Time to Ditch Our Profit-Hungry Corporate Economy: Here's What the Future Could Look Like Instead
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And so, how do you bring companies back to earth; how do you bring them back to focus on the real economy? It comes down to designing ownership in a way that keeps mission in focus. So the five elements start with purpose -- you have to have a generative purpose. Are you a bank that is out to help people buy homes and cars and do things in the real world, or are you just trying to extract as much wealth as possible and pass the risk off to someone else? Those are two different kinds of purposes -- and you know, we are not talking nonprofits here -- we're not talking about "save the world" kind of a mission -- we're just talking about human beings doing something in the real economy.
So purpose is the first element that has to be there if you're going to have a generative design. The second is what I call membership, what is commonly called ownership. Who is the firm? Who gets to vote? Who has a share in the profits? So in a cooperative for example, you can have producers, like in farmer-owned cooperative, the producers are the members. You could have employees be the members. In a credit union the customers or depositors are the members. In a food co-op the shoppers are the members. It's a social boundary -- who is the firm, who is the enterprise. That's the second element.
Then third is governance -- who has a say in the major decisions? Different than management, which is day-to-day, governance is more long-term, big picture.
Fourth is capitalization. How do you get capital into a firm without giving total control to capital? How do you make capital a friend rather than a master of enterprise?
Then the fifth is network. No company is an isolated entity. You are going to have a stronger sense of yourself as a generative economy if you're part of a network that supports your values. So I talk about the different commodity networks and what I call values-based networks.
Not every generative firms has every one of these elements. But the more you have, the stronger the design you have.
TL: So do you think there is any hope for the publicly traded companies that we have now?
MK: Yeah, I think that there has to be. The reason that I focus on the more ideal models is that you have to start with a powerful vision of what it is that you want. If we don't have a vision of what a generative economy should look like, we don't have a compass point to guide us. Think about democracy: we have a very pure idea of democracy in our minds. It's about equality, it's about justice, and democracy always falls short of that but it steers us, those values give us a compass point.
What is that compass point with businesses? I don't think it has ever been articulated that there can be an economy guided by powerful, positive values. Not just big corporate firms that we try to hedge them around with rules and laws, but actually guided internally by a set of positive values -- fairness, sustainability, community.
So you start with a vision of the positive and the possible -- I think that is really critical and that's been missing. What you have in your mind as a culture, yes it is possible first. Second, here is what it looks like and the design elements that hold it in place. Then you can begin to talk about how do we move more of existing large companies into this model. As this point if you start with the large companies and just try to change them as they are -- I've seen this happen -- I used to think this myself. You know, you start with federal legislation and new corporate chartering, we need to change the purpose of firms and we need to do it in state law or federal law and we're going to drive this change. There was a movement to do that in the UK but it just gets defeated or completely watered down by the time it gets anywhere.