Garrett Hardin first popularized the tragedy of the commons in 1968. in 2007, Peter Barnes proposes a solution: Capitalism 3.0 - building a "commons sector" to balance the "corporate sector."
THE TRAGEDY OF THE COMMONS
Simply, it means that individuals in a group/ society will be tempted to over-utilize unowned natural resources - the commons - in order to maximize their profit; but their actions will lead to a deterioration of the commons and a cost to the entire group. Wasting water, polluting air, over-grazing pastures, and other such "externalities" are the features of such behavior. Individuals do this because commons have no cost, and little governance.
CAPITALISM 3.0 (via the book's website)
Our current version of capitalismâ€"the corporate, globalized version 2.0â€"is rapidly squandering our shared inheritances. Now, Peter Barnes offers a solution: protect the commons by giving it property rights and strong institutional managers.
Barnes shows how capitalismâ€"like a computerâ€"is run by an operating system. Our current operating system gives too much power to profit-maximizing corporations that devour our commons and distribute most of their profit to a sliver of the population. And governmentâ€"which in theory should defend our commonsâ€"is all too often a tool of those very corporations.
Barnes proposes a revised operating systemâ€"Capitalism 3.0â€"that protects the commons while preserving the many strengths of capitalism as we know it. His major innovation is the commons trustâ€"a market-based entity with the power to limit use of scarce commons, charge rent, and pay dividends to everyone.
Capitalism 3.0 offers a practical alternative to our current flawed economic system. It points the way to a future in which we can retain capitalism's virtues while mitigating its vices.
SO WHAT DOES IT MEAN?
Congratulations! People are taking action to resolve the issues that have hounded humanity due to out limited perceptions about the results of our actions. It was Garrett, too, who said, "You cannot do only one thing". Capitalism 3.0 proposes an economic model that takes care of the other thing.
Capitalism 3.0 identifies the growing global unrest with capitalism's side-effects ("externalities") and suggests an economic solution. Within 5-7 years, we will be seeing more of this thinking in our economic textbooks. But while universities wait to tag along, here is one resource the common citizen and economist can self-learn from.
Capitalism 3.0
Reinventing the Commons
Trend Themes
1. Capitalism 3.0 - An economic model that proposes giving property rights to the commons and strong institutional managers as a practical alternative to our current economic system.
2. Commons Trust - A market-based entity proposed by Capitalism 3.0 to limit the use of scarce commons, charge rent, and pay dividends to everyone, offering a practical solution to the tragedy of the commons.
3. Global Economic Reform - Capitalism 3.0 identifies a growing global unrest with capitalism's side-effects and suggests economic solutions that retain capitalism's virtues while mitigating its vices, leading to a shift towards global economic reform.
Industry Implications
1. Environmental Management - Capitalism 3.0 proposes a revised operating system that protects the commons while preserving the many strengths of capitalism as we know it, leading to new business models and innovation opportunities in environmental management.
2. Finance - The proposed market-based entity, Common Trust, presents a new investment opportunity for finance professionals, and the shift towards global economic reform could lead to new financial regulations and opportunities for growth.
3. Education - Within 5-7 years, we will see more of this thinking in our economic textbooks, highlighting the need for educational institutions to adapt and create new programs that focus on global economic reform and sustainable business practices.