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James Quilligan: Beyond State Capitalism: The Commons Economy in our Lifetimes

August 11, 2010

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By **James Quilligan**

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 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. Hence, in the Market State that has emerged, corporations and sovereign states make decisions on the production and distribution of Earth’s 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 ‘unified field theory’ 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.

The transformation of modern political economy will involve reconnecting with—and reformulating—a pre-analytic vision of the post-macroeconomic global commons.

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 that 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 people’s 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?

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.

(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 don’t 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.

Copyright 2010 James Quilligan

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This post originally appeared at On the Commons.

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.

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