Fair markets will Evolve to Property Owning Democracies.

Kevin Cox
8 min readDec 29, 2022

Rawls and others in Property Owning Democracy argue that a more equal distribution of wealth is a superior alternative to Welfare-State Capitalism, Laissez-faire, State socialism, or Liberal socialism. Unfortunately, the proponents who have tried to implement the wider distribution of property owners use redistribution methods. Another approach is incrementally changing the existing system, so everyone has equal access to wealth accumulation.

This article provides a straightforward method that starts with any existing system and evolves it into Property Owning Democracies with a social mutation similar to those Pagel discusses in Wired for Culture. The change makes markets “fair”, meaning all can access wealth or Capital under equal terms. Fair Markets will result in a wide distribution of wealth, but the distribution shape will be normal with two long tails rather than the current wealth distribution, which is a single long tail of the poor. The Normal Distribution produces a stable, economically efficient society.

Distribution of Wealth comparing Fair Markets with Existing Markets

The most economically efficient society is the one that uses the least money to produce the goods and services the population needs and wants. Fair Markets are the most efficient, and as all communities want as much as they can get for the least cost, all the current systems will tend towards Property Owning Democracies if Markets are fair.

Why Markets are Unfair

Many markets in the modern world are relatively free but rarely fair because buying ownership is open to a few. We can make them free and fair by selling buyers a small ownership share with each purchase of goods and services. Today, in all markets, the buyers receive the goods and services produced but do not receive a share of the profits for which they have paid. This breaks the reciprocity rules, the basis of human cooperation and evolutionary success.

Profit remains when an owner subtracts all the costs, including Capital costs, from the price paid by the buyer. The buyer has received the goods, but where is their share of the profits? Profit creates new Capital, and the new Capital is not available to buyers or workers or other members of society. It is restricted to a relatively small group of entitled investors who have already received a return on Capital, such as dividends, Capital gains, or interest.

Buyers receive the goods, but they do NOT receive any of the profits. Profits become Capital, and so buyers pay for new Capital. To reciprocate, investors can sell old Capital in the business to the buyers. A fair amount sold would be half the value of the new Capital created.

Workers are included by allowing them to take some of their wages as old Capital instead of cash. Governments are included by taking a percentage of turnover to pay for government services.

Governments can start the change by incrementally selling Public Infrastructure businesses to consumer voters.

Investors will claim they share some of their new profits through trickle-down economics, charity or government transfer. This is true, but they are band-aid attempts to solve the Capital distribution problem after it has happened. Addressing the root cause of failure to share profits reduces the need to address the resulting mal-distribution of wealth.

The market rules ensure profits are invested as soon as practical, and there is a strong incentive to invest in ways to reduce the cost of production and to collaborate with other communities to find the lowest cost, long-lasting assets.

The existing system of not sharing the profits means Capital is expensive, difficult to price, results in wealth disparities requiring redistribution, accumulates in overpriced assets, and becomes the purpose of economic activity. Changing the purpose of economic activity to the planet's well-being may keep it liveable.

How Fair Markets increase the Productivity of Capital

The “invisible hand” of the free market keeps prices down by offering a choice to buyers, and buyers' choosing keeps markets fair. Unfortunately, in the modern world, most people have little choice, and in the wealth market of Capital, they have no Capital to invest. Replacing Capital markets with Community Capital makes Capital distribution fair and efficient, and because savings compound, it makes the cost of products the cheapest possible.

Community Capital makes a profit by saving costs, and the big saving is the cost of unearned income. The following simplified situations show the change.

  1. An investor invests $100,000 and each year makes a $10,000 profit. They decide to take all $10,000 and distribute it to their investors.
  2. A Community invests $100,000 and each year makes $10,000 profit. The investors get half the profits, and the buyers get the other half. The $10,000 is invested in the Community, $5,000 is allocated to the investors and $5,000 to the buyers. The buyers get their $5,000 by the investors transferring $5,000 in old Capital to the buyers.

In (1), the investor retains their $100,000 Capital and gets $10,000 in cash. The Community receives no benefit from the Capital generated.

In (2), the Community invests $10,000 and has $110,000 worth of assets. The extra $10,000 is divided between the investors and buyers, with the investors having $105,000 worth of assets and the buyers having $5,000 in assets. The investors also have $5,000 in cash, as $5,000 has been incrementally transferred to investors with each sale to buyers. Importantly most of the profits are invested to benefit the local communities. External investors get their share of the profits for a limited time until they are paid back.

The difference between the two systems is that most profits are invested in local communities to reduce the cost of goods and services or reduce the consumption of non-renewable resources. Regular Capital funding businesses for local consumption tend to take resources out of local communities without giving anything back.

For example, if $100,000 is invested in Community Batteries with Regular Capital, then after ten years, the local Community will not own anything, while if $100,000 is invested in Community Batteries using Community Capital, the local property-owning community will own $260,000 worth of renewable assets. With Community Capital, all the profit is invested; hence, Community Capital maximises the investment of Capital.

If the Community owns the battery and distributes profits with shares, then the Community shareholders will own $160,000 worth of renewable assets after ten years. The difference is that all the profits are invested immediately with Community Capital. In contrast, with shareholders, much of the profit is only realised and available for investment when the shareholders sell their shares. When they sell their shares, they normally take the money out of the Community.

Investing $100,000 in Community Batteries, the profit results after ten years are

The difference between Community Shareholding and Community Capital is that Community Capital invests more than twice as much Capital because all the Profit is invested. In contrast, the Capital with Community Shareholdings is not invested as quickly but distributed as dividends or lower prices or stationary as inflated asset prices.

Market Dynamics

Free and Fair markets change the dynamics of markets and make them efficient by ensuring most of the profits are invested. Large markets naturally divide into many smaller “nearest neighbour” markets. For example, a nationwide telecommunications service provider will consist of people who call each other frequently. An electricity supplier has natural groups of customers on the same low-voltage line. A petrol supplier has communities who regularly use the same service station. A supermarket grouping is the people who shop at the same store for the same items.

These groups would be the ones who would collectively purchase old Capital. They can buy and sell Capital to each other for little or no cost at a fixed price and exchange Capital without a market and without increasing the amount of money exchanging hands. These natural groupings would have a say in how new Capital is spent in their local area.

Markets become local, and the investment emphasis changes to making and consuming locally and sustainably.

To give some examples.

Water supply authorities have been slow to introduce smart metering systems because they reduce overall consumption and profits. However, for a customer, a drop in consumption due to fixing leaks is a profit. As customers gain more old Capital, they will change the business investment priorities to emphasise water savings.

Supermarkets favour broad acre farming that produces consistent products that can supply the same product across a wide geographic area. Smallholdings or backyard producers can rarely sell to supermarkets, and much local seasonal produce is wasted. Local consumer groups would like to supply trusted local products they produce. These groups will use investments to encourage local consumption as they obtain more authority. The experiments that succeed can spread through supermarket chains to other areas.

Customers of a Telco in a local area could build a resilient and reliable network that utilised local unused business and home broadband and wifi. Local transmission could reduce the payments to the Telco, but the customers benefit from higher utilisation of their Capital investments.

Emergent Properties of Fair Efficient Markets

With efficiency, fairness and the sharing of profits come many benefits. The following incomplete list shows the likely outcomes from Fair, Efficient Markets.

  • The maximum value of investments for the least amount of Capital.
  • The release of existing stationary Capital to invest in addressing existential threats and improve overall efficiency.
  • Change the wealth distribution of communities that adopt it to a normal distribution.
  • Transparency and rapid understanding of all owners if a business is making a loss or profit and of the ways to stabilise the business.
  • Cooperation between buyers and sellers to deliver the lowest prices as both benefit from reduced production costs.
  • A competitive economy as local communities strive to reduce costs without reducing the value of production.
  • A dynamic economy built on local production for most goods and services.
  • Shorter supply chains.
  • Profits set to encourage production to match local demand.
  • A circular economy where all benefit from recycling, reusing and regenerating assets.
  • An inclusive economy where no one is left behind.
  • A restoration of privacy and away from surveillance capitalism.
  • The elimination of inflation and increased government economic control by releasing new money into agreed areas.
  • The inclusion of unpaid labour and care in the economy.

Fair Capital is Community Capital

Community Capital means the Community collectively owns the business's assets while individuals own the output from the Capital. Individuals get a return on investment with discounts on the price they pay when they use Community Capital to purchase goods produced from Community owned assets.

Investors purchase future production of the business and receive their return when they either sell their Capital along with earned discounts or use their Capital to purchase goods. Either way, there is only a benefit when the business produces goods and services. This is why Community Capital is fairer than Ownership of Assets Capital. It is also why small investors can get a higher return than now. Capital moves at least twice as fast with Community Capital than it does with Ownership Capital. As it moves twice as fast, it is invested twice as often, and the increase in new Capital is shared between investors and buyers.

Community Capital gives ownership of future products that can only be realised once production occurs. In contrast, ownership of Assets gives returns in the future before they happen, and the world of finance is full of investments where the last buyers before the crash end up owning the losses.


Fair markets bring a fair distribution of wealth. They change success from maximising profits to meeting social and survival goals. All existing economic systems can evolve by moving the sale of Capital from separate Capital Markets to buying and selling Capital as part of the goods and services market.



Kevin Cox

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