The Problem of Captured Surplus

Reference code: C25-13

Historical Drift of the Postwar Social Contract

In the decades after the Second World War, households in the United States could reasonably expect that diligent work would translate into stability, modest upward mobility and some measure of shared prosperity. Productivity growth, wage growth and broad based living standards moved roughly together, and the middle class sat at the center of that story.

Over the last half century, that pattern has steadily broken. Careful work by the Pew Research Center shows that in 1970, middle income households received about 62 percent of all U.S. household income, while upper income households received 29 percent and lower income households 10 percent. By 2018, the middle share had fallen to 43 percent and the upper share had risen to 48 percent, while the lower tier inched down to 9 percent. Later updates through 2020 and 2022 confirm the same direction of travel: middle income households’ share of aggregate income has slipped into the low forties, while the upper tier approaches one half.

The figures that appear in the Apologia essay on commons-based enterprise place this shift in a larger narrative. They note that middle income households once received nearly two thirds of all income and now receive only a bit more than two fifths, while upper income households have moved from less than one third to nearly one half. The external data just summarized align with that description almost line for line, confirming that the problem is not a matter of impression. It is a structural redistribution of shares.

From Broad Prosperity to Extreme Wealth Concentration

Income shares tell only part of the story. Wealth, which accumulates the results of prior income and asset gains, has become even more concentrated. Economists Emmanuel Saez and Gabriel Zucman, in a widely cited analysis of U.S. income and wealth, estimate that between 1978 and 2018 the share of pre tax income going to the top 1 percent rose from about 10 percent to about 19 percent. Over the same period, the share of wealth owned by the top 0.1 percent increased from roughly 7 percent to about 18 percent. These are the exact ranges reflected in the Apologia discussion, and cross checking confirms that the essay relies on these published results rather than embellishing them.

More recent distributional financial accounts from the Federal Reserve show that as of 2024 and 2025, the top 1 percent of U.S. households hold about 30 to 31 percent of total wealth. A St. Louis Federal Reserve overview in mid 2025 describes the bottom 50 percent of households as holding only about 2.5 percent of total wealth. A synthetic summary on U.S. wealth inequality, drawing on the same Federal Reserve data, reports that as of early 2024 the top 1 percent held 30.5 percent of all wealth while the bottom half held 2.5 percent. Taken together, these sources validate the Apologia’s statement that the top 1 percent now hold a little more than 30 percent of wealth while the bottom half hold about 2.5 percent.

Urban Institute researchers underscore the broader pattern: wealth inequality in the United States is higher than in almost any other rich country and has risen for much of the last 60 years. This is not a transient fluctuation that might correct on its own. It is a long arc toward concentration.

Everyday Insecurity in a Rich Society

At the household level the consequences are felt as chronic insecurity. Reports on paycheck to paycheck living and retirement readiness demonstrate how that insecurity sits beneath impressive aggregate wealth.

A 2024 analysis by the Bank of America Institute finds that about 26 percent of U.S. households would be classified as living paycheck to paycheck when necessity spending consumes at least 95 percent of income, and around 30 percent under a somewhat broader criterion. By 2025, a financial wellness survey for PNC Bank reports that 67 percent of Americans describe themselves as living paycheck to paycheck, up from 63 percent in 2024. Public news coverage based on ADP surveys similarly notes that roughly two thirds of workers report living that way. The exact percentages differ by methodology, but the direction is consistent. A large share of the workforce has almost no slack.

Retirement figures point in the same direction. The Federal Reserve’s Survey of Household Economics and Decisionmaking reported in 2022 that 27 percent of adults had no retirement savings at all. A later summary of Federal Reserve data, interpreted in 2025, notes that only 54.3 percent of U.S. families had any retirement account assets in 2022. Public facing analyses describe the situation bluntly: nearly half of American households have no retirement savings. Follow up reporting in 2025, drawing on Federal Reserve findings, emphasizes that roughly 28 percent of non-retired adults lack retirement savings, leaving millions at risk of entering old age with nothing set aside.

These numbers match the underlying story on the commons oriented site. That story emphasizes workers whose wages cover present costs only narrowly, whose benefits are patchy, whose retirement prospects are fragile and whose share in the growing stock of national wealth is vanishingly small. The external data confirm that this narrative is rooted in observable reality, not in polemical overstatement.

Public Perceptions and the Search for Alternatives

The public is not blind to these developments. A Pew Research Center study from 2020 reports that a clear majority of Americans believe there is too much economic inequality in the country. Among those who hold that view, about two thirds say the federal government should have a lot of responsibility for reducing it, and majorities assign considerable responsibility to big businesses and corporations as well. Two thirds of this group say that addressing inequality requires major changes to the economic system, and another significant share calls for a complete rebuilding. The Apologia’s summary of public sentiment closely tracks these findings.

At the same time, attitudes toward the familiar ideological labels have become more ambivalent. A Gallup survey released in September 2025 finds that only 54 percent of Americans now view capitalism positively, down from 60 percent in 2021, while 39 percent view socialism positively. Among Democrats, fewer than half express a favorable view of capitalism, and a clear majority express a favorable view of socialism. This pattern echoes the Apologia’s description of a conceptual gap: people remain embedded in market practices yet doubt whether the current form of capitalism can deliver on its promises, while traditional socialism does not offer a convincing blueprint for most.

In short, there is both objective evidence of rising inequality and widespread subjective awareness of it. The problem is not merely distributional. It is a crisis of confidence in the prevailing institutional design.

Structural Limits of Conventional Capitalism

The core design of the standard business corporation explains much of what the data describe. In the prevailing model, residual claims are concentrated in private hands. Shareholders supply capital and in return receive the right to whatever profits remain after all contractual obligations have been met. Managers are hired and incentivized to maximize those residual returns within the constraints of law. In practice, compensation packages often tie executive wealth to stock price performance.

Within that structure, wages, benefits and working conditions are treated as costs to be contained. Communities become interchangeable locations instead of enduring partners. Once the shareholder-wealth contract is embedded in law and governance norms, it becomes difficult to elevate any priority that does not feed back into shareholder value. Taxation and regulation attempt to modify the outcomes from the outside, but the internal logic of the firm continues to push surplus toward private owners of capital.

Recent analyses of wealth dynamics highlight the consequences when that structure is combined with financialized markets. Economist Patrick Artus notes that in the United States, household financial wealth has risen from roughly 335 percent of GDP in 2000 to around 447 percent in recent years, while real estate wealth has also climbed relative to national output. Asset ownership is heavily concentrated among high income households. The top 1 percent own roughly half of all stocks, while lower income households hold very little corporate equity. Gains in asset prices therefore flow disproportionately to those who already sit at the top of the distribution, compounding the concentration measured by Saez, Zucman and the Federal Reserve.

From the standpoint of a social historian, this looks like a second enclosure movement inside the corporate form. Surplus generated in workplaces is structurally channeled to a narrow class of residual claimants, then reinforced by asset markets. The problem commons-based enterprise is trying to solve begins right there: the capture of surplus inside firm structures that treat workers as costs and owners of capital as exclusive beneficiaries.

Why Traditional Socialism Does Not Resolve the Problem

A careful account must also consider the opposite pole. Classic state centered socialism sought to respond to exploitation by placing productive assets under public ownership and directing surplus through state planning. Historical experience shows that such schemes encountered severe information and incentive problems. Production targets were often set politically, innovation lagged, and local knowledge was sidelined. Many citizens in market democracies view wholesale replacement of private enterprise with state ownership as neither practical nor desirable.

Modern democratic socialist proposals often imagine a more plural landscape of cooperative firms and stronger public services rather than complete state control. Even so, the mechanisms for translating such visions into concrete organizational templates at scale remain underdeveloped. Traditional socialism, in its classic form, did not solve the problem of how to combine the discovery and adaptation strengths of markets with a fair and durable structure for sharing surplus among those who create it.

The commons-oriented framework therefore does not simply reverse the polarity of capitalism. It asks a different question: how should residual claims be structured if neither traditional shareholder capitalism nor state centered socialism can, in fact, deliver broad based security in contemporary conditions.

The Specific Problem Commons Capitalism Targets

The problem can now be stated more precisely.

First, the prevailing economic order channels a growing share of income and wealth to a small group at the top while compressing the position of the middle and leaving the bottom with almost no stake in accumulated assets. The earlier figures on income shares and wealth concentration establish this clearly.

Second, the internal design of most firms treats workers as contractual input providers without any claim to residual surplus, and communities as externalities to be managed. Attempts to address inequality through tax policy and social spending operate outside the firm and therefore struggle to change the basic pattern of who owns and retains surplus.

Third, a very large share of the workforce now experiences the economy as precarious despite record aggregate wealth. Substantial proportions of households live paycheck to paycheck, and a sizeable minority have no retirement savings at all.

Fourth, public opinion reflects both recognition of the problem and uncertainty about solutions. Many people say there is too much inequality and that major changes are needed, but they remain divided over capitalism and socialism as inherited categories.

The framework described on the commons-oriented site takes these points as given. It focuses on the structural problem of captured surplus: an economic design in which net profits generated through collective work are claimed as private property by investors and managers, rather than being managed as a shared resource across past, present and future workers inside the enterprise itself.

How the Commons Corporation Reframes Surplus

The institutional design associated with commons capitalism responds directly to that problem by redefining who can make a claim on surplus and for what purposes.

The central unit is a nonprofit commons corporation that holds all the shares of one or more wholly owned, market facing subsidiaries. The subsidiaries compete in ordinary markets, set prices, strive for high net profits and operate with familiar commercial discipline. However, the ownership and surplus rules differ sharply from those of a conventional holding company.

There are no private residual claimants. Managers, outside financiers and other stakeholders receive wages or contractual compensation only. They cannot receive distributions of net profits as owners. The commons corporation itself has no public or charitable purpose in the tax-exempt sense. It is not designed to qualify as a charity under familiar categories such as relief of the poor or advancement of education. It exists to govern surplus on behalf of workers and the long-term health of the commons enterprise.

Capital is supplied and accumulated internally. Neither the commons corporation nor its subsidiaries have outside investors seeking financial returns. The commons corporation is the sole shareholder of each subsidiary. Surplus is retained within the overall entity and allocated according to explicit rules into funds dedicated to premium wages, robust benefits, education and training, acquisition of additional businesses and reserves. The Apologia emphasizes that this internal allocation is not a philanthropic gesture. It is a structural commitment written into the governing documents of the corporation and its subsidiaries.

From the standpoint of the problem just described, the key move is straightforward. Instead of allowing surplus to leak into private capital accounts or external investors, the structure converts net profits into a commons held inside the enterprise network. The surplus that would otherwise reinforce national wealth concentration becomes a resource for workers’ compensation, skill development and expansion of the commons oriented group of firms.

Why the Problem Cannot Be Left to Policy Alone

Some may ask why this problem cannot be resolved through progressive taxation, stronger public benefits and conventional regulation. The data on inequality and public opinion suggest that such tools, while essential, are not sufficient by themselves.

Federal Reserve accounts show that even after decades of existing tax and transfer policies, the top 1 percent’s share of wealth has climbed to about 30 percent and the bottom half’s share has dwindled to about 2.5 percent. Urban Institute researchers conclude that the United States still exhibits one of the highest levels of wealth inequality among rich countries. If policy instruments operating outside the firm were adequate to reverse this, the trend line would look different by now.

Moreover, the mechanisms of political influence themselves are shaped by wealth concentration. Pew’s inequality research reports that many Americans believe excessive inequality gives the wealthy too much political influence and undermines equal opportunity. That judgment is consistent with the simple fact that those who hold the bulk of stocks and financial assets also have disproportionate capacity to fund campaigns, lobby lawmakers and shape the regulatory environment.

A social order that relies exclusively on ex post redistribution therefore fights uphill against both structural firm level dynamics and feedback loops in the political system. The commons-oriented model does not reject public policy. It relocates part of the work inside the enterprise by altering ownership and allocation rules so that a portion of the solution is embedded directly in how organizations handle their own surplus.

Communities, Workers and the Recomposition of Wealth

Within this framework, the term “community” has a specific meaning. It refers to the network of workers who currently participate in the commons entity, those who have contributed in the past and those who will join in the future. The commitment to enrich communities is grounded in the idea that business generated wealth should circulate through this extended worker community rather than flowing out to external investors or distant asset holders.

The site’s definition encapsulates this succinctly: the system integrates profit making and competition with management of net profits as a commons in order to distribute business wealth across past, present and future workers and reduce the concentration of wealth in the economic elite. The external data on income shares, wealth concentration, retirement insecurity and paycheck to paycheck living demonstrate why that reorientation of surplus is necessary. The structure of the commons corporation is the institutional expression of that diagnosis.

Conclusion: The Problem as Captured Surplus and Worker Insecurity

The problem commons capitalism is trying to solve is therefore not a vague dissatisfaction with markets, nor a simple preference for equality. It is the historically specific problem of an economic and legal order in which:

Productivity gains and national wealth growth have outpaced the income growth of ordinary workers, shrinking the middle class’s share of income from about 62 percent to the low forties while the upper tier has expanded its share to nearly one half.

The top 1 percent and top 0.1 percent have captured rising shares of both income and wealth, with the top 1 percent now holding roughly 30 percent of total wealth and the bottom half holding about 2.5 percent.

A large share of workers live in persistent financial precarity, often paycheck to paycheck, with millions lacking any retirement savings even as aggregate household wealth reaches record highs. Public opinion recognizes that inequality is excessive and that major changes are needed, yet inherited categories of capitalism and socialism no longer provide a convincing map for action.

The corporate structures at the heart of the system concentrate residual claims in private hands, and external policy tools have proved unable to reverse the resulting concentration of wealth.

Commons capitalism, as articulated in the existing materials, treats net profits as a commons to be stewarded across generations of workers rather than as a private entitlement of investors and managers. It seeks to solve the problem of captured surplus and pervasive worker insecurity by redesigning the ownership and governance of firms so that the wealth generated in enterprises remains within a commons-oriented structure that privileges workers’ wages, benefits, education and long term stability. The external statistics, when carefully checked, trace the contours of the problem; the institutional design of the commons corporation is the proposed answer.