Trusts, the Commons and Capitalism

The book is not new, but still a must-read classic. Great review below.

Book: Peter Barnes. Capitalism 3.0: Enriching Ourselves By Enhancing Our Commons, Berrett-Koehler, 2006.

Gus diZerega:

“His basic argument is deceptively simple. Our private well being is rooted in a foundation of common values, our common-wealth. This takes on three dimensions: nature, community, and culture. This commonwealth is “the dark matter of the economic universe – it’s everywhere, but we don’t see it.” (66) Taken together, these are the commons, the ecological and cultural water within which we human fish swim.

But modern institutions are blind to these values and so unintentionally parasitize them, weakening their vitality and turning them into private values where they can no longer perform the functions needed ultimately to guarantee even private well-being. Corporations in particular, but other modern institutions as well, are gradually destroying our common-wealth. To inject my own comment, in the modern world what is not visible theoretically does not exist. We are taught not to notice what does not fit our preconceptions. What does not exist is of course unimportant. There is no sense of humility, modesty, or mystery in this attitude, and the price we have paid for our arrogance and egoism is high and promises to get much higher.

Barnes initially illustrates his point by examining how trust and liquidity, both essential for economic success, are not properties of businesspeople, but of the culture within which they operate. For example, when a business goes public its share value grows 30% simply from increased liquidity, constituting a “socially created bonus.” (68) Throughout Capitalism 3.0 Barnes gives many more examples taken from nature, our communities, and our culture.

Unfortunately, in our present system of ‘Capitalism 2.0,’ the rights of capital trump all other values. To give an example of my own, while there is enormous concern among so-called “property rights defenders” over ‘takings,’ where regulation in the service of common values reduces the monetary income a person might make from land, there is a deafening silence over ‘givings’ where public effort or even the simple growth of society leads to increased financial value. ‘Givings” are invisible to these people.

Barnes illustrates corporate capital’s parasitical relationship to our common-wealth in a chart comparing Disney stories taken from the public domain and turned into enormous profit, and stories Disney has added to the public domain. There are 17 of the former, ranging from Aladdin to The Wind in the Willows. There are none of the latter, for whenever enough time elapses so a Disney story might enter the public domain, they get the law changed to protect their monopoly. Disney takes but never gives.

To preserve a long term environment good for both our common-wealth and our private-wealth, the commons should trump capital.

But how?

Trusts!!: The answer is in expanding and deepening the role of trusts in our society. Barnes recognizes the importance of institutionalized property rights in making a complex society possible and is wisely skeptical of politicians’ and bureaucratic administrators’ capacity to look out for the common good. But, as he points out, “Nothing requires them to be locked in profit maximizing hands.” (72) “Propertization” he emphasizes, need not be privatization.

Trusts are already designed to protect different kinds of commons, and have long proven their worth. But their full implications have not been explored. Among private citizens different kinds of trusts have been developed and perfected for beneficiaries where trustees are responsible for their protection. I myself am a trustee for education trusts for my nieces and nephew. At the government level Barnes describes the Alaska Permanent Fund as a successful state trust institution channeling a portion of Alaska’s petroleum income to all state residents.

As a key example, Barnes describes the Trebah Garden Trust in Great Britain. Trebah Garden is a wonderful beauty spot governed by a trust with over 1000 voting members. The photo at the top of this post is from the Trebah Trust. About it, he writes:

“If we think of the world as an assemblage of gardens – that is, of ecosystems in which humans play active roles – the Trebah model becomes extremely interesting. It illuminates both a process by which natural gifts can shift from private to common ownership, and an institutional model – the trust – for managing such gifts as permanent parts of the commons.” (83)

Trust managers must give their primary loyalty to beneficiaries, and are obligated to preserve the trust’s principle, even if they can disburse income derived from that principle. They are required to operate with full transparency so that beneficiaries can easily see what decisions are made, and why. In this respect they differ radically from both corporations and government, both of which generally fear transparency. In the case of trusts charged with preserving values indefinitely, each generation is obligated to pass them on undiminished to the next. These principles are enforceable by law.

There are many such trusts. The National Trust of England, Wales and Northern Ireland governs over 600,000 acres with a voting membership of over 3 million. It is over 100 years old. Scotland has a similar trust of its own. In the US there are over 1500 Trebah like units. The Nature Conservancy, America’s largest, while not democratically run like Trebah, is responsible for over 15 million acres (over 23,000 square miles). Common property trusts can cover a wide range of values, and Barnes describes two very successful ones near his home in northern California: the Marin Agricultural Land Trust and the Pacific Forest Trust. For more general information on land trusts in the US, see The Trust for Public Land.

I was particularly delighted by this section because Barnes had independently hit upon a model I had developed as a reform proposal for our grievously mismanaged national forests.

But for Barnes, Trusts are more than simply ways to preserve natural values, important as that is. They also offer a way to keep the commonwealth of a society, or of humanity as a whole, from being siphoned off into corporate coffers, or simply dissipated because it is not valued. Barnes thus picks up a challenge first addressed long ago by Henry George, that much of the value of land often has nothing to do with the owner’s actions and everything to do with the society wherein it is situated. Why, then, should the owner get all the gain and society pay all the price?

Economically efficient use of the commons for private purposes requires paying rent. Rent paid for use of the commons can be paid as dividends to members of society as a whole, which while benefiting all, would disproportionately benefit the poor who are most taken advantage of in this time of rampant crony capitalism and national kleptocracy. (97) As I read this part of Barnes’ analysis I was again surprised and delighted because I had explored similar themes in my own book Persuasion Power and Polity especially in Part III, a Theory of Contractual Federalism (249-359). Alas, for both myself and the ideas therein, the book was never reviewed. Barnes discussion will be reviewed many times. Maybe my own efforts will finally get some attention? A man can always hope.

But Barnes sees the implications of this model more broadly than I have, applying it across the board as an institutional alternative to the most troublesome ecological, social, and cultural challenges of our time. He has made what I regard as the vital conceptual breakthrough, freeing us from being trapped trying to solve serious problems while encased within institutions and ways of thinking that prevent us from doing so. Indeed, one of the most ambitious implications of his model is a way to create a truly long term institutional framework able to address the most frightening ecological issue of our time, global warming. That alone is enough to make the book valuable. But as I hope I have shown, there is even more there.”

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