Evolving Capital

Kevin Cox
5 min readJun 24, 2023


The capitalist system has the potential to adapt swiftly to lower its costs while maintaining profits. This article explains how the system can change to enhance productivity. For example, it can halve housing costs while freeing up Capital to address some of humanity's existential threats.

A quick book-keeping change will reduce the cost of owning a home in Australia by 25%, leaving Bank Profits about the same. A longer-term reorganisation of productivity improvements in the Real-Estate and Conveyancing Markets will further reduce the cost by another 25%. Other changes to the supply of services to households will further reduce living costs.

The productivity improvements will release 50% of the current value of the housing for further investment to move the country to lower-cost renewables, recycling and reusing existing materials. Increased investment will reduce costs and consumption of raw materials instead of the current investments that mostly increase the consumption of natural resources.

The Reserve Bank, in collaboration with the Australian Government, can coordinate the investment in infrastructure. The investment will be spent through private and public enterprises but in a way that controls prices through local governance procedures.

This article illustrates the process of Capital sharing using home ownership and the rewiring of Australia as an example. The process applies to all investments of Capital.

Fair Loans

Today a loan of $500,000 over 25 years with an interest rate of 6% costs a borrower $39,133 a year to repay. Changing the repayment formula can drop to $28,714 a year or about a 25% drop, leaving bank profits about the same. The new formula reduces the Capital by the amount repaid (including interest) plus 50% of the interest. Any Bank can use this formula with agreement from the borrower.

The Reserve Bank could specify that loans for existing houses follow this new rule, and Banks could implement it “overnight”. This would immediately reduce inflation without increasing demand and free up Capital for investment for more productive purposes like reducing the cost of renewable energy. The change is well within the remit of the Reserve Bank, and they have the staff to model the change for unintended consequences and implement it almost immediately.

If the Reserve Bank won’t, any Bank could do it unilaterally, and borrowers would likely move their loans to the Bank.

Sharing interest makes loans more productive by requiring fewer repayments to produce the same profit (interest) for the same value of new Capital.

Sharing 100% with the Lender

We can further improve Capital Productivity if we lend to ourselves. If lenders and buyers form an organisation, the loans can be made to the organisation, and the organisation lends to the buyers with a 100% share of the profits going to the borrower. The organisation transfers the interest payments separately from the loan according to a predefined agreement of the group. When we do this, the spreadsheet appears as follows.

Increasing the share to the borrower and working out the rules of redistributing the interest is best done in small local groups. For example, the redistribution could have nothing to do with the amount of money borrowed but could be associated with the financial needs of the borrowers. Perhaps a fairer system for distributing funds would be based on the borrower's income or needs rather than the current system where those with the most capital receive the greatest profits.

Coming to such agreements is difficult even with a small group but is much harder as the groups get larger. It is expected that small groups will appear and experiment. As people can be relatively easily moved between groups and the groups can experiment, it is expected the best solutions for different community characteristics will soon evolve.

The Further Evolution of Capital

The other main way to Create new Capital is with Company profits. Each time a Company makes a profit, all the profits go to the investors instead of sharing with buyers, employees, and the wider community. Such sharing is hard to do, but it can be done for specific businesses that are natural monopolies, such as energy, water, transport, hospitals, schools, production and distribution. All the things we think of as Commons can use the same approach of sharing profits with the community of investors and buyers.

For example, the income from Community Batteries is best shared with consumers “behind a transformer” in a local network. That community can form a single entity that has shares for all investors. All the income from the shares can be distributed to all the consumers on the local network according to their needs which can be their income per person in each household. This approach makes Community Batteries profitable at today’s Australian prices.

Affordable Housing with Community Capital

Affordable Housing is defined as housing that costs a person 25% of their disposable income. A fair return on Capital is defined as a 7% indexed annuity for 30 years.

Any household group creates a company where investors receive a 7% indexed annuity for 30 years on their money. Every occupier pays 25% of their disposable income into the company to purchase shares. The Company has shares equal to the value of the houses.

Occupiers of houses receive 50% of their payments as shares in the Company. The Company uses the other 50% to pay for maintaining the houses and purchasing other assets for use by the occupiers.

When an occupier owns shares equal to the house's value, they continue to pay 25% of their disposable income and purchase shares in the Company. Occupiers receive no income from shares up to the house’s value.

Occupiers of houses can move from the company for no cost, sell their shares or leave their funds in the company and collect their annuity.

The Company appoints board members by sortition from occupiers and investors.

Most neighbourhoods in Australia can be formed into groups of affordable houses, and those that can’t enlist the government as an investor.

Further suggestions on the sharing of Capital can be found in the articles by Kevin Cox on Medium.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.