Global corporations get the vast bulk of media attention, and in the minds of many, they define the business sector. The vast majority of business enterprises, however, are human-scale, rooted in the communities they serve, and mindful of community needs and values.
In its ideal form, the living enterprise seeks to provide a fair and balanced return to all its stakeholders — including safe, meaningful family-wage jobs for its employees; good service and useful, safe, high-quality products for its customers; and a healthy social and natural environment for the community in which it is located. Owners who are engaged in the enterprise as managers, workers, customers, or suppliers secure the firm’s relationship to the community and receive a living return that includes the benefits of life in a healthy and prosperous community with a vibrant natural environment.
Living enterprises may be organized as consumer cooperatives, worker-owned corporations, community corporations, partnerships, nonprofits, family businesses, and simple sole proprietorships — all of which involve rooted, engaged ownership. An enterprise that is publicly traded or owned by a Wall Street private equity fund is captive to Wall Street financial values and priorities, which are antithetical to the values and priorities of a living enterprise.
Contrary to the claims of market fundamentalists, there is no reason that all enterprises should be for-profit. There are many needs — health insurance, banking, electricity, and water among them — that may be best served by community-owned, nonprofit, or cooperative enterprises.
Where the nature of the work requires greater aggregations of skills and capital, individual living enterprises may come together to form larger alliances that still maintain the principles of human-scale organization and community-rooted ownership. Well-known examples include the Mondragón Cooperatives in Spain, the Organic Valley dairy co-op in the United States, local manufacturing networks located throughout the world, and purchasing and branding cooperatives owned by member stores, such as Ace Hardware and True Value.
In what could prove to be a breakthrough initiative for the U.S. labor movement, the United Steelworkers union signed an agreement in October 2009 with Mondragón International, an arm of the Mondragón Cooperatives in the Basque region of Spain, to draw on Mondragón’s expertise in cooperative worker ownership. If unions are to have a future, it will center on worker ownership, and this seems a promising model.7
REAL MARKETS/REAL DEMOCRACY
THE GOAL: Free both the market and democracy from corporate domination by breaking up concentrations of economic power, getting big money out of politics, making corporations pay their own way, and reserving Bill of Rights protections for people.
Real democracy and real markets go hand in hand. Both are accountable and responsible to the people they serve. Both are free from domination by Wall Street corporations that operate as governments unto themselves, organize their internal economies as private fiefdoms, and pass the outsized costs of their centralized command-and-control structures onto the public in the form of social, environmental, and taxpayer subsidies.
Events following the Wall Street meltdown significantly raised public awareness of the Wall Street–Washington political axis and its pernicious consequences for democracy and the market economy. It is a defining issue. For so long as we continue to allow big money to make the rules and set our priorities as a nation, we will continue to bear the consequences of stagnant wages, wasteful consumption, unaffordable health care, climate chaos, and all the other phantom-wealth casino-economy ills.
Wall Street interests lobby relentlessly against rules that protect democracy, such as those that would limit their ability to influence elections and legislation. Similarly, they lobby against rules that protect the market, such as those that would limit the size of individual enterprises, support an equitable distribution of income and ownership, or require corporations to internalize their social and environmental costs. Wall Street also lobbies against any public program that does not direct lucrative public subsidies or contracts to private corporations. The unrelenting objective is to expand corporate monopoly control of resources, markets, money, technology, knowledge, and information.
Democracy is supposed to provide a political forum in which people come together on an equal footing with one another to determine by mutual agreement the rules by which they will live. The market similarly is supposed to provide an economic forum in which people come together on an equal footing to exchange goods, services, and resources based on their individual needs and preferences.
When the essential condition of equal footing is met, the combination of democratic rule making and market exchange gives every person a voice in how society allocates the resources available to it. When a corporation that accepts no allegiance to the community or its interests takes control of both the political forum and the market forum, both democracy and the market lose all but symbolic meaning.
The corporation’s governing framework has evolved primarily through a patchwork of federal and state court decisions favoring the interests of concentrated private capital. Great care went into writing and amending the U.S. Constitution as a governing framework for the organization of political power. As a society, we have never taken on the task of debating and crafting a governing framework for the organization of economic power. Both are essential to a functioning democracy and healthy markets.8
Some basic principles would seem to be self-evident. Because all corporations are created by public action, they properly function as quasi-public bodies accountable to the communities in which they operate. Whatever wealth they create is the collective product of contributions by managers, workers, customers, suppliers, and communities, without which the investments of absentee owners would be worthless. That wealth is therefore properly shared among those who contributed to its creation.
Size, ownership, and rights are all relevant to this discussion. Initiatives to break up and restructure the ownership of oversized corporations are foundational. Rigorous antitrust enforcement can break up concentrations of corporate power and give employees or the communities in which they live first option to purchase the divested units.
Employees and communities should have the option in bankruptcy proceedings of paying off creditors at a discounted rate and taking possession of the corporation’s remaining assets. Rules governing company pension funds might allow employees to use them to purchase the assets, and voting control, of the firms that employ them. The rules governing employee stock ownership plans need to be revised to assure real worker control.
A corporation’s workers, managers, and investors all properly enjoy the protections of the U.S. Bill of Rights. The corporation itself should not. If a constitutional amendment is needed to communicate that message to the Supreme Court, then so be it.
Other measures to support a transition to real democracy and real markets include
• levying a progressive tax on corporate profits and assets to create an incentive to voluntarily break up monopolistic concentrations of corporate power;
• introducing proportional representation and instant runoff voting to open meaningful space for third parties in elections;
• eliminating public subsidies for private-benefit corporations;
• establishing rules to assure that corporations bear the full social and environmental costs of their operations and imposing fees on those that do not; and
• requiring that all corporate charters clearly specify the public purpose the corporation is chartered to serve and revoking the charters of corporations that do not comply.
LOCAL LIVING ECONOMIES
THE GOAL: Create a planetary system of coherent, self-reliant local economies that function as dynamic, life-nurturing subsystems of their local ecosystems.
When economies are local and self-reliant, people have more control over their lives and enjoy the full benefit of their labor and investments. When communities focus on sustaining themselves using their own resources rather than appropri
ating the resources of others, they give more attention to living within their environmental means.
When people know they and their children will be living with the social and environmental consequences of their business decisions, they have a compelling reason to take the health of the community and the natural environment into consideration.
All the many elements of the New Economy come together at the level of the bioregion: the living-wealth indicators and money system; policies that support the sharing of resources; living enterprises; real markets; and real democracy. All of these are supported by the new global rules discussed in the next section.
To advance local living economies, we need to nurture the growth and interlinking of living enterprises to form the building blocks of prosperous, resilient bioregional economies supportive of ecological balance, equitable distribution, and living democracy. We must reorient land-use patterns and transportation systems; retrofit buildings; concentrate populations in walkable, energy-efficient, multistrata communities; and rebuild local productive capacities based on closed-loop production and consumption models to reduce long-distance shipping, eliminate waste, and increase energy efficiency. We also must implement regional living-wealth indicators to track our progress toward zero waste and self-reliance in food, energy, water, and other essentials of daily life.
The decay of our public physical infrastructure creates an opportunity to reshape land-use and transportation patterns as we rebuild. The decimation of our industrial capacity allows us to reindustrialize on a new model of green technology, functional durability, and regionalized, closed-loop, zero-emissions product cycles.
Striving for local self-reliance does not mean closing one’s borders. It does mean recognizing that every healthy living organism depends on a protective membrane that is essential to maintaining its integrity. The single cell has the cell wall. The animal has its skin, the tree its bark, the ecosystem its topographic and climatic barriers, and the biosphere Earth’s atmosphere.
The fair and balanced exchange of surpluses among regional economies is integral to the New Economy vision, as is the free sharing of information and technical knowledge. Trade, however, is never a priority in itself, and there is no assumption that more trade is necessarily better.
These basic ideas are spurring local living-economy initiatives around the world that are interlinking living enterprises to form the essential building blocks of diversified, self-reliant local economies. A local food and agriculture building block, for example, typically includes a region’s farmers, ranchers, and fishers as well as food processors, food transporters, farmers’ markets, restaurants, food retailers, and food- serving institutions such as schools and hospitals, among others.9
There are far too many elements to these many initiatives to offer details. You can find more information on real-life initiatives on the Web sites of the American Independent Business Alliance (amiba.net), the Business Alliance for Local Living Economies (livingeconomies.org), the New Rules Project (newrules.org), and YES! Magazine (yesmagazine.org).
GLOBAL RULES
THE GOAL: Create a system of global rules and institutions that support living-wealth indicators and money systems, shared prosperity, living enterprises, real democracy, and local living economies.
Over the past thirty years, corporate interests have aggressively crafted global rules and institutions that in effect give global corporations a protected right to do business in whatever country they choose while restricting the right of a government to intervene to protect the interests of its own people, communities, and natural systems.
Some international trade and investment agreements even go so far as to give corporations the right to sue a government if they lose expected profits as the result of a regulation that protects the health of a community’s people and natural systems. They also require governments to vigorously protect corporate intellectual property rights, thus impairing the international sharing of information and technical knowledge.
Such rules put the rights of corporations ahead of the rights of people and even the rights and responsibilities of government. They give private for-profit global corporations virtual control over local economic priorities, free from accountability to the people affected.
Recall that the larger New Economy goal is a planetary economic system that self-organizes toward three system conditions: ecological sustainability, equitable distribution, and living democracy. To achieve these three conditions, each bioregion must have substantial control of its economic priorities and resources. There is little place in such a system for global corporations that command internal economies larger than that of most countries and accept no responsibility for the common good.
To achieve a New Economy world that works for all, the right to economic self-determination of nations and peoples must trump the assumed rights of any transnational corporation. Appropriate global rules will limit the rights and size of individual corporations, support balanced trade, set fair commodity prices, and internalize the true cost of goods and services in market prices — all in line with sound market principles. They will further recognize the right of nations and communities to determine with whom they will trade and whom they will invite to invest in their economies and on what terms.
The struggle over global rules is in essence a struggle between corporate power and people power, between capitalism and democracy, to determine who will rule. To tip the balance in favor of democracy, international trade agreements will need to be rewritten and global institutions like the World Trade Organization, the World Bank, and the International Monetary Fund, which are organized to advance the old economy, will need to be dismantled and replaced by institutions designed to serve the new.
The seven critical intervention clusters outlined in this chapter are intended to replace an inherently unstable system moving toward collapse with a more stable system that maintains equilibrium around three system conditions we defined earlier as ecological balance, equitable distribution, and living democracy.
These intervention clusters are focal points for mobilizing citizen action to achieve the needed cultural and institutional transformation. Successful action will shift the system’s defining value from money to life, its defining purpose from the creation of phantom wealth to the creation of real wealth, and its locus of power from corporations to people and from global to local.
This is an ambitious agenda. We will address the how question in greater depth in part V. First, however, I want to address a few questions I suspect may be weighing heavily on your mind: If we really shut down Wall Street, what happens to my credit card? mortgage? retirement? insurance? These are good questions, to which we now turn.
CHAPTER 14
WHAT ABOUT MY. . .?
A confidence trick or confidence game…is an attempt to defraud a person or group by gaining their confidence. The victim is known as the mark, the trickster is called a confidence man, con man, confidence trickster, or con artist, and any accomplices are known as shills. Confidence men exploit human characteristics such as greed and dishonesty, and have victimized individuals from all walks of life.
wikipedia, “confidence trick”
In my experience, the first reaction of most people to the call to shut down Wall Street is one of jubilant enthusiasm — a measure of the public outrage at Wall Street excesses. The second reaction is, “But what about my 401(k) retirement account?” The same question might be raised about our credit cards, mortgages, and medical, homeowners, and auto insurance.
In fact, the Wall Street way of dealing with each of these is a scam. Wall Street doesn’t develop its business plans to meet our needs; it develops its plans to place us in a position of dependence on Wall Street products that afford it the greatest opportunity to profit at our expense.
There are better ways to meet each of the needs that Wall Street offerings address. To understand the options, we must step back to identify the real need we are trying to satisfy and then ex
plore what the alternatives might be to the Wall Street product.
This chapter is about that exploration. Along the way, we will come to recognize the ways in which Wall Street has succeeded in limiting our options to those that generate the greatest profit for itself. In each instance, we will find that we will be better served by options that Wall Street has denied us or hopes we will not discover.
In short, we are the marks in a sophisticated Wall Street con game that depends on our buying into the illusion that phantom wealth is somehow real.
PHANTOM WEALTH IS ONLY PHANTOM WEALTH
To understand what we are up against, we must revisit the distinction between phantom wealth and real wealth. Phantom wealth is bogus, a product of illusion and fantasies of effortless luxury that are expertly cultivated by highly skilled professional propagandists funded by Wall Street with billions of advertising dollars. To get the picture on the fantasy, thumb through any business magazine and look at the images and promises in the ads for Wall Street investment houses. These ads are part of what in con slang is called setting up the mark.
Setting Up the Mark
I grumble every time I hear business reporters on the evening news refer to stock market results by saying, “Today, investors [did this or that].” It is another example of setting up the mark by manipulating the language to make the marks believe that they are making a serious, solid investment rather than betting on a crapshoot. Gambling in Vegas is more honest. There you don’t “invest” in the roulette wheel. You place a bet on the ball. On Wall Street, bets on the movement of prices of pieces of paper are called investments to make them sound real and productive.
Agenda for a New Economy Page 17