This article was adapted from the book ‘Capitalism 3.0’, by American social entrepreneur Peter Barnes.
I'm a businessman. I believe society should reward successful initiative with profit. At the same time, I know that profit-seeking activities have unhealthy side effects. They cause pollution, waste, inequality, anxiety, and confusion about the purpose of life.

I'm also a liberal, in the sense that I'm not averse to a role for government in society. Yet history has convinced me that representative government can't adequately protect the interests of ordinary citizens. Even less can it protect the interests of future generations, ecosystems, and nonhuman species. The reason is that most - though not all - of the time, government puts the interests of private corporations first. This is a systemic problem, not just a matter of electing new leaders.

If capitalism as we know it is deeply flawed, and government is no savior, where lies hope? For years the Right has been saying that government is flawed and that only privatization, deregulation, and tax cuts can save us. For just as long, the Left has been insisting that markets are flawed and that only government can save us. The trouble is that both sides are half-right and half-wrong. They're both right that markets and state are flawed, and both wrong that salvation lies in either sphere. Is there a missing set of institutions that can help us?

I think there is, and that these institutions lie in the realm of common wealth.

Our Common Wealth

Everyone knows what private wealth is, even if they don't have much of it. It's the property we inherit or accumulate individually, including fractional claims on corporations and mutual funds. In the United States, the top 5 percent of Americans owns more of this treasure than the bottom 95 percent.

But there's another trove of wealth that's not so well-known: our common wealth. Each of us is the joint recipient of a vast inheritance. This shared inheritance includes air and water, habitats and ecosystems, languages and cultures, science and technologies, social and political systems, and quite a bit more.

Common wealth is like the dark matter of the economic universe - it's everywhere, but we don't see it. Despite its invisibility, the value of this common wealth is immense. Though most of it isn't priced in markets, economists like Robert Costanza have calculated that it's worth more than all private wealth combined. In other words, most of what we cherish, we share.

It's time to notice our shared gifts. Not only that, it's time to name them, protect them, and organize them. The practical question is how.

The Evolution of Capitalism

As our economic system evolved, two parallel threads emerged: the ascent of private corporations and the decline of the commons.

In the beginning, the commons was everywhere. Humans and other animals roamed around it, hunting and gathering. Like other species, we had territories, but these were tribal, not individual.

About ten thousand years ago, human agriculture and permanent settlements arose, and with them came private property. Rulers granted ownership of land to heads of families (usually males). Often, military conquerors distributed land to their lieutenants. Titles could then be passed to heirs - typically, oldest sons got everything. In Europe, Roman law codified many of these practices. Still, many commons remained, including shared pastures, woodlands and streams.

Around the 17^th century, local gentry began fencing off common lands and converting them to private holdings. Impoverished peasants then drifted to cities and became industrial workers. Landlords invested their agricultural profits in manufacturing, and modern times, economically speaking, began.

When Adam Smith wrote The Wealth of Nations in 1776, there were barely a handful of corporations in Britain or America. The dominant form of business was the partnership, in which small groups of people known to each other ran businesses they co-owned. In the public's mind, as in Smith's, the corporate form - in which managers sold stock to strangers - was inherently prone to fraud.

As the scale of enterprise grew, however, partnerships proved unable to aggregate enough capital. The great advantage of corporations was that they could raise capital from strangers. In this, they were aided by laws limiting shareholders' liability to the amounts they had invested.

By the 19^th century, corporations could live forever, engage in any legal activity, merge with or acquire other corporations, and enjoy all the legal rights of real persons. By the 21^st century, their power - both economic and political - stretched worldwide.

This might be well and good, were it not for three things. First, the corporation isn't a real person; it's an automaton designed to maximize profit for shareholders. It externalizes as many costs as it possibly can, not because it wants to, but because it has to. It never sleeps or slows down. And it never reaches a level of profit at which it decides, ‘This is enough. Let's stop here.'

The second difficulty is that, as noted earlier, these corporations deliver most of their profits to a small minority of the population. It's no wonder, then, that as GDP grows, so does wealth inequality.

The third difficulty is that, in spite of their prodigious capabilities, these corporations aren't making us any happier. In fact, their manic focus on selling us stuff we don't need - thneeds, as Dr. Seuss called them in The Lorax - actually distracts us from truer paths to happiness.

Sometime around 1950, capitalism entered a new phase. Until then, poverty was a widely shared American experience. Wages were low, hours were long, and unemployment was a wolf at almost every door.

After around 1950, America became what John Kenneth Galbraith called an affluent society. There's virtually no limit to what corporations can produce; their problem is finding buyers. A sizeable chunk of GDP is spent to make people want this unneeded output. And credit is lavishly extended so they can buy it.

This new phase of capitalism turned old scarcities on their head. In pre-affluent times, our chief scarcity was goods. It thus made sense to sacrifice other things in pursuit of goods, and capitalism was masterful at doing this.

Today our scarcities are different. Among the middle classes, the top scarcities, I'd say, are time, companionship, and community. Among the poor, there remains a lack of goods, but not due to a shortage of production capacity - it's due to the poor's inability to pay. The critical scarcity here, in other words, is income.

Similarly, in the early capitalist era, land, resources, and places to dump wastes were abundant; aggregated capital was the scarcest factor. That's why rules and practices developed that put capital above all else. In the 21st century this is no longer the case. As economist Joshua Farley has noted, ‘If we want more fish on our dinner plates, the scarce factor isn't fishing boats, it's fish.'

Rebuilding the Commons

The solution to capitalism's failings is to add a commons sector to balance the corporate sector. The new sector would supply proxies for unrepresented stakeholders: future generations, pollutees, and nonhuman species. It would offset the corporate sector's negative externalities with positive externalities of comparable magnitude.

If the corporate sector devours nature, the commons sector would protect it. If the corporate sector widens inequality, the commons sector would reduce it. If the corporate sector turns us into self-obsessed consumers, the commons sector would reconnect us to nature, community, and culture.

To be sure, building an economic sector is a formidable task. Fortunately, the commons sector needn't be built from scratch; it has an enormous asset base just waiting to be claimed - the commons itself, the gifts of nature and society we inherit and create together. All we need to do is organize those gifts in ways that protect them from corporate predation.

Trusteeship of Creation

Gifts of nature, such as ecosystems, habitats and non-human species, are the most threatened part of the commons today. Morally, we have a duty to preserve these irreplaceable gifts, a duty we aren't fulfilling. One way we might fulfill it is to place such gifts in trust.

Trusts are centuries-old institutions devised to hold and manage property for beneficiaries. Neither trusts nor trustees may act in their own self-interest; they're legally obligated to act solely on behalf of beneficiaries. The beneficiaries of commonly-held trusts would be future generations and all living citizens equally.

With enough such trusts, what are now unpriced externalities would become property rights under accountable management. When corporations want to pollute, they'd have to buy permits from a trust. The price of pollution would go up; corporate dumping would go down. If the trust pays dividends, income would flow to all. Non-human species would flourish; inequality would diminish. And government wouldn't be enlarged - our economic engine would do these things on its own.

Expanding Our Birthrights

Thomas Jefferson, in drafting the Declaration of Independence, called life, liberty, and the pursuit of happiness gifts from the Creator that can't be taken away - in other words, birthrights. The Constitution further guaranteed such birthrights as free speech, due process, habeas corpus, speedy public trials, and secure homes and property. Our birthrights today include the rights to non-discriminatory treatment, free public education, collective bargaining and security in old age. They can be thought of as rights necessary for the pursuit of happiness.

We're now at the point where, economically speaking, we can afford to go further. Without great difficulty, we could add three new birthrights to our economic operating system: the right of every adult to property income, the right of every child a start-up stake, and the right of all to affordable medical care. Our ability to add these birthrights isn't a matter of economics, but of attitude and politics.

Why attitude? Americans suffer from a number of confusions. We think it's ‘wrong' to give people ‘something for nothing,' despite the fact that corporations take common wealth for nothing all the time. We believe the poor are poor and the rich are rich because they deserve to be, but don't consider that millions of Americans work two or three jobs and still can't make ends meet. Plus, we think tinkering with the ‘natural' distribution of income is ‘socialism', or ‘big government', or some other manifestation of evil, despite the fact that our current distribution of income isn't ‘natural' at all, but rigged from the get-go by maldistributed property rights.

By distributing income from common trusts, we could give every American some property income without taxing or redistributing private income. By creating a Children's Opportunity Fund financed from end-of-life repayments back to society, we could make every baby a trust fund baby. And by pooling our health risks universally, as Canada does, we could protect every American from the rising cost of private health care.

A Way Forward

Earlier, I noted that corporations dominate American government most, but not all, of the time. Once or twice per century, there are brief openings during which non-corporate forces reign. I think we are approaching such an opening again.

When that opening comes, we must be ready to build a strong, self-perpetuating commons sector that can't easily be dismantled when the political wheel turns again.

Being ready then means getting busy now. We should, first of all, start noticing and talking about our common wealth. Whenever we see it, we should point to it and let the world know to whom it belongs. We should do this locally, regionally and nationally.

Second, we should demand more birthrights and property rights than we have now. Rights that belong to everyone. Rights built into our operating system. Rights that protect future generations as well as our own.

Third, we should imagine and design multiple pieces of the commons sector - that is, organized forms we want the commons to take (see ‘What's in the commons sector' below). We should build and test our models wherever possible, starting locally and working up.

What's nice about building the new commons sector is that we can do it one piece at a time. We needn't shut the economy down or delete the old operating system before installing a new one. Indeed, we're not even replacing most of the old operating system, which is fine as it is. Rather, we're adding new bits of code that allow for a gradual and safe transition.

These add-ons will curb our current system's unchecked excesses. What's also nice, however, is that not everything will change. Winners in the marketplace will still earn rewards. Government won't over-regulate our private lives or businesses. Nobody's private property will be expropriated. Markets will remain dynamic.

In short, by adding a new commons sector, we can preserve capitalism's virtues while mitigating its vices. All Americans will benefit from the health of corporations and from the health of nature and our communities.

What's In The Commons Sector

Commons institutions like these could balance private corporations.

Municipal wi-fi. Cities are starting to build high-speed wireless networks the way they once built streets. When most Americans can link their phones, computers and TVs to such networks, we'll no longer be hooked to corporate cable, telephone or media companies

Sky trusts. State, regional and federal ‘sky trusts' could reduce greenhouse gas emissions, make polluters pay, and divide much of the income among all citizens, one person, one share.

A spectrum trust. A spectrum or airwaves trust could reduce the influence of corporations on our democracy. Broadcasters would pay for their licenses, which they now receive free, with revenue going to political candidates for the purchase of TV and radio ads.

A global atmosphere trust. A global atmosphere trust would be governed by a board of trustees and a general membership consisting of all signatory nations. The trustees would decide, based on peer-reviewed scientific evidence, where to set yearly global caps on greenhouse gas emissions, and issue tradable emission permits up to that year's limit. They would make decisions by majority vote, with no vetoes.