Drew Field
Direct Public Offerings

Capitalism 3.0: A Guide to Reclaiming the Commons by Peter Barnes, Berrett-Koehler Publishers, Inc., 2006


Peter Barnes and four friends started Working Assets Money Fund in 1983.  They asked me to be the fund manager’s securities lawyer and help them do a direct limited offering of its shares.  I very much enjoyed working with Peter on some innovative capital formation tools and admire his thinking and commitment.  This is what I got out of his book.


“Capitalism 2.0” names the problem that needs solving:  our economic system that relies on increasing consumption.  It is destroying nature, widening the gap between the few very rich and the many very poor, and failing to increase our happiness.  Peter shows that the solution will not come from government, because it is controlled by the persons causing the problem.   Corporate shareowners are also dismissed as a source of change.


The book’s subtitle is “A Guide to Reclaiming the Commons.”  The “commons” means all the tangible or intangible “things” that do not belong to an individual, a corporation or other private entity.  The commons belong equally to all individuals, including future generations.  Over the centuries, many things that once were in the commons have been taken as private property or used for private purposes.  The rest of us lose when a part of the commons is taken, such as with land and the airwaves.  We also lose when the commons are used for private purposes, such as the use of air and water to dispose of waste. 


What his book proposes, the “Capitalism 3.0” of its title, is that individual trusts be created to hold each element of the commons.  The trustees would not only protect the trust property for future generations but they would also collect fees for its use and distribute them as dividends to all U.S. residents.  The aggregate of the distributions from all these trusts could be enough to bring everyone above the poverty level. 


Peter has included newly created elements in the commons.  One that relates to our work is the existence of a regulated stock market.  He figures that it provides liquidity for corporations and the wealthy shareowners worth about $5 trillion.


The regulated stock market commons illustrates how a trust would work.  Publicly traded companies could be required to deposit up to ten percent of their shares as fees for the privilege of using the market.  The trust would receive and distribute dividends on these shares equally to everyone living in the United States.


This example can be continued to show the “devil is in the details” for the commons trust concept.  The U.S. stock market has been losing listings the last couple of years, as corporations choose the London Stock Exchange or other foreign stock markets.  Some argue that the cause is SEC regulation of publicly traded companies, particularly after the Sarbanes-Oxley law in 2002, together with the threat of class action or derivative lawsuits brought on behalf of investors.  Others say the flight for offshore public offerings is to avoid the high fixed commissions imposed by American investment bankers.  Having to turn over 10% of the shares to a trust could arguably result in near abandonment of the very commons that the trust is intended to preserve.


I believe there is a missed opportunity in Peter’s argument against a solution coming from shareowner action.  He shows that existing shareowners routinely vote with management.  What is missing is how that ownership structure could be changed, especially for younger businesses that are most likely to seek profitable new ways to solve social issues.  Our own work is in broadening the ownership of business and in building a more direct relationship between the owners and their stewards in management.  Peter places capitalism and community in conflict.  He suggests the trusts of commons as a way to serve the community, leaving capitalism to service individual acquisition and consumption.   We believe that businesses can market their ownership to their own communities, resulting in both service to the community and an investment return to the individual shareowners.


While Peter proposes a very major shift in our whole political economy, he also deals with “how-do-we-get-there-from-here.”  Research for the book found many existing trusts of commons, mostly for land and water use.  The suggestion for action now:


            “While we wait for an historic shift at the national level, we can

            build and experiment at lower levels.  We can test different kinds of

            trust, nonprofits, and informal associations, seeing how closely they

            can hew to commons principles.  Then, when history is ready for

            bigger changes, we’ll be ready too.”


A chapter on “What You Can Do” has suggestions for entrepreneurs, lawyers, economists, religious leaders and politicians -- what they can be doing now.  Then, we wait.  “Once or twice per century, there are brief openings during which noncorporate forces reign. . . . We must be ready when it comes to build a strong, self-perpetuating commons sector, not easily dismantled when the political wheel turns again.”


Capitalism 3.0 is a clear, well-thought-out analysis of the problems and a plan for protecting our world and society for future generations, while alleviating poverty.  Drawing upon John Rawls A Theory of Justice, Peter proposes the “predistribution of property,” to provide more people with a source of income, rather than the redistribution of income that is practiced through taxation and welfare.  However, predistributing assets into trusts means interposing an elite class to take care of the rest of us.  The trustees would manage the commons, for the benefit of humans and other creatures now and for all time to come.  Those of us being protected would have no direct participation in making policy or running the operations. 


Peter acknowledges the contribution of Louis O. Kelso, whose books are the subject of another of these commentaries.  Like Lou’s ESOP, CSOP and other stock ownership plans, Peter would place ownership of the commons in a trust, an institution sealed away from any participation by the persons it is intended to benefit.   Unfortunately, our history shows that institutions get twisted over time.  They need the continuous struggle with their constituency to stay within their principles and adapt to changing conditions.  Direct ownership, with democratic participation in decisions, clearly has a record of difficulties, disappointments and even disasters.  However, “It has been said that democracy is the worst form of government except all the others that have been tried.”  (Winston Churchill)