The Productivity of Capital Formation and Movement

Kevin Cox
6 min readNov 2, 2023

To address global heating, we have to change the way we produce energy, and that requires immense amounts of investment Capital. We obtain investment money from the Financial System, which harvests the surplus money as savings and profits and puts it to work to create more Capital.

The Financial system has one system for goods and services and a separate one for Capital. It treats money for investment as different from money for goods and services. The separation of Capital markets from goods and services markets turns out to be a costly decision as it makes Capital into a separate product where people pay for the use of money or usury. It has traditionally separated Capital from goods and services because most people need more money than they possess to buy Capital goods. To collect enough money, they rent it from others.

There is an alternative to renting money. Rather than rent money, the investor can share profits. Hence, the concept of shareholders working together and accumulating enough Capital for an initial investment or to purchase a large asset.

Shareholders coming together are not renting money — instead, they agree to share the profits generated by the investment. This is a much cheaper alternative than renting money. Unfortunately, what works for an initial investment is now used to distribute the new Capital created when the enterprise makes a profit. Shareholders think they have the right to ALL the profit, and they do not share profits with the buyers who supplied the money to create a profit or new Capital.

If shareholders share the profits, the new Capital is transferred without renting money. To do this, when a buyer purchases goods and services, the profit part of their payment is divided between a purchase of shares from existing shareholders and giving the same shareholder new shares. The old shareholder receives an annuity, and part of the collective asset is transferred to the buyer. This form of Capital is called Community Capital.

The transfer of house ownership benefits from this approach. Instead of having a single market, we can set up many small separate housing markets where buyers and sellers are free to move between markets but where the small market acts as a single entity, and Capital can move without the need to rent money. It reduces the cost of moving Capital by at least 100% and, in most cases, more.

The article “Capitalism that Cares and Shares” shows how we can reduce the cost of transferring ownership of an existing house from the current 100% of the cost of the home to 50% by sharing interest and by a further 50% by purchasing the home payment by payment from the local housing market. It means a person who now pays $500,000 for a home, $500,000 in interest over the length of the loan, and $50,000 in government and real estate transfer fees will pay $500,000 only and not pay for rented money or the cost of transferring ownership.

Finding the Money to Rewire Australia

We can use some of the savings from the transfer of houses to rewire Australian buildings. Homes can go into local community housing markets even if the people in the house have no intention of leaving. They can “sell” part of their house to pay for the rewiring of batteries, solar panels, EVs, insulation, etc. They repurchase the part of the house they have sold by paying a monthly rent covered by the energy savings from electricity consumption.

Using the same principles of sharing profits provides a way to invest all electricity payments into energy saving or renewable energy production. It provides the funds to rewire a community.

Interest-Free Loans Compared to Community Funding

To encourage ACT residents to install solar panels and other renewable technologies, the ACT government offers interest-free loans via a commercial funder. The ACT government pays the interest on the loans with citizen taxes. There is an alternative. The ACT government assists communities of citizens to invest in each other’s infrastructure.

If the ACT government choose to assist its citizens in organising themselves to take advantage of community funding, the citizenry will save money. For example, instead of paying $10,000 for a loan and the government paying a further $5,000 in interest over ten years, the citizens pay $1,500 a year from the $2,000 in savings they make from the solar panels over the next 20 years. The community investor receives $500 for the next twenty years.

Similar numbers apply to all infrastructure funding. Communities do not have to pay others to fund common or private assets owned by the same community members.

The following is a Netlogo model of the differences between loans, fair loans and community funding that applies to all infrastructure assets.

Figure 1 — $15,000 interest free-loan comparison

The model compares Regular Loans, Fair Bank Loans, and Community Funding to fund Community infrastructure. Figure 1 shows the output for the parameters set on the left and can be used to compare community funding with traditional Bank funding. Governments can use the approach to see the savings in financing local infrastructure with community funding. Banks can participate by becoming funding partners instead of issuing debt.

The key outputs are the Bank and Fair Bank Cost per $ of infrastructure assets compared with the Community Cost per $ of infrastructure assets created. In the first year of a loan, the cost to the community is $1.88 for regular loans minus the cost of operating the community investment of 0.25 cents. Fair Loans are better, costing $1.29 minus .25 cents.

Investing in renewable technologies such as solar panels and batteries for home use saves money. The model demonstrates the cost implications of individualistic approaches versus government support in bringing communities together. The figures are striking and highlight the financial benefits of collaboration.

For any organised community, the savings can reduce taxes and increase community capital and cohesion.

Cost of Community Services Funded by a Service Provider

It is crucial that community services, such as water, electricity, employment services, parking, shops, offices, internet, telephones, and education, etc., be funded and partly owned by the local community who use them rather than solely by service providers. It halves business capital costs by removing many interest and other financial service charges. It ensures communities have a voice in the services provided in their local areas. It builds trust within communities.

One way to achieve this without disrupting the existing system is to allow it to evolve. Government tenders can favour developers and other organisations, like shopping centres, parking franchisees, restaurants, and all service providers, that would enable local investment and share some of their profits with equity to customers and employees.

This creates loyalty and trust between those servicing the community and those served. It is a variation on Rewards systems that companies already use, is trusted and applies to everyone equally. Businesses will voluntarily move to it as it reduces costs when suppliers use the same system.

The Innovations in Community Capital

Community Capital borrows ideas from many areas. The main innovations are:

  1. The elimination of usury or charging for using money with a return on investment in an asset.
  2. Sharing profits occurs when exchanging money for goods or services creates a profit.
  3. Share profits based on the relative efforts of the buyer and seller to create the profit. (Buyers have to do work to earn the money to make a profit)
  4. Share prices of an entity never change. Profits and losses increase or decrease the number of shares.
  5. Returns are annuities where the investor must sell some of their shares to obtain new shares. This removes the need for separate capital markets.
  6. All shareholders must sell an agreed number of shares each month for sale — first to consumers, then to other investors.
  7. When there are multiple buyers at the same price, the buyer who receives the most value relative to their circumstances purchases the goods or services. When the value cannot be agreed, it is allocated by lot.


Today, the government forces businesses to share their profits by taxing profits. Companies can voluntarily share profits with their customers as equity and allow customers and employees to purchase new equity. Equity raised from customers does not require traditional debt or dividends and keeps money within the community it serves.

Sharing profits speed up capital movement, creates low-cost capital markets, and removes usury and other unnecessary financial costs. The faster activity of Capital increases investment, which, in turn, reduces costs through productivity improvements.



Kevin Cox

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