Inefficiencies and Inequities of Capitalism - And How They Can Be Reduced

Perpetual property rights to land, structures, corporations and money allows investors to be overpaid to create inefficiencies and inequities in a way not measured by accountants and little noticed by economists. All intellectual property rights have limited life. Most assets depreciate over time except modern forms of stable money, collectables and land in developing urban areas. Private ownership of urban land creates inequities and inefficiencies from the windfall gains generated by external investment from either the private and/or private sectors. The Old Testament describes limited life land tenure that today could be used to make urban development self-financing, efficient and equitable. To illustrate the inequities, inefficiencies and un-sustainability of modern capitalism the paper describes an alternative system of property rights for owning realty, corporations and money. Ancient forms of money incurred a storage cost that Proudhon proposed for modern money as promoted by Gesell (1919). Keynes (1936: Chapter 23, part VI) and Fisher (1933) supported the introduction of cost carrying money that invigorated many communities during the Great Depression. Cell phone money, used in developing countries to democratize finance, proves that cost-carrying money is practical today. Investors obtained limited life property rights in all early business associations and corporations. Ownership of privately financed US toll roads, bridges and other public assets had to be transferred to community ownership after their payback period. Ownership transfer is still used today by governments to finance public infrastructure like power stations and tunnels. The paper makes a case for a tax incentive to encourage all private sector corporations to create a stakeholder class of shares to facilitate the transfer of their ownership to employees, suppliers, distributors, agents and customers resident in the host community. Localizing control provides a basis for residents to protect their environment on a self-financing basis that can attract more alien investment without undermining democracy. A dividend income can then be provided to all citizens to provide universal prosperity without: growth, pensions, welfare, more taxes and bigger governments while democratizing the wealth of host communities and nations on an environmentally sustainable basis.