Hanchi Wu & Qinwen Huang   中文

A Conversation on Ownership, Productive Capacity, and the Meaning of Value

An edited and expanded dialogue between Hanchi Wu (SW) and Qinwen Huang (WH) about investment, markets, productive tools, and the possibility of an economy that cultivates rather than merely replaces.

1. Ownership over Exit

When did financial return become the measure of value?

SW: I’ve been thinking about creating a wellness retreat. Not simply a place offering wellness services, but an environment where architecture, agriculture, landscape, and everyday life are designed together.

WH: Why not? But the CAPEX would be huge. Why not collaborate with an existing boutique hotel?

SW: Because the environment itself is what I want to create. The architecture, the land, the way people inhabit the space, and the relationships between these elements are part of the experience.

WH: But that’s market economics. If people see value in it, then yes. If not, then no.

SW: I think that’s precisely the economic logic I’m questioning.

Why do we assume that financial return should determine whether something is worth creating?

Especially when we’re talking about infrastructure, education, ecological restoration, or community development. These things may take decades to develop. Their value often extends far beyond the people who initially invested in them.

And I think the way we evaluate economic activity today is historically specific.

WH: What do you mean?

SW: The shareholder-oriented corporate economy we’re familiar with today became particularly influential during the 1970s, 1980s, and 1990s.

Of course, shareholders, CEOs, accounting, and financial returns existed long before that.

But something important changed in corporate governance.

In 1970, Milton Friedman argued that the social responsibility of business was to increase its profits. In 1976, Michael Jensen and William Meckling published their influential work on agency theory, examining the relationship between corporate managers and owners.

During the following decades, shareholder value maximization became increasingly influential in American corporate management. Executive compensation became more closely tied to stock performance, while financial markets gained greater influence over corporate decisions.

This wasn’t the invention of financial capitalism, but it was an important shift in how corporate success was defined.

I think of this as the rise of a Shareholder Economy: an economy in which the financial returns captured by shareholders increasingly become the dominant measure of corporate performance.

WH: But shareholders provide capital. Isn’t it reasonable for management to be accountable to them?

SW: Of course. Accountability matters.

But accountability to whom, and over what period of time?

If a company is primarily evaluated through earnings, share prices, and returns to investors, those measurements can begin shaping what it considers worth doing.

A project that requires twenty years to develop may appear less attractive than one that produces measurable returns in three years.

An investment in education, ecological restoration, or public infrastructure may create enormous long-term value, but much of that value may never appear on the investor’s balance sheet.

And this is where I think we need to distinguish between value creation and value capture.

WH: But value investing and long-term investing are also based on fundamentals. The important thing is whether something genuinely has long-term value.

SW: Yes, but financial value and collective value are not necessarily the same thing.

A school may educate people who eventually create businesses, knowledge, and social relationships far beyond the school itself.

A road may increase the productive capacity of an entire region without allowing the original investor to capture all those benefits.

A farm may improve soil, biodiversity, and local knowledge in ways that exceed its agricultural revenue.

These benefits are not necessarily mispriced financial assets. Some of them are simply values that cannot be privately captured.

And that’s often the part of value creation I find most meaningful.

WH: But if the value created is higher than what the market recognizes, that’s a mispricing opportunity. That’s where alpha comes from.

SW: Then don’t sell. 😂

Actually, that made me realize something about myself.

I genuinely don’t want to sell the things I create.

I don’t see selling as the natural conclusion of making something valuable.

To me, the best asset is one I can hold, maintain, use, and continuously improve.

A piece of land can become more fertile. A building can become more adaptable. A workshop can develop better tools. A farm can accumulate knowledge and infrastructure.

Why should the value of these things only be realized through a transaction?

WH: But holding an appreciating asset is also an investment strategy.

SW: Yes. But there is a difference between holding something because you expect to sell it for more later and holding something because you want to continue developing its productive capacity.

I’m interested in the second.

An asset should not only store value. It should become increasingly capable of generating new value.

And ideally, it should do so without requiring its liquidation.

2. Tools over Consumption

Why must productive tools constantly be replaced?

SW: I’ve also been thinking about how modern capitalism can progressively separate people from their means of production.

Historically, that could mean losing access to land or machinery.

Today, the separation can be more subtle.

People may own machines but cannot repair them without the manufacturer’s permission.

They may use software but must continuously pay for access.

They may create content but remain dependent on platforms they don’t control.

Even when people possess productive skills, they may need to keep purchasing new tools, licenses, or access rights to remain productive.

One way markets generate recurring revenue is through the replacement of existing tools.

WH: But tools become obsolete. Technology improves. Isn’t replacement sometimes necessary?

SW: Of course.

I’m not arguing that tools should never change.

But a genuinely good tool should be capable of producing value over a long period of time.

It should be repairable, adaptable, and improvable.

A well-made hand tool can last generations. A building can accommodate different uses. A farm can improve its soil over decades. Knowledge can become more useful as it is practiced and shared.

And perhaps the most important characteristic of a good tool is that it can help create more tools.

A workshop can produce not only objects but new builders.

A farm can produce not only food but new farmers.

A school can produce not only graduates but independent thinkers who can develop new ways of learning.

The best tool does not merely produce value. It produces the capacity to create more tools.

WH: But physical resources are limited. Tools wear out. You can’t accumulate productive capacity indefinitely.

SW: I agree. But physical limits don’t mean we must organize economic activity around perpetual replacement.

In fact, scarcity makes maintenance, durability, and improvement more important.

What interests me is a different economic logic.

Instead of continually selling old tools and producing new ones, what if we focused on improving the tools we already have, increasing their productive capacity, and distributing that newly developed capacity to other producers?

I would call this a Cultivation Economy.

WH: Cultivation? As in agriculture?

SW: Agriculture is a useful analogy, but I mean something broader.

Cultivation is the process of developing something’s productive potential through continued care, use, knowledge, and improvement.

When you cultivate land, you don’t necessarily sell the land after every harvest and buy another piece.

You work with the same land. You learn its conditions, improve its soil, develop its infrastructure, and gradually increase what it can sustain.

I think the same logic can apply to buildings, machinery, knowledge, education, and institutions.

In a replacement-oriented economy, one common model of growth is:

Produce → Sell → Replace → Sell Again

In a Cultivation Economy, the process would be:

Create → Hold → Use → Improve → Generate New Productive Capacity → Distribute → Cultivate Further

The difference is not simply that tools last longer.

The difference is what we expect tools to do over time.

A tool should become more useful through maintenance, adaptation, and accumulated knowledge.

And the additional productive capacity it generates should not remain exclusively with the original owner.

It should be possible to share, transfer, or reproduce that capacity among other producers.

WH: But isn’t that just sharing the value you’ve created?

SW: Not exactly.

There is a fundamental difference between distributing products and distributing productive capacity.

If I grow food and give some of it to my neighbors, I’m distributing products.

If I help my neighbors develop their own farms, irrigation systems, and agricultural knowledge, I’m distributing productive capacity.

The second creates the possibility of independent production.

And importantly, I don’t necessarily need to give away my original farm to do that.

I can continue cultivating it while helping others establish their own productive systems.

The objective is not merely to distribute what has been produced, but to distribute the capacity to produce.

3. Development over Growth

Could fifty producers be enough?

SW: I’ve noticed that many cooperatives already practice aspects of this logic through collective ownership.

And I don’t think we necessarily need an enormous, perfectly functioning market to establish a productive economy.

Maybe fifty independent producers would be enough to form a meaningful economic network.

WH: That’s not really the case. There are constraints. Physical ones.

SW: Of course there are physical constraints.

But growth and development are not the same thing.

I’m not suggesting infinite material growth.

I’m suggesting that productive capacity can improve through knowledge, maintenance, better tools, and cooperation without requiring the market itself to continuously expand.

Imagine a network of fifty independent producers.

Not fifty employees working for one company, and not necessarily fifty individuals living together in a commune.

They could be fifty farms, households, workshops, small businesses, or cooperatives, each possessing different productive capabilities.

Some of that work grows food; some of it builds structures, repairs machinery, develops water systems, processes agricultural products, provides healthcare, teaches skills, or manages transportation.

For example, the network’s total labor might divide roughly into 24 percent agriculture, 16 percent building and fabrication, 10 percent water and energy infrastructure, 10 percent food processing, 8 percent healthcare and wellness, 8 percent education, 8 percent design and engineering, 6 percent logistics, 6 percent retail and hospitality, and 4 percent knowledge and records.

The exact composition would depend on local needs and resources.

What matters is not the number itself, but the relationships between these productive capabilities.

WH: But fifty producers can’t provide everything a modern society needs.

SW: Of course not. They would still participate in larger markets.

They would still purchase advanced equipment, medical supplies, vehicles, electronics, and materials that cannot reasonably be produced locally.

I’m not proposing a closed or self-sufficient economy.

I’m interested in a network that can reduce unnecessary dependence by developing and sharing its own productive infrastructure.

Imagine a farmer who needs a greenhouse.

A local builder constructs it. An engineer develops the irrigation system. A technician installs the pumps. Another producer supplies seedlings. A workshop fabricates replacement components.

The farmer gains productive capacity, while the other producers receive income, materials, services, or opportunities for further collaboration.

But the exchange doesn’t end there.

Over time, the builder develops a better greenhouse structure. The engineer improves the irrigation design. The technician learns how to make the system easier to maintain.

The next greenhouse becomes easier and less expensive to build.

The accumulated knowledge can then be shared with other farmers.

Eventually, a new producer might learn enough to establish an independent greenhouse-building workshop.

This is what I mean by cultivation.

The network is not simply exchanging products. It is continuously improving and reproducing its means of production.

WH: But that still requires capital.

SW: Absolutely.

That’s where collective ownership becomes interesting.

A tractor might be too expensive for one small farm, but useful to several farms.

A fabrication workshop might contain equipment that no single producer needs every day.

A shared commercial kitchen could serve multiple food businesses.

Water infrastructure, renewable energy systems, storage facilities, and training spaces could be collectively financed and maintained.

Each producer could retain ownership of their own business and tools while participating in shared infrastructure.

Collective ownership doesn’t necessarily mean eliminating individual ownership.

It can mean making expensive productive tools accessible to more people without requiring everyone to purchase a separate copy.

WH: And what happens when the network becomes successful? Wouldn’t it naturally expand?

SW: It might, but expansion shouldn’t be compulsory.

Why must a successful network of fifty producers become a network of five hundred or five thousand?

What if, instead of expanding one organization indefinitely, it helped establish another independent network of fifty producers?

The original network could share knowledge, training, designs, and organizational experience.

The new network could adapt those methods to its own resources and needs.

They could continue exchanging goods and collaborating without being governed by a single centralized institution.

This would create a federated structure of relatively independent productive networks.

Growth would occur through the reproduction of productive capability rather than the continuous enlargement of one organization.

WH: But wouldn’t larger organizations be more efficient?

SW: In some activities, certainly. Economies of scale are real.

But economies of scale also come with coordination costs, institutional complexity, and sometimes concentrated decision-making power.

I don’t think small is automatically better.

I just don’t think bigger is automatically better either.

What matters is whether the organization can sustain and improve its productive capacity.

Imagine that after ten years, the original fifty producers still number fifty.

But their soil is healthier, their infrastructure is more reliable, their tools are more capable, their maintenance costs are lower, and their knowledge is more sophisticated.

They have trained new producers and helped establish other independent networks.

Even if their membership hasn’t grown, haven’t they developed?

A system doesn’t have to become bigger to become better.

This is why I prefer the term Cultivation Economy over Small-Scale Economy.

Small-scale describes the size of an organization.

Cultivation describes how its productive capacity develops.

A Cultivation Economy can operate at different scales, provided that its growth in capability does not depend primarily on forced replacement, permanent dependency, or endless market expansion.

4. Creation over Capture

Who eventually owns the value we create?

WH: But if a system creates real value, shouldn’t the market eventually recognize it?

SW: Some of it, perhaps. But I don’t think all value can or should be converted into financial returns.

Consider education, infrastructure, ecological restoration, and community development.

These activities can generate benefits far beyond the organizations that initially finance them.

A school may develop people who eventually create new businesses, knowledge, and institutions.

A farm that restores its soil may improve the surrounding ecosystem.

A workshop that teaches people how to build and repair tools may reduce their dependence on external manufacturers.

These are what economists might call positive externalities: benefits extending beyond the parties directly involved in an economic transaction.

Some of that value will never appear on the original organization’s balance sheet.

And I don’t see that as a failure.

WH: But if the benefits are shared by everyone, doesn’t that make infrastructure more suitable for governments or large institutions to build?

SW: Sometimes. Public investment can be essential, especially when infrastructure is too expensive or interconnected for individual producers to provide.

But there is another question: who gets to determine the conditions under which that infrastructure operates?

If individuals depend entirely on infrastructure designed, owned, and governed by external institutions, they may have access to productive tools without having meaningful control over their conditions of production.

A farmer may own the land but depend on externally controlled water systems, energy, roads, financing, and distribution.

A designer may possess the skills but depend on proprietary software and platforms.

When the rules change, individuals often have little choice but to adapt.

The problem isn’t dependence itself. Cooperation always involves interdependence.

The problem is dependence without agency.

And this is why I think infrastructure should not only provide services. It should also cultivate the capabilities of the people who depend on it.

WH: But that doesn’t mean everyone should build their own infrastructure.

SW: Of course not.

The question is not whether infrastructure must be private, public, or collectively owned.

It’s whether people have meaningful opportunities to participate in its development, maintenance, improvement, and governance.

A shared workshop should help people become capable of building and repairing their own tools.

A water system should develop local knowledge about its operation.

An educational institution should produce independent thinkers, not permanent dependence on institutional authority.

In a Cultivation Economy, the positive externality of infrastructure should include the productive autonomy it creates.

An economy cannot meaningfully distribute productive capacity while concentrating all control over the infrastructure that makes production possible.

WH: But the organization still needs to sustain itself financially.

SW: Yes. Financial sustainability is important.

But the need for financial sustainability doesn’t mean every valuable outcome must become a source of private revenue.

In fact, I think one of the problems with measuring success primarily through financial returns is that organizations may gradually prioritize the value they can capture over the value they can create.

And this creates another problem.

I’ve looked at many alternative communities established during the twentieth century.

Some began as experiments in architecture, education, collective living, or new forms of production.

Decades later, their buildings, archives, artworks, and ideas have sometimes been absorbed into museums, universities, foundations, or other institutions.

What was once a living experiment becomes an object of preservation.

WH: But isn’t preservation a good thing?

SW: It can be.

I’m not against museums or institutions preserving knowledge.

But I wonder what happens when the institution preserving an experiment also acquires the authority to define and choose its meaning.

The original community may have been interested in creating a different way of living.

Yet its legacy becomes an exhibition, an academic subject, or a cultural asset.

The capacity to continue the experiment may be lost, even while its historical artifacts survive.

That’s the distinction I’m interested in.

Preserving what a community created is not the same as preserving its capacity to create.

WH: Then how do you prevent institutional capture?

SW: I don’t think any institutional structure can guarantee that it won’t happen.

Even a cooperative can eventually centralize power.

A community can become exclusive. A nonprofit can become dependent on donors. A successful institution can begin prioritizing its own survival over the purposes for which it was established.

The dragon can always return.

But perhaps the Cultivation Economy offers a different strategy.

Instead of concentrating all productive knowledge and infrastructure in one institution, we can continuously distribute the ability to reproduce them.

A workshop teaches people how to establish new workshops.

A farm develops methods that other farmers can adapt.

A cooperative helps establish independent cooperatives rather than requiring every new producer to join the original organization.

The original institution remains valuable, but it is no longer the sole source of productive capability.

This doesn’t eliminate the possibility of capture.

But it makes the productive system less dependent on any single institution.

And I think that is a more meaningful form of resilience.

WH: So you’re not necessarily trying to maximize the value of the original asset?

SW: I’m trying to maximize its capacity to generate further creation, including creation that the original owner may never financially capture.

That’s the distinction.

In a conventional investment framework, an asset’s success is often evaluated through the financial benefits accruing to its owners.

In a Cultivation Economy, I would also ask how much independent productive capacity the asset has helped generate beyond itself.

If a workshop becomes more valuable but everyone remains dependent on it, that’s one kind of success.

If the same workshop helps ten new independent workshops emerge, that’s another.

I’m more interested in the second.

5. Experience over Representation

Can the market determine what is worth creating?

WH: The market is a product of human nature. It’s not created by humans. It’s a reflection of human nature.

SW: Then it’s not necessarily rational, and not guidance, but a reflection.

WH: To understand the market, it’s necessary to understand human nature.

SW: But understanding the market is not understood human nature, let alone human life.

There is a gap between what statistics can capture and what people actually experience.

A reflection of one dimension, or even multiple dimensions, is still not the experience itself.

Representation is not the thing being represented.

I think this is where our perspectives differ.

We often talk about the market as though it were an objective intelligence capable of determining what is valuable.

The market decides. The market knows. The market corrects itself.

But the market is not a single rational being. It is an imagined community.

It emerges from interactions between people with different information, resources, desires, fears, and degrees of power.

Human beings are not perfectly rational, and their behavior is shaped by the institutions in which they participate.

Markets can coordinate exchange and communicate important information.

But they cannot fully represent human experience.

WH: But market prices are still useful signals.

SW: Absolutely. I’m not denying that.

I’m questioning whether a useful signal should become the final authority over what is worth creating.

A person who cannot afford a service may still need it.

A public space may generate little revenue while improving the lives of thousands of people.

An educational program may have no immediate financial return while transforming someone’s ability to think, work, and create.

A community may provide belonging, mutual support, and shared knowledge that cannot be adequately expressed through its property values.

The market can capture certain dimensions of these experiences.

But those dimensions are not the experiences themselves.

And there is something else that concerns me.

When we use representations to make decisions, those representations begin to shape the reality they were supposed to describe.

When schools are evaluated primarily through examination results, education may increasingly organize itself around examinations.

When buildings are evaluated primarily through financial returns, design may increasingly prioritize what can be monetized.

When organizations are evaluated primarily through growth, they may begin expanding even when their members would benefit more from stability.

The model stops being merely descriptive.

It becomes prescriptive.

WH: But without measurement, how do you know whether something is actually working?

SW: We still need measurement.

A Cultivation Economy would need to evaluate productivity, resource consumption, maintenance costs, financial sustainability, ecological conditions, and the capabilities of its members.

But no single indicator should be confused with the entirety of value.

We could measure whether tools are becoming more durable, whether people are gaining independent productive capabilities, whether knowledge is being shared, and whether the network can maintain itself without constantly expanding.

These are measurable dimensions too, even if they don’t all translate directly into market prices.

And we would still need to listen to people’s lived experiences, because no collection of indicators can fully replace them.

That’s why I don’t want to define value solely through market economics.

The market is a tool for exchange and coordination.

It is not the final judge of human life.

If the market is a tool developed through human interaction, why should human life become subordinate to the market?

6. Toward a Cultivation Economy

What should an economy ultimately cultivate?

WH: So are you proposing an alternative to capitalism?

SW: I’m not sure I want to begin by defining it as an alternative to capitalism.

I’m more interested in questioning the assumptions behind how we define economic development.

Why do we so often equate success with expansion?

Why must a business grow larger to be considered successful?

Why must an asset be sold for its value to be realized?

Why should productive tools become obsolete simply because new products need to be sold?

And why do we measure the success of economic activity primarily through what can be captured financially, rather than through the productive capacities it leaves behind?

I think a Cultivation Economy begins with a different set of questions.

What tools do we already possess?

How can we improve them?

How can we make them more durable, adaptable, and productive?

How can the knowledge accumulated through their use become available to others?

And how can one productive system help generate more independent productive systems?

WH: But isn’t that still economic growth?

SW: It can be. I’m not against growth itself.

I’m questioning what we choose to grow.

A replacement-oriented economy often measures growth through increasing production, consumption, sales, and transactions.

A Cultivation Economy would emphasize the development and distribution of productive capacity.

It doesn’t necessarily require more material throughput, more consumers, or larger institutions.

It can develop through improved tools, healthier ecosystems, accumulated knowledge, stronger cooperation, and greater autonomy among producers.

And it doesn’t reject innovation.

A new tool may genuinely be better than an old one. Sometimes replacement is the right decision.

But replacement should serve the development of productive capacity, rather than productive capacity being made dependent on continuous replacement.

WH: And what about ownership? Would everything need to be collectively owned?

SW: No. That’s an important distinction.

I don’t think collective ownership of every asset is necessary.

A farmer can own their farm. A carpenter can own their workshop. A designer can own their equipment.

They can still participate in shared infrastructure, exchange knowledge, and help others develop independent productive capabilities.

What matters is not that everyone owns the same things.

What matters is that access to production does not become increasingly concentrated or dependent on a small number of owners.

A Cultivation Economy is not defined by collective ownership, but by the cultivation and distribution of productive autonomy.

In fact, I think a Cultivation Economy should preserve room for individual experimentation.

Different producers should be able to develop different methods, tools, and ways of living.

The network becomes more resilient through that diversity.

WH: But how do you keep such a system financially sustainable?

SW: Through many of the same mechanisms that sustain other productive organizations.

Selling products and services, maintaining shared assets, investing in infrastructure, developing new capabilities, and exchanging with larger markets.

The difference is that financial return would be treated as one condition of sustainability, not the ultimate definition of success.

A farm can sell its produce without needing to sell the farm.

A workshop can earn income from fabrication while sharing knowledge about repair and maintenance.

A cooperative can charge for services while helping new independent producers establish themselves.

The goal isn’t to eliminate transactions.

It’s to prevent the need for transactions from overwhelming the long-term development of productive capacity.

WH: And you think fifty producers could really demonstrate this?

SW: I think fifty producers could be a meaningful experiment.

Not a complete economic system, and not a universal formula.

But a sufficiently diverse group of independent producers could test whether shared infrastructure, complementary skills, and long-term cultivation can improve their collective productive capacity without requiring continuous organizational expansion.

They could document what works, what fails, which resources remain scarce, and which capabilities can be developed locally.

If the model proves useful, others could adapt it elsewhere.

The objective wouldn’t be to establish a perfect market.

It would be to cultivate a network capable of learning, improving, and reproducing its productive capacities.

And perhaps that’s what I find most interesting about the idea.

It doesn’t require us to design a perfect institution before we begin.

We can start with a piece of land, a workshop, a few productive tools, and a group of people willing to build something together.

Then we cultivate what we have.

We improve the tools.

We share what we learn.

We help others develop their own productive capacities.

And eventually, the system becomes less dependent on its original creators. In fact, this is nothing new, it is just an old form of community building, when community still depends on necessity.

WH: So what would you consider the ultimate success of a Cultivation Economy?

SW: Not the largest market, the highest valuation, or the greatest number of transactions.

I would ask whether the system has made people more capable of producing, maintaining, improving, and reproducing the conditions of their own lives.

Whether the land is healthier.

Whether the tools are better.

Whether the knowledge has deepened.

Whether more people can participate in production without becoming permanently dependent on the original owners.

And whether the productive capacity we have cultivated can continue beyond us.

I think that is a form of value worth creating, even when no single person or institution can fully capture it.

Because ultimately, I don’t want to create something merely to sell it.

I want to create something that continues creating.

A Cultivation Economy is an economy in which productive tools are continuously maintained, improved, and developed to generate new productive capacities, and those capacities are distributed and reproduced among more producers rather than depending on the perpetual replacement and resale of existing tools.

Its success is not defined by how quickly tools circulate through the market, but by how much productive capability they accumulate and how widely that capability can spread.

The purpose is not to build one institution that grows forever.

It is to cultivate the conditions from which more independent producers, tools, and productive networks can emerge.

Not an ever-expanding market, but an ever-expanding capacity to create.

Participants

SW — Hanchi Wu

WH — Qinwen Huang

Editor’s note: This is a reconstructed philosophical dialogue, not a verbatim transcript. Some questions and responses have been expanded to clarify the argument. “Shareholder Economy” and “Cultivation Economy” are conceptual terms used here. The historical discussion refers to the growing influence of shareholder-value governance in the United States during the late twentieth century, not the origin of CEOs or short-term investment behavior. The fifty-producer network is a hypothetical organizational model.