During inspiring discussions with Japanese economists, we came up with the idea of ‘commonism’: That would be defined as a market economy that is based on the commons as fundamental form of appropriation, and not private property. However, later I noticed that the term is already being used in a different way, namely referring to a radical alternative to capitalism that also eschews market mechanisms, especially prices and money. This was not our idea, which can be summarized in Hirokazu Takizawa’s (Chuo University) wording as ‘markets and institutions’. This means that there is a wide range of possible forms of market economy, with capitalism only as the one that has become hegemonic since the 19th century. ‘Commonism’ rejects capitalism, as we do, but throws the baby out with the bathwater, also eschewing the market. We envisage a market economy with commons as fundamental institutions. I suggest referring to this as ‘commoning market economy’. This term avoids one problem with the term commons which often confuses the institution with the underlying resource, such as a fishing commons. If we approach commoning as a process, this makes clear that resources are endogenous and result from institutional creativity. In fact, this is also true for natural resources: We can only use them in an institutionalized way, and some institutions may eventually destroy them, others sustain them.
The expression ‘commoning market economy’ refers to a fundamental point that defines the differences with other views on commonism. This is that the market itself is seen as a commons, which is probably surprising to many, but has been seminally posited by Mill in his term ‘community of advantage’, picked up by Robert Sugden. Consider the following. The division of labour enhances the productivity of everyone and allows to fulfill human needs, thus creating a joint gain over a state without such a division. Markets are complex systems of cooperation in which networks of positive externalities provide the fertile ground for this productivity: Hence, this cannot be reduced to any individual contribution exclusively. Their material manifestation are cities: As urban economists have argued for long, markets co-evolve with cities because the spatial concentration fosters the emergence of the positive externalities of living and working together in spatial proximity. Now, if we look at the gains that are individually appropriated, they are caused by this collective pattern of advantages, and not just by individual skill and effort. In this sense, the market is a commons which benefits everyone. However, the problem is that these benefits are individually appropriated, as determined by the capitalist institution of private property: The people living in the city have higher income than the people living in remote areas. The classical expression of this is the land rent: Owners of land in the cities appropriate gains that in no way relate to their own skills and efforts. But the same applies for all other gains caused by spatial patterns in cities, such as enhanced flows of knowledge. Hence, markets with exclusive individual appropriation of gains results in distributional inequalities and eventually distributional conflict. Similarly, individual appropriation will eventually undermine fair and equal competition as this strives at monopolizing the gains from collective enhancement of productivity. In other words, markets manifest an inherent tendency to erode the conditions for their productive powers: This may be called the ‘Tragedy of the market commons’. What is the solution?
Clearly, the solution cannot be to abolish markets but to ‘commoning markets’. On this idea, early modern Japanese scholars and businesspeople have contributed important insights, as they reflected upon the economic practices on traditional markets and their transformation by the transition to capitalism. One of the key ideas, already present in traditional merchant ethics, is that markets require the sharing of business opportunities with others. A key thinker who systematized this idea was Shibusawa Eichi (during our stay, my wife, expert on Japanese business, and I visited the Shibusawa memorial museum and enjoyed the explanations offered by the director). This so-called ‘father of Japanese capitalism’ in fact coined his own alternative term (gapponshugi 合本主義 instead of shihonshugi 資本主義), which emphasizes the cooperative and public nature of the shareholding corporation and stock markets. His Confucian business ethics called for creating opportunities for profit enjoyed by competitors that would eventually also nurture own prosperity. Accordingly, he was a sharp critic of the emerging Zaibatsu of his times, which he saw as monopolizing the market, and amazingly created about 500 companies in his lifetime engaging many other businesspeople.
Coming back to the example of cities, commoning the market can work via various institutional forms. As said, we can approach the joint advantages of cities as spatially generated rents of positive externalities. Hence, as John Collier has proposed in his perspective on transforming capitalism, we can envisage a tax system that redistributes those rents (similar to land rent) in favour of poorer regions. This model is different from income taxation as it directly addresses the sources of the distributional inequalities and transfers the revenue to those who suffer from the disadvantage. This illustrates a general point: Commoning the market means to approach the market as a social technology, and not as a Hayekian transcendental power governing society. The market is a tool that is designed by institutions.
The market as commons presupposes another important institutional condition, which is Universal Basic Income. This is because only with UBI, people enjoy freedom to choose whether to partake in the market or not. At the same time, funding UBI via taxing markets implies that the market contributes to the common good of all members of society. Indeed, markets as commons contribute to the strengthening of communities via freeing people to engage in non-market activities.
In sum, commoning markets means performing markets as societal forms of creating economic gains for everyone. Markets are commons as they create the social resource of cooperation in complex forms of division of labour. At the same time, they build on commons as a fundamental form of appropriation. As we have seen, one aspect is the sharing of business opportunities in contrast to monopolizing appropriation. Another form, as I have argued recently, is subjecting a wide range of other resources to a regime of common property, an idea that was elaborated by an eminent Japanese economist, Hirofumi Uzawa, as ‘social common capital’. Referring to the example of cities, this applies for land. Transforming urban land into a commons would mean that the land is owned by the local community (in my proposal, the local ecosystem community), and the individuals would only hold land use rights. Again, this institution would not abolish the market, since land use rights allow for most kinds of business, but would subject fundamental decisions of land use to community governance and would directly appropriate land rent by the community via the rental price. So, combined with the Collier scheme, the land market in a commoning market economy would be locally governed by the local community, and nationally via taxing those communities for interregional redistribution.
To conclude, the commoning market economy is the alternative to capitalism. There are many supporting institutions, such as the local currencies studied by another participant in our Tokio conversations, Makato Nishibe. Tellingly, Japan is the country where such initiatives have flourished in the past decades. However, in the end of the day all such institutions must mutually reinforce each other. Otherwise, as long as the general setting remains geared towards the capitalist model of market economy, they may not be sustainable.
The technosphere, our agency, our planet 