Rentier — noun — An individual who does not work for a living but instead receives an income, usually interest, rent, dividends, or capital gains, from their assets and investments.
Humans survived as a species by working together in small groups for their collective survival. Today wealth is the key to survival, and most of us desire to be ethical rentiers by sharing our good fortune and having the time to assist others. Wealth gives us that time, but it also gives us the time to consume more in search of wealth. Unfortunately, our Financial System is structured so those with wealth acquire more wealth. They then consume more rather than invest to consume less. It is hard to be an ethical part-time rentier who collects enough wealth to survive while working to consume less.
There is a way for us all to become ethical rentiers. We can change our economic system and provide enough wealth to allow us the time and the means to work for others. We can take collective responsibility for others and assets. We know how to do it as it is the way our organisations work. Businesses have shareholders, cooperatives have members. Shareholders take collective responsibility for the business. Taking responsibility for shared assets means sharing wealth guided by reciprocity.
Reciprocity means doing things for others because it is ethical, not because we seek something specific in return from a specific person or entity. In particular, it means not taking advantage of others’ ethical behaviour. In economics, we should share our wealth even when we don't have to, and we should set up our systems so that sharing is automatic.
Fixing the Financial System
Unfortunately, Capitalism has evolved so that profits are automatically shared unequally between those who invest in Capital and those who pay for the goods and services produced from Capital. Instead of sharing the profits with lower prices, investors charge what the market will bear and keep all the profits. If a society uses this principle, markets set prices, and profits are taxed as a way to share new Capital.
The Financials System redistributes Capital, and it has become very expensive to operate. It takes a lot of effort to redistribute the profits from Capital months or years after they occur. It is much cheaper to share profits at transaction time.
We can share profits at transaction time by transferring a small amount of Capital in the business from the seller to the buyer. How much is returned is calculated automatically by agreement. It means customers become investors in the business and will share the profits with future customers.
The approach is good for both investors and customers because it is more efficient and does not waste effort and time on the later redistribution of Capital. It saves money.
The savings come by:
- removing the need for markets to set prices,
- the faster turnover of Capital prevents the accumulation of Capital,
- the over-pricing of assets,
- the reduction in taxation because of a lower need for redistribution,
- increasing investment to reduce prices,
- and the reduction in inflation.
Consumers all become a little wealthier by purchasing goods and services. This spreads the benefits from Capital more evenly across society. Both buyer and seller share the profits, and because the Financial System costs less to operate, there is more to share.
The Capital a person holds also gives them a voice in the organisation's governance. Consumer voices will have a say in how the business operates and can ensure that it remains true to its ethical principles of sharing profits and other constraints on profit generation.
Any business or organisation can operate this way, including government businesses that supply goods and services from consolidated revenue. Instead of money exchanging hands, benefits can be calculated and notionally allocated to recipients. The investors, in this case, are the elected representatives of the people. Their task, along with beneficiaries, is to ensure that the distribution of benefits is fair.
Sharing profits with Capital rather than lower prices is an incremental way to change the Financial System for the benefit of all. It becomes more efficient and saves money and resources, and it may just give humans the resources needed to keep the planet liveable.
