Definitions of terms used in this article
- Capital is the knowledge of how to use Assets to create income while keeping the value of the Assets intact.
- Private Capital is Assets owned and maintained by individuals.
- Public Capital is Assets owned by a community but where individuals have the responsibility and benefit from some of the Assets.
- Markets distribute Private Capital. Predefined agreements distribute Public Capital.
- Communities are groups of individuals who wish to use or profit from a set of Assets.
A sustainable economy can evolve to create a sustainable planetary environment if we turn most Private Assets into Public Assets.
Today most economies work to satisfy short-term human needs because market economies favour Private Capital which drives the economy towards more consumption and a less resilient environment. Private Capital investments can quickly shift to Public Capital and meet multiple longer-term social goals, including sustainability and a stable environment.
The profits from Private Capital investments go to individuals. In contrast, the profits from Public Capital go to the whole community, and the community divides the profits by agreement. Communities put group profits ahead of individual gains, and group profits depend on a sustainable, resilient economy that relies on a stable physical environment. Such an economy increases the survival rate of individual members.
Public Capital is lower-cost than Private Capital because Capital moves by agreement and at no cost to future beneficiaries of Capital. In turn, they are interested in preserving and maintaining it for others to use. Private Capital will always be more expensive to distribute than Public Capital because Private Capital requires a market to distribute.
Communities invest Public Capital to save money, not to increase profits. However, saving money increases profits and makes the investments more profitable than using Private Capital. We know this because less money changes hands with profiting from lower prices than profit from higher prices for the same goods produced the same way.
Private Capital Markets result in some individuals accumulating large amounts of Capital because the owners of Capital have an advantage in Capital Markets. Those with little Capital soon lose the little they have as the less Capital, the less they can compete. Uneven distribution of Capital is inefficient as it leads to uneven consumption and investment.
Public Capital increases resilience and sustainability as investors are future consumers of the output from the Capital. Public Capital is high productivity Capital as its value remains in the community it serves, and it uses less money to produce the same amount of goods and services.
Distributing Capital to those receiving the most value from its use increases Capital productivity. It can make everyone better off than allocating Capital to those who possess the most Capital.
