Nothing would change.

In this world, the CEOs of large "free-lending" companies would make millions on repair fees, gas fees, and any other kind of reimbursements simply by charging them more than it costs to fix it.

Even if charging the customer more than it costs to fix it is not allowed - which prevents profit - money will always be used to make more money. Money that goes into research and development leads to better products, which people then purchase, which gives the company more money, etc. And the poor folk will have no money for research and development.

As long as companies are able to be created, as long as people can have different amounts of wealth based on the services they are able to provide - an equal society won't happen.

Unless we're creative, we just outlawed:

1) Hotels (no more renting a room for night)

2) Paid highways, paid parking (because you're effectively renting them for drivers)

3) Power grid, internet access (as we're renting its transfer capability, right?)

Practically any infrastructure is no longer able to be private and rented to multiple users. It actually encourages monopolies, as vertical integration of services is the only viable model in order to avoid being accused of renting.

Plenty of people tried to come up with a better economic system than capitalism, but without much luck. So you are in good company here :)

There are a few problems with your scheme.

• What about owner-operated business? The building and equipment belong to the owner, who also works as CEO, other workers are hired. Do you pay the CEO the "reasonable CEO wage", and take away the rest of the profit as tax? There is no way to determine reasonable CEO wage b/c each business is different, and every person has different skill and effort. And profit is the main motivation for owner to do their best. Fixed salary=fixed effort.




• Paid labor is essentially renting one's time. I guess you exclude that, but the line between thing and labor is blurry. What if you rent out a house, but also provide lawn care and other maintenance? The renters should pay you for your labor, but how much? Different houses require different amount of time and effort to maintain. And house can be maintained at different levels, from spotless luxury to barely habitable.




• What is the "reasonable amount for wear and tear"? Even annual "oil change" on a car is actually a maintenance that can include (or not) several different things. Also, Do you charge for deep-cleaning the car every month, vacuumed once a year, or let it become soiled?




• Rental fee should also include the risk of rented item being destroyed. E.g. car crash. I guess you can get insurance rate for that. But insurance never covers 100%, and you might know the renter better than the insurance company.

I also need to think some more about inflation. Your setup is not banning it explicitly, but you do ban bank interest, and that will reduce inflation, maybe even to zero.

The question deeply misunderstands and misstates a large variety of economic conditions.

First, the notion that in capitalism the rich get richer and the poor get poorer. This is grossly false. In capitalism, everybody gets richer.

The most importang graph in the world shows us this. And Gapminder's fantastic graphs show us the data in splendid animated beauty. Before capitalism, personal material wealth was stagnant for centuries, for millenia. Now it is possible that within two decades there will be almost nobody poor. And those who are still poor will almost exclusively be in non-capitalist countries.

The notion that there are strict limits on production of wealth is simply wrong. Wealth can be leveraged, produced in bulk. 1000 years ago, the wealth of the poorest populations in capitalist countries would have been beyond the reach of the most resplendent emperors.

It's not any "1 percent" that owns the wealth. How many houses in the USA? How many bank accounts? How many pension funds? How many iPhones? How many personal computers?

The notion that people would be better off if renting was prevented is simply risible at best. Renting is cheaper than buying, so in many situations it is a net benefit to the renter. A net financial benefit. Banning it would make him poorer. The fact it would make a property owner poorer also can only be attractive if you like hurting people.

Giving a government the power to prevent such financial benefit is giving them the power to destroy. Nobody will be better off, and many people will be much worse off. The very best you can hope for is stagnation. But the expected result, from looking at countries that try it, is mass murder. From Hayek's Road To Serfdom, to the tens of millions in the former USSR, to the tens of millions in PRC, to the killing fields of Cambodia, to the dreary list of horrors to be found in The Black Book of Communism, there is no apparent end to how horrible it will get.

You're trying to "fix" things from the top down. That's just like communism, fascism, etc... it doesn't work. We have the ghosts of a hundred million people telling us it doesn't work.

People are people and will do people things no matter the threat screamed at them or treat dangled in front of them. Going against human nature only succeeds in bringing unnecessary suffering into the world.

If you want to change the economic outcome in your world you'll have to take into account human nature. So, you'll want to find for your world a living breathing example of the outcome you want.

My example is the apocryphal story of a sushi restaurant in New Zealand.

One day, after lots of preparation and hard work, a couple opened a sushi
restaurant in Aukland. Word got around that they were great. After a
few months they did so much business they could meet all their
financial goals for the week by Wednesday. So, they'd take the rest of
the week off. Still, their success grew. Eventually they did enough
business in a few years they could retire. And they did. They closed
down the restaurant, bought a nice bungalow on the beach and happily
drank beers and watched rugby until the end of their days.

This is what you want. Make people want just enough to make themselves and their immediate loved ones happy and comfortable.

How?

Culture sculpting. Movies, stories, songs, etc...

Make egregious luxuries and gratuitous wealth just in bad taste and bad tasting. "Why would I want a new car? My 10 year old honda works just fine."

Make inheritance seem ugly and insulting. "Why would I give my children a lot of money? If they can't earn it themselves they'll waste it." (Jackie Chan has basically said this) This is the real lynch pin to reducing income inequality. If you don't have static and sterile cesspools of wealth not creating value, but only creating more money then it's free to move around and do actual work.

Sure you'll get people addicted to creating businesses and wealth because you haven't gotten rid of the inherent benefits. Still, you'll severely undercut rent-seeking (which is what you're trying to get rid of) because IMHO rent seeking is a greed fueling behavior.

https://www.investopedia.com/terms/r/rentseeking.asp

Let's try working through this. By the way, this was codified in Deuteronomy by Moses and supposedly practiced by pre-monarchy Israel in antiquity, but the specifics on how this worked out aren't well recorded.

For small businesses, loans could still be made, but would have to be done without interest. Seed money can come from personal savings and benefactors.

Mid sized businesses can also exist. The most primitive definitions of non-slave labor are like contracting: payment per some unit of measure - day of work, goods delivered, goods manufactured. To keep it rent free, the trailings would be available for the poor and strangers to pick over. This created a legal problem as suggested in the book of Ruth - criminals would hide among the fields to ambush and abuse people trying to collect the leftovers.

As to industry - who owns the winepress I set up? It was not, in fact, uncommon in antiquity for someone to build and abandon (or gift to the community) a small piece of public infrastructure. You can probably see, however, that this will have problems scaling up from the simple well or olive press. It's not a violation of the no rent rule, possibly, for a family to personally operate their own press and insist people allow them to perform the labor for a fee.

How would trade work? If you entrust your goods to a trader to take across the continent for trade, when are those goods considered abandoned or rent? I would guess, as with infrastructure, it slips into the public good as soon as you give up working it... Therefore, families would have to cart their own goods to market.

Large industry would be possible. It could take at least two forms: large trustworthy families (think the Medicis) actively managing (and keeping control of) a widespread operation. Or, one or more investors could entrust operation of a large facility or network to a group of managers, who technically now own the piece of tooling or goods (thinking ocean-going trade ships or light factories), and can reassign (on their retirement) the goods and property to someone else. This might be done by a large wealthy family because they want to accomplish some goal : open a trade route, create a sub-assembly supplier. Auto companies have actually engaged in this in near history.

Intellectual property would need to be considered, or not exist. Without government protection of the ownership ideas you have an environment of tightly guarded trade secrets that masters regularly take with them to the grave. Perhaps government could secure an inventors ownership of an idea for some period or life (as is currently done), but require the inventors to be an active participant in the development to market and operation of the idea in order to keep the idea from slipping into the public domain.

Hotels might not exist. The primitive options for travelers were an expectation that every towns' citizens either opened up their homes for visitors (see the last chapters of Judges), or public housing was provided. Such guest houses even provided meals without charge, but you might decide they could charge for food and entertainment.