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Can There Ever Be Good Corporations?

When the employees own the company, it changes absolutely everything.
 
 
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George Siemon calls himself Organic Valley’s “C-E-I-E-I-O.” An organic farmer himself, he leads the $700 million cooperative of small dairy and egg farmers with a commitment to sustainability.
Photo Credit: Organic Valley

 

Our economic system is profoundly broken. To anyone paying attention, that much is clear. But what’s less clear is this: Our approach to fixing the economy is broken as well. The whole notion of “fighting corporate power” arises from an underlying belief that there is no alternative to capitalism as we know it. Starting from the insight that capitalism has become virtually a universal economy, we conclude that our best hope is to regulate corporations and work for countervailing powers like unions. But then we’ve lost before we begin. We’ve defined ourselves as marginal and powerless.

There is another approach. It’s bubbling up all around us in the form of economic alternatives like cooperatives, employee-owned firms, social enterprises, and community land trusts. We don’t recognize that these represent a coherent, workable alternative to capitalism, for two reasons.

First, we haven’t acknowledged what unites them. Second, we don’t have a name for this seemingly disparate batch of alternatives.

Ownership unites them. That’s the reason that these different models represent change that goes deep. It’s the reason this change is fundamental, enduring, and real. This transformation doesn’t depend on the legislative or presidential whims of a particular hour, but is instead a permanent shift in the underlying architecture of economic power. 

The alternatives emerging in our time represent an unsung ownership revolution. This revolution is about broadening economic power from the few to the many and redefining the purpose of economic activity. The aim isn’t to endlessly grow gross domestic product or to create wealth for a financial elite, but to generate the conditions for the flourishing of life.

Here we confront the second consideration—the need for a name. We can call this new economy the generative economy. The word generative is from the Greek ge; it’s the same root form found in the word Gaia and means “the carrying on of life.” The generative economy is one whose fundamental architecture tends to create beneficial rather than harmful outcomes. It has a built-in tendency to be socially fair and ecologically sustainable.

Employees in this firm are not a countervailing power. They're not legally outside the firm, negotiating with it. They are the firm.

Options like worker ownership and cooperatives not only spread wealth but ensure that owners are local, hence more likely to care about local ecological impacts. And they allow enterprises to reject the growth imperative endangering the biosphere. Generative enterprise does not answer to the demands of the finance system, which locks publicly traded companies into a growth path in order to keep stock prices inflated.

In writing the book,  Owning Our Future: The Emerging Ownership Revolution, I’ve been traveling around and visiting places where this new economy is bubbling up. Here’s some of the good news I have to share: Generative ownership isn’t just about small, local, founder-run companies. It’s possible to keep the soul of these companies alive even at large scale, and long after the founder is gone.

Founded on Fairness

Consider, for example, the John Lewis Partnership (JLP) in England. It’s the largest department store chain in the country, with 35 department stores and 272 Waitrose grocery stores. Revenues of this company are more than $11.5 billion. If placed into the Fortune 500 list of the largest U.S. corporations, JLP would settle in around 212—a little higher than Starbucks. It’s 100 percent owned by its employees.

The John Lewis Partnership is built around the value of fairness. The founder, John Spedan Lewis, who created its democratic structure about a century ago, believed that traditional ownership was unfair because dividends paid to shareholders for doing nothing were obscene when workers barely earned subsistence wages. The stated purpose of the company he created is to serve the happiness of its employees, or, as the company calls them, partners.

 
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