There are many more buyers than sellers for most economic activities, yet few Buyer Capital investment opportunities.

In most markets, buyers look for the cheapest products that satisfy their needs, while sellers sell products for whatever the market will bear. Buyers and sellers have different goals, and with markets, these differences can result in efficient economic outcomes.

Unfortunately, for markets in goods and services, money investors side with sellers and want higher prices to increase their money returns. Governments attempt to control the bias towards price increases with restrictions on who can invest, competition laws, and market regulations.

Money investors look for investments that will bring in money returns, so investors and sellers have the same goal — more money. Sell as much as they can for the highest price possible in the shortest time possible. On the other hand, buyer investors look for investments where the returns are lower prices for as long as possible.

Governments are buyers, and, in democracies, they have traditionally worked on the side of buyers to reduce the long term costs for those they represent. Governments, however, have less and less influence on investment decisions and are increasingly lobbied by the money investors to favour short term profits.

To redress the balance between buyers and sellers and allow markets to provide efficient economic output, we need ways for Buyer Capital to invest in reducing prices and have a seat at the table when sellers, who are producers, make their investment decisions. Buyer Capital has a longer-term vision because buyers have to live with the consequences of purchases, whereas money investors take their profits and move on to the next thing.

Buyer Capital can outcompete Money Capital in Capital markets because Buyer Capital needs less money to operate. Money Capital gives a return with more money, whereas Buyer Capital gives more goods and services for the same amount of money. It means Buyer Capital requires less money to produce the same amount of goods and services. It achieves this by circulating money more rapidly, making a given amount of Capital more productive.

Examples of Buyer Capital

Buyer Capital is where buyers provide funds before the goods and services are received. Some examples of Buyer Capital are:

  • Magazine subscriptions where people pay upfront for their magazines, and the up-front payments provide the Capital to produce the magazine.
  • Frequent Flyer points, Shopper Dockets, Every tenth coffee is free, and discounts for prepayments are all forms of Buyer Capital.
  • Crowd Sourcing (not Crowd Funding) is buyer capital.
  • Lay-buy for Next Christmas Hampers or similar is Buyer Capital.
  • Consumer cooperatives where buyers work together to get lower prices.
  • Superannuation and Pension plans are a form of Buyer Capital where buyers purchase a future income stream.

Unfortunately, most of these approaches give Buyer Investors little or no control over their investments and returns. The governance of most Buyer Capital is the same as Money Capital — except when the buyer is a responsive democratic government or a Non-distributing cooperative.

Prepayment Consumer Cooperatives

Prepayment Non-distributing consumer cooperatives can provide Buyer Capital with buyer control.

Money Investors retain control of their investments through the concept of ownership. When Money Investors put money into a business, they obtain a share in the company's ownership. This share gives them a voice in the decision making of the business and the distribution of profits.

With Prepayment Buyer Capital, ownership of the business does not determine the uses of the Capital. Instead, the individuals who have paid for future output have a voice in the use of the Capital. Typically they will set fixed discounts on the Capital depending on the time the Capital remains in the business. They will take the risk on the level of profits and collectively decide on the profits' distribution. Significantly, as a consumer purchases goods and services, the Buyer Investor's return automatically transfers to the consumer. This transfer of Capital occurs automatically, but it means all consumers become Buyer Investors by their consumption and hence have a say in the investments in the ongoing business.

As there are many buyers, buyers can form themselves into small cooperatives to aid decision making. The small cooperatives are autonomous, and they can elect representatives to the larger cooperative. The cooperatives work together by using compatible information systems platforms. Buyer investment scales upwards using a fractal approach.

The approach works well for the whole of community infrastructure for goods and services often thought of as "the commons".

Buyer Capital

Buyer Capital is an accounting device to replace the need to monetise assets. Money comes into an organisation, converts into productive investments and remains as a tangible asset with the following characteristics:

  • The organisation owns the productive assets.
  • Capital from members is payment for future production, not future production or a share of ownership.
  • Members own Buyer Capital.
  • Discounts on the charges provide a return on Capital.
  • When a member buys a product with Buyer Capital, part of the payment is Buyer Capital. The Capital and the product transfer to the Buyer as Future Buyer Capital without discounts.
  • Future Buyer Capital converts to Buyer Capital with a discount using organisation specific rules.

Buyer Capital can exist in any organisational structure. Any organisation can organise part of its Capital using these principles. In particular, government assets can be owned by the government but controlled by groups within the community where the groups are consumers of the output from assets.

In summary, Buyer Capital is an accounting device as an alternative to shares or debt and its derivatives.

The Advantages of Buyer Capital

Buyer Capital has the following advantages over Traditional Capital.

  • Buyer Capital uses the payments market instead of a separate but connected Capital market. For long-lasting assets, this cost is often as much or more than the Capital itself.
  • Buyer Capital speeds up the circulation of money. Monetising an asset requires extra money to store the value. This extra money circulates slower than Buyer Capital.
  • Buyer Capital value is reliable, and buyers have control over the cost of the Capital because they are both investors and buyers. Money Capital value is difficult to calculate because it depends on future unknowns over which the owners have no control. Because Money Capital value is unreliable, it is higher risk and covering risk is expensive.
  • Buyer Capital spreads wealth across society as an organisation may allow all buyers to acquire some Buyer Capital when they purchase goods and services financed with Buyer Capital. It means wealth spreads across the community—the more equal, the greater the trust.
  • Buyer Capital increases trust, reducing the need to enforce contracts while expanding the opportunities for graduated sanctions. Reducing risk reduces costs.
  • Buyer Capital produces more for less cost, and investors, sellers and buyers share the savings.
  • Buyer Capital reduces the consumption of scarce resources and increases the production of non-physical assets such as knowledge, entertainment, and the arts.
  • Buyer Capital can rapidly move resources to meet community threats.

An Example Calculation

A device that costs $1500 per household is available to a community to reduce the cost of electricity. The device buys electricity when it is cheap and uses it when it is expensive. An estimate of average savings per year is $500 per household, though the variation is high.

Assume a community forms a Consumer Cooperative, and it has the choice between financing with Money Capital or with Buyer Capital.

It decides in both cases to charge households 70% of the savings. If it uses Money Capital at 8% and the investment lasts ten years, then investors will receive $2,234 in cash. If they use Buyer Capital at an 8% discount, investors will receive $2,700 in cash. There will be less Capital in the Cooperative with Buyer Capital, and each household gets Capital proportionate to the amount of savings generated by the household. There will, however, be the same asset value.

The difference occurs because unnecessary interest payments on money create more Capital than needed.


What we call Capital comes about through exchanging goods and services for money. If the cost of producing the goods and services and selling them is less than the price, it creates a profit. We call this profit Capital, and it comes about as the result of exchanging goods and services using money.

If we now treat the money as a profit generator through interest, dividends, or capital gains, that is an extra cost to trading and reduces the trading profit.

Buyer Capital removes the extra cost of using money and is the most efficient way to deploy Capital.

Kevin works on giving individuals control over their online information - particularly their financial information with local communities.