Introduction

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 no small amount of 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 of capitalist democracy, not just a matter of electing new leaders.

If you identify with the preceding sentiments, then you might be confused and demoralized, as I have been lately. If capitalism as we know it is deeply flawed, and government is no savior, where lies hope?

This strikes me as one of the great dilemmas of our time. For years the Right has been saying—nay, shouting—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. But if that’s the case, what are we to do? Is there, perhaps, a missing set of institutions that can help us?

I began pondering this dilemma about ten years ago after retiring from Working Assets, a business I co-founded in 1982. My initial ruminations focused on climate change caused by human emissions of heat-trapping gases. Some analysts saw this as a “tragedy of the commons,” a concept popularized forty years ago by biologist Garrett Hardin. According to Hardin, people will always overuse a commons because it’s in their self-interest to do so. I saw the problem instead as a pair of tragedies: first a tragedy of the market, which has no way of curbing its own excesses, and second a tragedy of government, which fails to protect the atmosphere because polluting corporations are powerful and future generations don’t vote.

This way of viewing the situation led to a hypothesis: if the commons is a victim of market and government failures, rather than the cause of its own destruction, the remedy might lie in strengthening the commons.