Watch the podcast or read the talk.
RSA virtual coffeehouse conversation: Building an economy fit to handle a crisis.
In this talk I describe how the company-as-property paradigm of our companies–limited companies, cooperatives, etc.,–is one of the deeply hidden root causes of the messes we’re in: SARS-Coronavirus-2 has turned into an horrific epidemic and climate change is now a climaate emergency.
It is also part of why many approaches to address our problems have failed to become the norm: circular economy, triple bottom line, economy for the common good, ethical leadership, and much more would be the norm by now;
Sociocracy, Holacracy, mental health at work, and many other initiatives to make the workplace both productive and suited to human beings would be the norm by now; if we used an inclusive incorporation such as the FairShares Commons.
|Or read it here if you prefer.
This podcast is based on a talk I gave earlier today to the RSA, as their second virtual talk during this SARS-Coronavirus-2 lockdown.
Thank you for watching this podcast!
I have one request to you during this talk: don’t ask yourself whether what I’m saying is crazy; ask yourself, is it crazy enough to get us out of the messes we’re in?
The SARS-coronavirus-2 is our acute mess. In 2003 we had SARS Coronavirus 1. It hit Beijing six months after I moved there as a Procter and Gamble manager. I stayed through the entire SARS-1 epidemic. At first, Beijing didn’t react well. Then they reacted really well, and really fast. I was amazed; lockdown of a 21 Million city, a brand new, 1000 bed, concrete hospital in less than a week. When SARS-Corona-2 hit this year, China moved fast and well because they had been expecting it.
Around the world, ever since 2003, clear warnings have been given that a serious global pandemic is coming. Why did we let it get so bad?
Or take the climate emergency, our chronic mess: Limits to Growth was published in 1972. 48 years ago. Why has it become a full-blown emergency?
|I believe we can learn from the apartheid South Africa I grew up in, because I see similar DNA in our economy. Before I use this analogy with apartheid to identify systemic root causes for the mess we’re in, let’s look at just what kind of a mess we’re in.
We have coronaviruses, anxiety, xenophobia, rampant pollution, a climate emergency, many people with no job security, who now form a rapidly growing class of people called the precariat. We have a world of mistrust, polarisation, injustice and division. A world that only works for the few, and is fragile even for those few.
I imagine most of us want to live in a world that looks something like this. You’ll have clean air and water. health. Success, and self-respect. Security, freedom, belonging. Cooperation. Competition, the chance to achieve your goals with a stable income. A world that meets all of your needs individually and collectively. I call this a UniOne world; Uni, because every single person’s uniqueness is 100% there, and One, because our common oneness is 100% there.
Why don’t we have this UniOne world? A big part is because business is failing us.
Why is business failing us? Is it because we have designed companies to maximise financial returns to financial investors? So maximising investor returns must be wrong. Right?
So we tried for-purpose. B-Corporations; leaders must have better ethics, business must be circular, business must deliver on the triple bottom line, Impact investing started up, and more.
But necessary as they are, why have they all failed to clean up our messes? Why did it take so long to act when the SARS-Coronavirus-2 emerged? Why do we have a worsening climate emergency?
Even if you don’t buy what I’m about to say; please at least rent it for the rest of the hour. Play with it and see where it takes you.
What if maximising profit and investor returns is the central purpose of all business?
Does this sound crazy? Crazy enough to maybe have value?.
Maximising returns is fine. We need to expand our concept of investor, capital and profit. What if all capitals are multiplied by a company, not just money? All natural, social, relationship, intellectual, human, manufactured, and financial capitals. What if we maximise profit in each and every one of these capitals, not just in money? That is exactly what a regenerative economy is! To create a UniOne world, with a regenerative economy, we don’t need less capitalism, we need big capitalism, inclusive of all capitals.
So why aren’t we doing that?
Because apartheid. The very essence of apartheid is in the original Dutch meaning of the word: apart – division, separation – and heid, the Dutch suffix meaning “a context of”. A context of separation is the DNA of apartheid.
In apartheid South Africa, only those who happened to be lucky enough to be born with a white skin, as I was, had the right to vote. And a share of the wealth generated.
In South Africa’s apartheid, everyone was separated by skin colour from governance and wealth sharing.
What do we have in business today? Only if you are lucky enough to have financial capital to invest, do you vote in the annual general meetings that elect the leaders, and share in the wealth generated. Do you see a resemblance to the context of separation that is the DNA of apartheid?
The same story of superiority:I n apartheid, having whiteness. In business, having money.
Apartheid could never create a South Africa where all could thrive. So why do we expect to get a UniOne world, if we build separation, not inclusion?
In business there are many capitals and investors. Staff, suppliers, customers, all invest human capital. Cities invest their infrastructure, their long-term stability, education capitals. Nature invests natural capitals in tremendous amounts.
To get a regenerative economy capable of creating the UniOne world we want to live in, we must reinvent business so that each business maximises all capitals and includes all stakeholders in governance and wealth sharing.
Still with me? Is what I’m saying crazy? Only crazy can get us out of the
mess we’re in!
I’ll emphasize what I said before: this context of separation in business is the foundational reason why we are still in a mess. Circular, for-purpose, triple bottom line, renewable energy, impact investing – all of these – would have become the global norm, if we were not all trapped by the apartheid-like context of separation that excludes all capitals other than financial; excludes all investors other than financial investors from corporate governance and return on investment.
People like us invented today’s incorporation out of yesterday’s story of separation; today we have a new story of inclusion, of UniOne. We can and must reinvent incorporation to match our new story.
We need inclusive incorporation. All of the tension between investors of different kinds of capital; all of their unique perspectives and needs; must be inside the company. Only then can each business, society, and its economy as one whole, benefit by maximising the return from each individual’s and capital’s unique strengths.
Now, as a side comment, I’m only talking here about general meetings and the board; of course all operating decisions lie with the executive and staff.
Let’s explore inclusive incorporation for a bit. What do you think would change if you had voting rights and a share of the dividends and capital gain of every company that you are a regular customer of; or that you supply to; or that you work for?
If you are a gig worker, what would change if you had an equitable balance in voting power and a share of the dividends? What would change in health care if that were true? What would Uber, Facebook, Amazon, the oil industry be like?
Here’s one way that works now. The FairShares Commons works now, because it uses what you already know. Starting with the limited company or the cooperative as the basis you can build an inclusive, all capitals all stakeholders company this afternoon in many countries. I cannot stress this enough; even though company law and policy needs to be improved, we do not need to wait. There is a way to get close enough to a FairShares Commons company using existing company law.
Here’s how you build an inclusive FairShares Commons company. First identify all the relevant capitals your company runs on; second, who are the investors of those capitals; third, define a class of shares specific to each of those investors and capitals; fourth, put inclusive commons values into your constitution. Finally, Incorporate.
Here’s what it will look like: You will likely have financial investor shares. If you want to attract financial investors; if you want to have a healthy pension; you had better deliver very healthy financial returns! All of the financial value of the company is in these shares.
You will have staff shares, for everyone working for the company and investing their relationships, their intelligence and their time. You will have customer shares, supplier shares, shares for representatives of nature, maybe for the cities you operate in, perhaps even for the countries you operate in. None of the financial value is in these shares. They cannot be bought or sold. They represent the non-financial capitals. They do have voting rights, dividend rights, and a share of the appreciation.
You also have stewards. These are like the trustees in a trust; they must vote in general meetings according to the principles of the company, and have sufficient power to veto anything against those principles.
These now naturally form open regenerative ecosystems and a circular economy, because each company is now a semi-open system at nature’s optimum point of competition and collaboration. All companies in the circle benefit from the wealth generated by collaborating to optimise the whole, and they trust each other long term because they have full information and voting rights in the whole circle. Without this designed long-term trust, any circular set of businesses is fragile. This is one fundamental reason why circular is not yet the norm it should be..
One caveat. The FairShares Commons only works if the first four layers are addressed in an inclusive UniOne way.
This is the topic of another video though, or download my book.
|If we want to live in a UniOne world, if we want to clean up messes like our current Corona and Climate Emergencies, we must end the context of separation in business. We must incorporate based on a new story of including all investors of all capitals in governance and wealth sharing. We must have businesses that cannot be bought or sold, even more are fully free to contribute their full uniqueness, and free to be held accountable if they cause harm. Our FairShares Commons approach is one way to do just that, and you can do it, or get close enough to it, in many countries today. There is no need to wait for new laws. Just do it.
We are doing all we can to create a UniOne world with our consulting, trainings, startup incubation; and this year we are starting an investment fund.
Would you be willing to do what you can to transform the fundamentals?
1) Read my forthcoming book on this (pre-orders and draft e-book available now) 2) Develop your own capacity to thrive in nebulous, complex times 3) Start up your own company using such an inclusive incorporation. 4) Make your money matter. Invest all of your pension in businesses using inclusive incorporation like the FairShares Commons