Sustainable economies and the ownership solution [Jeff Gates, ISSS 1998 Plenary Session, July 22/98

These notes are a rough transcription, prepared as each individual presenter and/or commentator spoke at the ISSS 1998 conference. Gaps and errors have likely occurred. For more accurate citations, please consult the original presenters. These notes have been contributed to the ISSS by David Ing, of the IBM Advanced Business Institute (sabi@systemicbusiness.org).

Jeff Gates, from Atlanta, lawyer, author of book.

The Ownership Solution -- book.

• Originated with Stephan Steffain?
• Why can't we get sustainable economy, across global boundaries?
• We have disconnected capitalism: money managers.
• No complex design of values, Adam Smith would have thought about some moral manager.
• Not a self-designed system, it's a disconnected capitalism.

• Billionaires have assets greater than incomes of 45% of the world.
• Bill Gates is more than combined net worth of 40% of Americans.

• Drucker role of management to make knowledge valuable.
• Need up-close capitalism
• If Adam Smith alive today, wouldn't use invisible hand, would use feedback loop.
• Not enough of us are in the conversation.

• Books suggests a different approach.

• Like physics, different groups of connections that overlap and give a texture to the whole.

• Environmental
• Fiscal
• Social
• Cultural
• Political.

Instead of paying utilities, what if you bought assets?

• CSOPs: Consumer Share Ownership Plans.
• Creates a feedback loop

• Crowding out infrastructure, research, education.
• 42% of students can't use computers, because electrical wiring in buildings in insufficient.
• Gave Pentagon $11b more than they asked for.
• Gap between rich and poor 13 times, now 15 times, going to 20 times.
• People now working more for less money: parenting deficit.
• Bob Hutton at Harvard: strain on civil society; culturally non-sustainable.
• Poverty in young families, stress on marriage.
• Now have a Tiffany-Kmart strategy from Saatchi & Saatchi: Don't advertise to the middle market.
• By 2005, 60% of purchasing power will be hands in millionaires.
• California spends 9% on prisons: for every 3 professors laid off, hiring correction officers
• Where's the humanity in the system?

• Corporations being sucked into financial cyberspace.
• Grand Met bought Pillsbury: eye is now on career track, not social, which reflects in decline of Minneapolis.

• The Overworked American (Julius Schorr)
• Baby boomers will squeeze out investment interests: 71% have $2000 in assets.

• Poll scared FDR, to create social security: a tax the workers solution.
• Social security is the most regressive, it's a tax on jobs.
• Not debating why we're relying on it, but how to finance it.
• Looking at an indexed portfolio of equities.
• Economists advising in-transition governments.

• Only thing worse than communistic society is life in post-communistic society.

• International language is now finance.
• Capitalism is happy to concentrate nationalism.
• $90 trillion of non-securitized assets.

• Two sources of funds:
1. Internal:
1. undistributed profits.
2. depreciation reserves
2. External
1. debt
2. equity
• Closed system of finance.

• Personal savings is a dartboard.
• Business savings are continually internally generated funds.
• Makes rich people richer.

• e.g. chicken processing company: Jamaica Broilers, ownership not only by employees, but also suppliers, distributors.

• Literacy is an issue, 3 dimensions:
• Political illiteracy
• Financial illiteracy
• Ecological illiteracy
• Had lots of mergers and acquisition, but did anyone ask if the workers would like to buy in?
• We have employment programs, but no ownership programs.

• Government is obliged to secure rights.

• Gorbachev endorses the book.

 

Concentration	Connection
social division	social cohesion
population accumulation	asset accumulation
fiscal hindsight	fiscal foresight
fixed labour costs	flexible costs
alienation	alignment
centralize	localize
radical	humanize
financial colonization	indigenization

 

• fiscal
• political
• social
• cultural
• environmental
• sustainable

• are
• interdependent ...

• Concentration of property
• Inability to adapt.

Questions

Are we talking about the sustainability of our civilization? What about other species? Growth of illicit drugs and sex is largest growing trend.

• Poll of women in Russia: second most popular answer was prostitution, to get hard currency.
• Problem is inclusion.
• If we had localized, human-sized system, people will take care of local ecologies.
• If the only value is labour as an economic unit, then lots of movement. There's value in staying put.

• No, because capitalists will continue to fund capitalisms within the system.
• The issue is how to engineer inclusion, not between the people who are already included.

• Yes, doing it.

• Working on this 25 years, but the few ESOPs are a small phenomenon.
• Financial and fiscal non-sustainability speaks to conservative financial people.

• People are not educated, and don't associated as many patterns associated with ownership.
• Noone educates people to be owners.
• Need to get the feedback patterns in the right way.
• de Raadt: Democracy is effective in justice, but not in ethics. We need to know how to live, and can then influence this through the democratic process.