says that corporations must be operated in such a way as to do their very best to increase the value of the company so that as much money as possible gets sent back to the shareholders. Any other consideration is secondary to that goal. Even corporations that write other goals and priorities into their charters may be sued for not growing the company enough, and even if that doesn't happen, they're usually bought out in the end by large multinationals that have no qualms about slave labor or dumping of toxins, as long as it's not in the CEO's neighborhood.
The author, therefore, advocates setting up some legal protections for the commons. He uses (interestingly enough) the Federal Reserve Board as an example of an institution set up in our country to advocate for a specific piece of our civilization that's important to the common good: the smooth running of our country's economy. Current financial crisis aside, this board is set up in such a way that experts in that field advocate for that particular thing, with no real opportunity to personally benefit from the policies they advocate or don't advocate. The author suggests forming similar bodies to advocate for other sectors.
My list of GoodReads friends runs the political gamut, and I'm interested to hear other people's takes on these ideas. Please comment if you have anything to say!
July 16, 2018
Some 12 years after the book was written by Peter Barnes, the urgency of Barnes’ vision is stronger and more relevant than ever. As the clock ticks, not only is “Capitalism 2.0” widening inequality, destroying the natural world, devouring our natural resources, poisoning our planet, causing the current sixth mass extinction event, and making us miserable in a material-driven society dominated by corporations driven by profit, greed and constant growth—Barnes’ 3.0 model is based on addressing the dark side of capitalism by protecting our gifts of nature and shared commons in perpetuity. His radical notion is now more important than ever in our country’s history. As we have a duty to protect and pass these shared assets of nature and commons on to future generations in at least the same condition that we inherited them, if not better condition—then we must not continue to degrade and destroy them.
Barnes advocates for “propertizing” our commons, not privatizing them by charging corporations for polluting and degrading our ecosystems and setting up trusts to manage the natural assets. Socially responsible corporations aren’t enough Barnes argues, because it’s too little too late and corporations are constantly maximizing profits and growth, and producing externalities. Instead he argues for common property rights for the commons, managed through trusts – land trusts, water and groundwater trusts, public spaces, community gardens, air trusts, watershed trusts—that benefit all people and our commons for generations to come. Since corporations wield far too much power today, run the government, and destroy most of the natural systems upon which all life depends—we positively and undeniably need an economic system that will start protecting and preserving our natural commons, and at the same time work to give all citizens in the U.S. a chance at a good life, not just the top 5 percent. Barnes lays out a reasonable, rational plan to do both, starting now.
Barnes advocates for “propertizing” our commons, not privatizing them by charging corporations for polluting and degrading our ecosystems and setting up trusts to manage the natural assets. Socially responsible corporations aren’t enough Barnes argues, because it’s too little too late and corporations are constantly maximizing profits and growth, and producing externalities. Instead he argues for common property rights for the commons, managed through trusts – land trusts, water and groundwater trusts, public spaces, community gardens, air trusts, watershed trusts—that benefit all people and our commons for generations to come. Since corporations wield far too much power today, run the government, and destroy most of the natural systems upon which all life depends—we positively and undeniably need an economic system that will start protecting and preserving our natural commons, and at the same time work to give all citizens in the U.S. a chance at a good life, not just the top 5 percent. Barnes lays out a reasonable, rational plan to do both, starting now.
February 7, 2025
This is the second Econ book I’ve read that focuses on the concept of common wealth, it’s huge, mostly unrecognized value, it’s unremunerated appropriation by capital, and what we can do to change all that. More people need to be aware of this stuff and planning for the realization of at least some of these ideas. Barnes acknowledges that, while the capital side tends to dominate politics, there are windows of opportunity that open up every century for the commons to assert itself. There might be another such window open after the Trump reign and we need to be ready!
December 29, 2020
This is less of a book, and more of an outline for the author's vision of "propertizing" the commons. That being said, this is truly a revolutionary idea. Though I don't think there is any political will for a change of this magnitude and there are certainly downsides, I believe this idea would eventually create a truly equitable and just society in the long-term. Maybe in increments (I'm specifically thinking of some of Andrew Yang's policy ideas), something like this could become reality.
June 19, 2018
Somewhat idealistic but largely accurate in his analysis of capitalism and the reasons it contributes to its own timely destruction. Neoliberals get your (out)act together for the sake of a livable climate.
July 23, 2022
When up is down, and poverty is the norm of enriching equality, certainly a downgrade to Communism can be called an upgrade.
July 19, 2025
An important book but would be good to know if there are activist readers who are interested in lobbying on behalf of the author's message.
November 4, 2009
Barnes plantea una readaptación del capitalismo hacia un estilo más "humano", o tal vez debería decir "terrestre". Sobre las ventajas y desventajas de su solución, no puedo decir nada; sí sobre la excelente y rápida pintura que hace del capitalismo, sus fallas y su interacción con la democracia. Lo interesante es que su propuesta consiste mayormente en agregar jugadores a la economía, en lugar de tratar de modificar el sistema preexistente. En este sentido, es mucho menos utópico que otras propuestas. Es entusiasta, al estilo norteamericano, y transmite ese entusiasmo y las ganas de hacer algo para cambiar nuestra sociedad.
Se puede bajar en inglés desde acá
Se puede bajar en inglés desde acá
August 8, 2013
I found it difficult to engage with this book. It stated two core propositions that trouble me. The first is that the world should be more like America. Should it? I doubt that many in Europe would find that exhortation appealing. The second proposition is that Americans should be nicer to each other. I don't disagree with this as an objective, but I do wonder if it is at all feasible.
That is where the book arrives. there is a plea for a form of communitarianism - not quite laissez-faire capitalism, not quite outright communism, but a form of money making by nice people. I am afraid that I don't have much time for the Goldilocks School in economic theory. I suspect that few others do as well, which would explain why this book isn't exactly a big hitter.
That is where the book arrives. there is a plea for a form of communitarianism - not quite laissez-faire capitalism, not quite outright communism, but a form of money making by nice people. I am afraid that I don't have much time for the Goldilocks School in economic theory. I suspect that few others do as well, which would explain why this book isn't exactly a big hitter.
June 8, 2008
Short, pithy, bold - I recommend this. Not all the ideas are fleshed out completely, but that's not the point. It's a smart and creative attempt to think beyond capitalism in the age of ecological disaster.
November 29, 2013
Please, please, read this book in tandem with No One Make You Shop at Walmart by Tom Slee. If you read them both with an open mind, they should change the way you view our economic system. Barnes and Slee point us to a better, more fair, way.
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August 30, 2008This book was recomended by author William deBuys as part of the Rocky Mountain Land Library's "A Reading List For the President Elect: A Western Primer for the Next Administration."
September 30, 2008
Sounds great to me! We just need to make it happen. By the way, you can find the book online as a free download.
November 5, 2009
I recommend this book to any one interested in trying to understand why our economic system is failing. The author relates capitalism to a computer operating system in need of repair!
Displaying 1 - 17 of 17 reviews