Beyond State Capitalism
The Commons Economy in our Lifetimes
By James Quilligan
Photo by TW Collins via Flickr, licensed under a Creative Commons Attribution, NonCommercial, No Derivatives license.
In considering the essential problem of how to produce and distribute material wealth, virtually all of the great economists in Western history have ignored the significance of the commons — the shared resources of nature and society that people inherit, create and utilize. Despite sharp differences in concept and ideology, economic thinkers from Smith, Ricardo, and Marx to Keynes, Hayek, Mises and Schumpeter largely based their
assumptions on the worldʼs seemingly unlimited resources and fossil fuels, their infinite potential for creating economic growth, adequate supplies of labor for developing them, and the evolving monoculture of state capitalism responsible for their provision and allocation. Hence, in the Market State that has emerged, corporations and sovereign states make decisions on the production and distribution of Earthʼs common resources more or less as a unitary system — with minimal participation from the people who depend on these commons for their livelihood and well-being. Because our forbears did not account for the biophysical flow of material resources from the environment through the production process and back into the environment, the real worth of natural resources and social labor is not factored into the economy. It is this centralized, hierarchical model that has led to the degradation and devaluation of our commons.
Over the past seventy years especially, the macroeconomic goals of sovereign states —
for high levels and rapid growth of output, low unemployment and stable prices — have
resulted in a highly dysfunctional world. The global economy has integrated dramatically
in recent decades through financial and trade liberalization; yet the market is failing to
protect natural and social resources, the state is failing to rectify the economic system,
and the global polity is failing to manage its mounting imbalances in global resources
and wealth. Without a ʻunified field theoryʼ of economics to explain how the commons is
drastically undervalued and why world society is amassing huge debts to the
environment, the poor and future generations, policymakers and their institutions lack
the critical tools and support to address the massive instability that is now gripping the
global economy. Businesses and governments are facing the Herculean challenge of
reducing climate change and pollution while alleviating poverty without economic growth
— a task for which the Market State is neither prepared nor designed to handle.
Meanwhile, the essential ideals of state capitalism — the rule-based systems of
government enforcement and the spontaneous, self-regulating social order of markets —
are finding direct expression in the co-governance and co-production of common goods
by people in localities across the world. Whether these commons are traditional (rivers,
forests, indigenous cultures) or emerging (energy, intellectual property, internet),
communities are successfully managing them through collaboration and collective
action. This growing movement has also begun to create social charters and commons
trusts — formal instruments which define the incentives, rights and responsibilities of
stakeholders for the supervision and protection of common resources. Ironically, by
organizing to protect their commons through decentralized decision-making, the
democratic principles of freedom and equality are being realized more fully in these
resource communities than through the enterprises and policies of the Market State.
These evolving dynamics — the decommodification of common goods through
co-governance and the deterritorialization of value through co-production — are
shattering the liberal assumptions which underlie state capitalism. The emergence of
this new kind of management and valuation for the preservation of natural and social
assets is posing a momentous crisis for the Market State, imperiling the functional
legitimacy of state sovereignty, national currencies, domestic fiscal policy, international
trade and finance, and the global monetary system. Major changes are on the way. The
transformation of modern political economy will involve reconnecting with — and
reformulating — a pre-analytic vision of the post-macroeconomic global commons.
Another world is coming: where common goods are capped and protected; a
portion of these resources are rented to businesses for the production and consumption
of private goods; and taxes on their use are redistributed by the state as public goods to
provide a social income for the marginalized and to repair and restore the depleted commons.
Although peopleʼs rights to their commons are often recognized and validated in smaller
communities, scaling these lessons to the global level will require a new dimension of
popular legitimacy and authority. The world community is rapidly evolving a sense of
social interconnectivity, shared responsibility and global citizenship, yet the sovereign
rights of people to the global commons have not been fully articulated. In declaring our
planetary rights for these commons, we shall be confronting many decisive questions:
(1) Are modern societies prepared to create a framework in which the incentives
behind production and governance are not private capital and debt-based
growth, but human solidarity, quality of life and ecological sustainability?
(2) How soon — and how peacefully — will the subsystems of the Market State
integrate their structures of value-creation and sovereign governance with the
greater biophysical system of ecological and social interdependence?
(3) Can the global public organize effectively as a third power to develop checks
and balances on the private and public sectors and establish the resource
sovereignty and preservation value needed for a commons economy?
These issues will be filtering into mainstream discussion over the next two decades.
Already the system of state capitalism is breaking down, threatening the entire planet,
its institutions and species. When this collapse can no longer be contained and a global
monetary crisis ensues, world society will have the choice of creating an economic
system that follows the universal laws of biophysics and commons preservation — or
accepting a new version of 18th-20th century mechanistic economics, obliging humanity
to continue living off the common capital of the planet under corporate feudalism and
über-militaristic regimes. Our decision will likely come down to this: global commons or
global autarchy. As an economist, I donʼt pretend to speak for the conscience of
humanity; but as a human being, my heart tells me that we shall see the beginnings of a
commons economy in our lifetimes. The long-forsaken global commons are beckoning.
James Bernard Quilligan has been an analyst and administrator in the field of international development since 1975. He has served as policy advisor and writer for many international politicians and leaders, including Pierre Trudeau, François Mitterand, Edward Heath, Julius Nyerere, Olof Palme, Willy Brandt, Jimmy Carter, and His Royal Highness Prince El Hassan of Jordan.
Posted July 30, 2010
As the result of slow growth
As the result of slow growth in economy. Businesses stop expanding, employment falls, unemployment rises, and housing prices decline. The situation at the financial market is still unstable. During the crisis period millions of people have been recessed and some professions have become not required at all. We’ve tried to rate 10 of the most required and 10 of the least required professions.Crisis forces to save money. Business’s success is crucial.
Transfinancial Economics...
I agree with the sentiments of the article. It is really all question of how to get from A to B. Thats the hardest part,and that is where my evolving project of Transfinancial Economics comes into play. Recently, it was subject to a talk at an International Science Conference. See link
http://www.iiis2010.org/iceme/invitedsession/InvitedSessionPre.asp?vc=32
Here, is some introductory data on TFE…
i) TFE is a transitional system towards the ultimate aim of a moneyless world.
http://www.p2pfoundation.net/Transfinancial_Economics
ii) Phase I TFE could be undertaken very quickly by special banks concerned with sustainability, and green products/services. These banks are called Facilitator Banks, or FBs (term not yet used in the entry on this subject at the p2pfoundation).With so-called grant interest as an incentive they would be able to electronically create new non-repayable money (like governments but be tracked, and monitored by the Central Bank, or some other body to prevent fraud) for some project which could in part also include investors using earned money ofcourse. It is similiar to the concept of Advanced Market Commitment, or AMC. FBs would have powers to create subsidies, and other ways to ease finance in some project (especially those with little, or no obvious commercial incentive but have high humanitarian, environmental, and sustainable value so to speak). Objective checks on the capacity of the relevant suppliers of products, and services would be undertaken to ensure that there is no disallocation of resources which could lead to serious rises in the free market price as well as shortages. If necessary investment by FBs could be made to increase capacity where, and when necessary.
iii) Phase II TFE involves the gradual introduction of new, or upgraded computers, and new computer programming into the banking system. FBs (and the normal banking sector) would start to in part to monitor the volume, and sales of products,and services directly from the real economy. If there is any serious problems of inflation these could be subject to an instant electronic price controls. Moreover, if this leads to a serious loss in profit to a business this would be instantly compensated by new non-repayable money created electronically to the relevant bank account(s). However, every attempt would be made to avoid serious price distortions.
Taxes, and interest would also be gradually phased out altogether. Interest would be paid for by an independent public body.
iv) Phase III TFE is the full global introduction of electronic monitoring of goods, and services. The key aim of this is not only to keep inflation in check if necessary but also to have highly accurate data of how much in the way of real resources are being used up on our “small” planet. Such knowledge will become increasingly important as this will give growing green businesses (subsidised mainly by FBs rather than by governments) to make the best use of limited resources. Furthermore, we would unlike now have a far more adbvanced understanding of the mechanics of the economy itself.
At this stage, taxes, and interest would no longer exist.
v) During Phase II, and Phase III TFE there would be a huge increase in automation. This would ultimately end the need for wage slavery. With the help of carefully targeted subsidies virtually all businesses would have become responsible as far as the environment, and sustainability is concerned. At the same time, there would be unemployment on a huge scale. But people would be able to indulge in “leisure-like” pursuits, and receive a form of financial benefit created by new non-repayable money. NGOs would become far more powerful, and influential in society, and would spearhead changes on a mass scale to create a new, saner world no longer based on greed, and money. They would be able to challenge centralized power structures as never before, and will find getting grants alot easier to come by. The upshot of all this is a moneyless world but one in which open democracy, and respect for universal human rights acts as the basis of an evolved technocratic world..
Anyway, food for thought..
Transfinancial Economics...
I agree with the sentiments of the article. It is really all question of how to get from A to B. Thats the hardest part,and that is where my evolving project of Transfinancial Economics comes into play. Recently, it was subject to a talk at an International Science Conference. See link
http://www.iiis2010.org/iceme/invitedsession/InvitedSessionPre.asp?vc=32
Here, is some introductory data on TFE…
i) TFE is a transitional system towards the ultimate aim of a moneyless world.
http://www.p2pfoundation.net/Transfinancial_Economics
ii) Phase I TFE could be undertaken very quickly by special banks concerned with sustainability, and green products/services. These banks are called Facilitator Banks, or FBs (term not yet used in the entry on this subject at the p2pfoundation).With so-called grant interest as an incentive they would be able to electronically create new non-repayable money (like governments but be tracked, and monitored by the Central Bank, or some other body to prevent fraud) for some project which could in part also include investors using earned money ofcourse. It is similiar to the concept of Advanced Market Commitment, or AMC. FBs would have powers to create subsidies, and other ways to ease finance in some project (especially those with little, or no obvious commercial incentive but have high humanitarian, environmental, and sustainable value so to speak). Objective checks on the capacity of the relevant suppliers of products, and services would be undertaken to ensure that there is no disallocation of resources which could lead to serious rises in the free market price as well as shortages. If necessary investment by FBs could be made to increase capacity where, and when necessary.
iii) Phase II TFE involves the gradual introduction of new, or upgraded computers, and new computer programming into the banking system. FBs (and the normal banking sector) would start to in part to monitor the volume, and sales of products,and services directly from the real economy. If there is any serious problems of inflation these could be subject to an instant electronic price controls. Moreover, if this leads to a serious loss in profit to a business this would be instantly compensated by new non-repayable money created electronically to the relevant bank account(s). However, every attempt would be made to avoid serious price distortions.
Taxes, and interest would also be gradually phased out altogether. Interest would be paid for by an independent public body.
iv) Phase III TFE is the full global introduction of electronic monitoring of goods, and services. The key aim of this is not only to keep inflation in check if necessary but also to have highly accurate data of how much in the way of real resources are being used up on our “small” planet. Such knowledge will become increasingly important as this will give growing green businesses (subsidised mainly by FBs rather than by governments) to make the best use of limited resources. Furthermore, we would unlike now have a far more adbvanced understanding of the mechanics of the economy itself.
At this stage, taxes, and interest would no longer exist.
v) During Phase II, and Phase III TFE there would be a huge increase in automation. This would ultimately end the need for wage slavery. With the help of carefully targeted subsidies virtually all businesses would have become responsible as far as the environment, and sustainability is concerned. At the same time, there would be unemployment on a huge scale. But people would be able to indulge in “leisure-like” pursuits, and receive a form of financial benefit created by new non-repayable money. NGOs would become far more poweful, and influential in society, and would spearhead changes on a mass scale to create a new, saner world no longer based on greed, and money. They would be able to challenge centralized power structures as never before, and will find getting grants alot easier to come by. The upshot of all this is a moneyless world but one in which open democracy, and respect for universal human rights acts as the basis of an evolved technocratic world..
Anyway, food for thought..
Dear James, thank you for
Dear James,
thank you for your great work on the commons.
I am hoping I am not nit picking but Marx was fascinated by the commons and wrote extensively about commons.
For example he noted that the Earth should be commons, “From the standpoint of a higher socio-economic formation, the private property of particular individuals in the earth will appear just as absurd as the private property of one man in other men. Even an entire society, a nation or all simultaneously existing societies taken together are not the owners of the earth. They are simply its possessors, its beneficiaries and have to bequeath it in an improved state to succeeding generations, as boni patres familias. (good heads of the household)” (Capital, Vol. III, p. 911).
He looked at how enclosure had destroyed the commons and he argued against the state controlling the economy in a future socialist society based on the creative commons.
http://www.marxist.com/intellectual-property-rights221105.htm is quite a good article
Any way the main point is to promote the commons as a solution, which you do but I thought you might be interested that Marx is perhaps the one ‘economist’ from the past who was aware of the concept.
Yes and No
Derek, I very much appreciate your reaching out to make this point. Yes, you’re quite right — Marx was definitely tuned into the commons. He really did see it. And you chose a particularly good passage to illustrate this.
But that’s not quite what I was getting at in the first paragraph of this article —
“Despite sharp differences in concept and ideology, economic thinkers from Smith, Ricardo, and Marx to Keynes, Hayek, Mises and Schumpeter largely based their assumptions on the world’s seemingly unlimited resources and fossil fuels — their infinite potential for creating economic growth, adequate supplies of labor for developing them, and the evolving monoculture of state capitalism responsible for their provision and allocation.”
I didn’t lump Marx in with these other economists simply for shock value — I actually do see them all locked into a similar paradigm. You’ll note that I didn’t say that Marx was explicitly endorsing these positions about resource management in the emerging Market State. I had something else in mind: which is that in critiquing the basic elements of industrial capitalism, Marx had to engage them on their own terms. My implication is that because Marx ‘largely based his assumptions’ on the capitalist practices and principles of his day in order to refute them through his chosen leverage point of the commons (i.e, material and social labor), this effectively minimized or sidetracked what he clearly understood about the essential importance of the commons in earlier societies.
I deeply appreciate Marx’s insights about the pre-capitalist commons and his desire to link modern society back with those modes of production. But I’m sure you’ll agree that the metaphor of the commons only appears in selected places in Marx’s writings and that the commons is not a consistent thread that unifies his theory. If the commons were truly integrated into Marx’s philosophy — rather than just his labor theory of value, which is certainly a part of the material and social commons but largely excludes a range of other commons (natural, genetic, intellectual, cultural and solar) — Marxism may have been able to lead modern societies into a stage of political economy beyond state capitalism, in which case I would have no business in labeling Marx as a classical economist along with Smith and Ricardo. Instead, as history has shown, Marxism was not a transformational principle of the biophysical commons, even though it identified one very important dynamic of the commons which was eventually co-opted by the Market State. (No fault of Marx, who was way ahead of his time. A century-and-a-half ago, who could have anticipated the extent of today’s global technology, communications, Freudian-inspired marketing techniques, mass consumerism, global political and economic integration, and pollution and climate change as intervening factors in the extraction and production of material resources and the suppression of social production?)
By putting Marx in the same box as the other economists, what I was implying is this. Marx offered no specific critique of the fossil fuel economy — nor did he seem to have deep sensibilities around planetary sustainability and the carrying capacity of the global commons, as did Malthus and Mill, neither of whom I included in the list. Although he sometimes spoke about the worker literally wresting his life-force from the natural commons of Earth, Marx’s sense of the environment was limited to its value in the labor process. Marx was acutely aware of the economic growth imperative, but mainly as a social justice issue in the labor-capital problématique rather than as an issue of the ecological limits to growth — the result of which is that the labor movement, untethered from the broader biospheric commons of which it is a part, has now become a direct part of the apparatus of resource expropriation and capital accumulation in modern society.
By criticizing state capitalism primarily in terms of the ownership of production, Marx did not really transcend the operating premises of state capitalism — which of course led his followers to attempt to implement forms of Marxism through a centralized state with a capitalist mode of production (i.e., the Soviet Union’s command economy or Communist China’s ‘capitalism with Chinese characteristics’). Hence, Marx’s work was riddled with this contradiction: on one hand, he was capable of calling for non-ownership of the Earth and its commons, but on the other hand he firmly insisted that workers first have ownership of the means of production (whether in a financial or non-financial context). This ambiguity around ownership undermined his larger theory. Marx’s idea of transcending the ownership of production was not simply a difference in the historical stages of commons resource management — that workers would first have to own the means of production before they could liberate society into the non-ownership stage of a future commons society. Because his theory did not encompass all aspects of the commons, particularly the biophysical relevance of resources in the production process, he could not formulate how ownership would lead to non-ownership. Since Marx’s commentary on the commons was mainly preanalytic and pre-capitalist, he never demonstrated how his theory of labor would actually provide the means of liberating the contemporary or future commons. In Marx’s writings, the commons is always in the background but never in the foreground. His elaboration of the commons was simply not comprehensive enough to underpin his labor theory of value, which ultimately weakened the utility of his brilliant observations as operational constructs.
So, by including Marx in this list of major Western economists who ‘dropped the ball’, what I’m suggesting is that Marx was unable to articulate a theory of the commons sufficient to underpin his critique of state capitalism, and this, in turn, led to the reification of the very assumptions about resource management in capitalist society that he was criticizing. While Marx’s great insight was that labor is embedded in the commons, his awareness of the biosphere was limited to material and social resources. In deriving his major ideas on the production process directly from the capitalist system instead of from the broader commons, Marx’s focus was primarily on the ownership of production, rather than the trusteeship of co-production and co-governance in a commons-based society. Today, we are recognizing that the commons is much broader than just labor, which is why the co-production of the commons has been emerging as such a vibrant phenomenon beyond the clutches of the Market State. And that’s really my basic point in mentioning Marx in this passage.
Anyway, Derek, thanks for bringing this up. Marx’s understanding of the commons is still essential, but needs to be updated in terms of the present state of the world, its political economy, global social disparities, the climate crisis, multilateralism, and the emerging governance of the global commons. But I’m afraid that progress in developing a transformative economic model has been painfully slow and misleading. Most of the contemporary attempts at ‘green economics’, ‘natural capitalism’, ‘conscious capitalism’ and ‘climate prosperity’ that I’ve seen are simply variations of libertarian capitalism. What this suggests, I think, is the need for a comprehensive theory of the developmental stages of the commons.