If Not Global Capitalism - then What
This paper is intended to stimulate a process of academic
exploration into a Great Unknown. My objective is to present
a phenomenon I have observed and to speculate as to connections
which may be made across several disciplines based upon
new a priori assumptions.
I do not profess any particular knowledge or expertise in
any of the areas which I will cover I have merely
learnt enough over the years to begin to understand
to some degree the extent of my ignorance.
I make intuitive connections and speculate as to the way
in which the world as we experience it actually relates
to the theory of economics and politics and by analogy with
advances in other sciences. As a result I posit an optimistic
view of the potential for Society from the emergence of
a new and Open form of Capitalism.
As J K Galbraith said in relation to private bank creation
of Money, the concept of Open Capital
is so simple
. it repels the mind".
Open Capital is defined as a proportional share in
an enterprise for an indeterminate time
Enterprise is defined as any entity within
which two or more individuals create, accumulate or exchange
Value is indefinite or indeterminate: Value is to Economics
as Energy and Matter are to Physics. Unfortunately, Economics
and thence Politics remain mired in a Newtonian world of
absolute certainties and closed boundaries and
A quantum leap is needed in Economics to explain
the phenomenon of Open Capital and to form a
basis for what follows we must make a brief detour into
The Metaphysics Of Value
Robert Pirsig, in his books Zen and the Art of Motorcycle
Maintenance and Lila sets out a case that
Western civilisation has long been under the thrall of an
artificial division between subject and object.
He proposed that the primary reality is Quality
which is both formless and indefinable. It is not a thing
but an event at which the subject becomes aware of the object
and before he distinguishes it: ie a non-intellectual awareness
or pre-intellectual reality.
Quality is the basis of both subject and object. The bad
Quality sensation one gets from sitting on a
hot stove leads to a consciousness both of oneself
the subject and the stove the object. He went
on to distinguish between Static and Dynamic
Quality, where the static order of one level forms the precondition
for the establishment of a higher level.
The perspective I offer upon a new form of Economics more
nearly related to reality (based upon empirical observation)
is based upon treating Value as a form of Quality
as envisioned by Pirsig.
Another perspective upon Value is that of the writer EC
Riegel who in his posthumously published book on
monetary matters Flight from Inflation - defined
Value as the Relativity of Desire
again implying indeterminacy. Taking Pirsigs approach
Capital may be viewed as Static Value and Money
as Dynamic Value. Transactions are
the events at which individuals (Subjects) interact
with each other or with Capital (both as Objects) to create
forms of Value and at which Value judgments
are made based upon a Value Unit.
The result of these Value Events /Transactions is to create
subject/object pairings in the form of data ie Who owns
or has rights of use in What, and - by reference to some
form of Value Unit at what Price. This data we recognise
as accounting data.
Note at this point that modern Neo-Classical
Economics confuses indeterminate Value with a market
determined Price a confusion best summarised by Oscar
Wildes definition of a Cynic as someone who knows
the Price of Everything and the Value of Nothing.
Data may be static such as the written word, or magnetic
polarities on computer discs; or dynamic, such as the packets
of energy passing between databases and defined under the
Internet Protocol. This Data identifies the
subject with objects such as tangible Material Value
such as Land, Commodities, Goods and Services; energy
ieCalorific Value derived from oil, gas, and
other fuels and source. Data may itself constitute Intellectual
Value such as music, video, information, the
written word and software and may exist in electronic or
tangible form. It, too, may then be defined in a subject/object
pairing through the concept of intellectual property.
Other forms of Value are however not definable by data:
who has not paid more than an object is worth
because it has sentimental Value? In particular
we see:Emotional Value at its
most basic, the need to love and to be loved, but extending
into the concept of Society; 'Spiritual Value
who am I? Why am I here? Questions in relation to
God and the relationship with the eternal. We may therefore
look at the transaction or value event
in a new light. We may, for instance be prepared to exchange
Material Value for the right to watch a film Intellectual
Value from which we derive Spiritual and/or Emotional
Value. As these different types of Value accumulate they
form Static Value/ Capital, in Material, Intellectual or
other forms. The creation and circulation of Value essentially
comprises the concept we know of as Money.
Money / Dynamic Value
Few people understand Money: the following - which was written
by E C Riegel in Flight from Inflation a Monetary
Alternative in the early Fifties and published posthumously
in 1978 is a good summary.
The purpose of money is to facilitate barter by splitting
the transaction into two parts, the acceptor of money reserving
the power to requisition value from any trader at any time.
The method of money is to employ a concept of value in terms
of a value unit dissociated from any object. The monetary
unit is any adopted value, which value is the basis relative
to which other values may be expressed. The monetary
process is a dynamic one involving the creation and recording
of obligations as between individuals and the later fulfilment
of these obligations. The monetary Value Event/
Transaction involves the creation of Credit:
so in exchange for something of Value to me (of whatever
type) I will assume an obligation to provide something of
equivalent Value at a future point in time.
These obligations may be recorded on transferable documents,
electronically or even merely retained mentally. Let us
consider the sum total of all obligations as recorded in
the accounting universe of all sets of accounting records.
Essentially this comprises a ledger of ledgers
or Master Ledger as Riegel put it. Another way
of viewing it is as a Cloud of Accounts
Receivable and Accounts Payable.
This massive database of Credit/obligations
is not Money, but temporary Capital (often known
as Working Capital). It is Static Value
which only becomes Money/ Dynamic Value when
exchanged in the transitory Monetary process. Rather than
the clearing of these obligations by a mutually
owned and operated exchange and offset system we utilise
Banks as intermediaries to carry out the Clearing
function for us. In this electronic age what we think of
as Money is in fact not tangible cash but rather
for the most part (97% of Money in circulation) the flow
of data between databases of obligations maintained by Credit
Institutions (ie Banks and Building Societies).
The role of Credit Institutions such as Banks in current
Money creation is little understood. Banks literally loan
Money into existence. In exchange for an obligation by an
Individual to provide to the Bank something of Value (ie
a claim upon Value) as described above the Banks obligation
is merely to provide another obligation at some future time.
These Bank-issued obligations are therefore not a claim
upon Value, but rather a claim upon a claim upon Value.
A double negative giving rise to what is essentially
a false positive.
The true source of Credit is the Individual, not the intermediary
Bank, and Banks therefore levy upon Borrowers a return
in the form of Interest - upon this Money they create from
nothing despite the fact that it is literally Value-less.
At this point it is necessary to flag an issue in relation
to Credit/Debt and this relates to the nature of Lending
itself. Even if no Interest is charged, the practice of
Lending involves an incomplete exchange in terms of risk
and reward: a Lender, as opposed to an Investor, has no
interest in the outcome of the Loan, and requires the repayment
of Principal no matter the ability of the Borrower to repay.
Thus there is no true sharing of Risk and Reward involved
in Lending and this, rather than the charging of Interest,
is in fact the Ethical problem familiar to religious scholars
which relates to the practice of Lending and Borrowing.
In summary, Money is not as we currently regard it
- an Object circulating but rather a dynamic
process of Value creation and exchange by reference to a
Capital/ Static Value
Capital represents the static accumulation of Value and
exists in exactly the same types as the underlying forms
of Value identified above. Some forms of Capital are productive
by which it is meant that when an individual interacts with
it in a Value Event/ Transaction he may create
and accumulate further Value: so as I type this paper using
Microsofts Intellectual Capital (word
processing software) I am generating further intellectual
value in which I have the property or
copyright and which may or may not give rise
to further Value in transactions with other individuals.
An ethical question which arises in relation to Productive
Capital relates to the extent of property rights
which may be held over it thereby allowing individuals to
assert absolute permanent and exclusive ownership
- in particular in relation to Land. As outlined above,
our current financial system is based not upon Value but
rather a claim upon Value. Our accounting conventions give
us the Balance Sheet which records on the one
side Assets including Material and Intellectual
Value and the existence of obligations due (Accounts
Receivable) and on the other side Financial Capital
representing claims upon Value.
Financial Capital consists of two types:
Debt - obligations of finite/temporary duration
but with no participation in the assets or revenues of the
borrowing enterprise other than a rate of Interest;
Equity absolute and permanent ownership/participation
(without obligation) in assets and revenues of the enterprise.
It is the absolute (ie without obligation) and infinite
nature of Equity that leads to the discontinuity
between Debt and Equity in the existing system of Global
Capitalism which is at the heart of our current problems
as a Society.
Three forms of Enterprise are identified:
1. the Charitable Enterprise where Material,
Calorific or Intellectual Value is exchanged for the Spiritual
and Emotional Value of giving;
2. the Social Enterprise a Public
Enterprise open to all, where Material, Calorific and Intellectual
Value are exchanged in agreed proportions;
3. the Commercial Enterprise a closed
or Private Enterprise where Material, Calorific
and Intellectual Value are exchanged between a limited number
of individuals but may be retained or distributed in whatever
way the Members agree.
Early enterprises were partnerships and unincorporated associations.
However, the need for institutions which outlived the lives
of the Members led to the development of the Corporate body
with a legal existence independent of its Members. In the
UK the earliest Corporates were created by Royal Charter
a possibility which exists to this day. The key development
in the history of Capitalism was the creation of the Joint
Stock Corporate with liability limited by shares of
a Nominal or Par value, typically
£1.00. The UK Industrial Revolution was fuelled by
Capital raised through Joint Stock Corporates largely created
by Act of Parliament.
From 1844 onwards, the creation of Corporates through registration
under Companies Statutes further streamlined the process
and over the next 150 years the Limited Liability Corporate
evolved into the Public Limited Liability Corporate at the
heart of the malaise deriving from the process we know as
Globalisation. Such Closed Shares
of fixed value constitute an absolute and permanent
claim over the assets and revenues of the Enterprise to
the exclusion of all other stakeholders such
as Suppliers, Customers, Staff, and Debt Financiers.
The latter are essentially costs external to
the (absentee in the case of a Public Corporate) owners
of the Enterprise and the resulting drive to maximise Shareholder
Value through a combination of cutting costs
and growth at any price has brought us the Wall Street/City
analyst-driven management excesses typified by Enron and
Global Crossing. There is a discontinuity/ fault-line within
the Closed Corporate. It has the characteristics
of what biologists call a semi-permeable membrane
in the way that it allows Economic Value to be extracted
from other stakeholders but not to pass the other way.
So while Capitalism may not, as its critics aver, be broken
Capital most certainly is and always has been - through
the discontinuity (see diagram) between:Fixed
Capital in the form of shares ie Equity; and Working
Capital in the form of debt finance, credit from suppliers,
pre-payments by customers and obligations to staff and management.
In particular if we consider Financial Capital alone we
see two opposing claims to the same assets and revenues:
in other words a fundamental and irreconcilable conflict
between Equity and Debt.
Due to this discontinuity between permanent Capital and
Capital of defined duration the exchange of Economic Value
in a Closed Corporate is made difficult and true sharing
of Risk and Reward is simply not possible. Society is crying
out for a Third Way between the co-operative/collaborative
and the competitive: the public and the private: the paradox
of the modern world: that humans have never been more inter-dependent
in our needs, or more individualist in our outlook. No Enterprise
Model has been capable of resolving this dilemma. Until
The UK Limited Liability Partnership ("LLP")
From 1844 onwards in the UK it has been mandatory for
partnerships with more than 20 partners to be incorporated
the result being Corporate Partnerships with unlimited
liability. In 1907, it became possible for Partners to limit
their partnership individually rather than collectively
within a UK partnership at the cost of being unable to participate
in the management of the partnership. This model routinely
continues in the USA where it is the normal structure for
In the late 1990's UK professional partnerships, faced with
the prospect of individual bankruptcy as a result of litigation
against the firm, successfully lobbied for protection, which
arrived in the shape of the Limited Liability Partnerships
Act 2000 and came into effect on 6 April 2001. Since then
over 7,000 UK LLP's have been incorporated, for the most
part from conversions of partnerships previously with unlimited
The UK LLP is supremely simple and remarkably flexible.
The only requirements are for two "Designated Members"
to complete an Application Form obtainable at the Companies
House web-site and to return it with the requisite fee of
£95. There is no requirement for the mandatory and
arcane Victorian vintage Memorandum of Incorporation and
Articles of Association the prescriptive Contracts
between Members laid down by Statute and no need
for a supplementary Shareholder Agreement tailoring these
Contracts to the precise present day needs of the Members
in the relevant Enterprise. All that is needed is a simple
Member Agreement a legal protocol which
sets out the Aims, Objectives. Principles of Governance,
Revenue Sharing, Dispute Resolution, Transparency and any
other matters that Members agree should be included. Amazingly
enough, this Agreement need not even be in writing, since
in the absence of a written agreement Partnership Law is
applied by way of default.
While a UK LLP should be a business run "With a View
to Profit" the proposed Enterprise Model redefines
the relationship between stakeholders in a way that literally
removes the very concept of Profit and Loss a subject
to which we will return. The ease of use and total flexibility
enables the UK LLP to be utilised in a way never intended
as an Open Corporate partnership.
Open Corporate Partnership
There are two innovative concepts which characterise the
Open Corporate Partnership. Firstly: the realisation
that it is now possible for any stakeholder to become a
Member of a UK LLP simply through signing a suitably drafted
Member Agreement: this puts the Open in the
Open Corporate. So instead of a supplier signing contractual
terms of business negotiated adversarially or an employee
being confronted with a Contract of Employment they may
instead become true Partners in the Enterprise with their
interests aligned with other stakeholders.
The result is that there are no externalities
and no profit or loss in an Open Corporate Partnership,
merely Value creation and exchange between members in conformance
with the Member Agreement.
The second innovation is the concept of Open
Capital itself as defined above. Proportional shares (such
as one half, three fifths, five millionths) in an Enterprise
constitute an infinitely divisible, flexible and scaleable
form of Capital capable of distributing or accumulating
Value organically as the Enterprise itself grows in Value
or chooses to distribute it.
Emergence of Open Capital
The optimal nature of the UK LLP is already becoming apparent,
and a number of technology start-ups have utilised the form.
Moreover, a transaction entered into in late 2002 by the
Hilton Hotel Group serves as an example of how Temporary
Equity may operate in practice (although it is extremely
doubtful that the parties realised quite how ground-breaking
their transaction was to be).
The Hilton Hotel Group sold a portfolio of 10 hotels for
some £350m to an LLP in which Hilton (the Occupier)
hold 40% and the balance of 60% is owned by another LLP
linking the 3 Investor Members - one of whom is Bank of
Scotland. The Investors receive for 27 years 28.8% of the
gross revenues from these hotels plus a further £3m
pa all subject to a floor of £17.5m pa or 5%.
There were two conventional routes Hilton Group could have
taken to raise Capital from these assets.
a loan secured by a mortgage over the hotels;
a sale and leaseback transaction.
which give rise to an interest and rental overhead respectively
and to a divergence of interest between the provider of
Capital and the User, ie between the Lender and Borrower
or the Freeholder and Leaseholder, respectively. In this
transaction, however, the interests of the provider of Capital
and the User are aligned, as both have an interest in maximising
the overall Value creation of the LLP in terms of revenues.
The transaction illustrates a restricted application (due
to the Banks requirement to limit its downside
Risk) of what is a generic enterprise form with dramatic
The Open Capital Partnership (OCP)
An OCP is a new (since 6th April 2001) UK Limited
Liability Partnership ("LLP") the purpose of which
is to acquire and develop Capital assets in the UK or elsewhere.
An "OCP" has two Members:
(a) the "Investee"- or Capital User;
(b) the "Investor" - or Capital Provider;
and the Investee has the right of indefinite use of the
Capital for so long as he pays an agreed Rental.
Both the Investor and Investee may itself be a group of
individuals or other legal entities. The OCP creates a form
of Property of indefinite or indeterminate duration which
is neither Permanent Ownership (eg freehold property or
closed Equity shares) nor temporary Use (eg
leasehold/tenanted property or Debt finance) but a hybrid.
Once a Capital asset such as Land and Property is within
an OCP there is no reason why it need ever again be sold,
although Investees and Investors may both change over time
in accordance with the OCP Agreement. Within the OCP Capital
and Revenue are continuous: to the extent that an Investee
pays Rental in advance of the due date he becomes an Investor.
Open Capital a new Asset Class
There is the potential to create a new asset class of proportional
shares/partnership interests (eg one tenth,
one thousandth, one millionth) in Capital holding OCPs.
Such shares would be analogous to the new asset
class created through Unit Trusts by the operation of a
trust law based legal wrapper around
assets and associated revenue flows. The OCP essentially
places a different form of legal wrapper around
Capital assets and associated revenue streams. So in the
case of the Hilton transaction a new form of security could
have been (and could still be) created in the form of partnership
interests in the property LLP of (say) 10m shares
of £35.00 value, each of which would be entitled to
a proportionate share in the Hilton revenue stream for 27
There appear to be three classes of Land/Property Investment
for which the OCP may be suitable:
Commercial based upon Hilton-type deals;
Public with potential to improve upon
PFI/PPP type deals; and
Personal eg Property Investment
Partnerships; developed below.
Property Investment Partnerships (PIPs)
A PIP is an Open Capital Partnership between and one or
more Investors and one or more Occupiers/ Investees of the
property it acquires, eg a property purchased for £100,000,
of which £80,000 is financed: the Occupier/Investor
receives 20 shares and the Financier/Investor 80 shares
at a value of £1k each. (or 200/800: 2000/8000 etc
- it is the 20%/80% proportions which matter, there being
no par or nominal value to these shares)
There is an Exchange of Value: in return for the use of
the Property, the Occupier(s) pays a Rental to the Investor
(s) for the use of the Capital, eg a rent of £6,000
pa is agreed for two years for the above property: the Occupier
pays net £4,800 pa; the Investor receives net £4,800
pa. After two years, the Occupier wishes to invest £12k
in the Property: at £120k valuation he purchases a
further 10%: at £96k valuation he purchases 12.5%
and so on.
Proposition for Investors
Virtual Property giving a proportionate
share of the market rental for the properties in question
coupled with actual ownership of a proportional share of
the assets in question. In the event that the Investee chooses
not to pay the Rental which may well be the case
where the PIP is used as a vehicle for Equity Release in,
rather than purchase of, a property then the Rental
is payable through a transfer of Equity from Investee to
Investor, who will be free to dispose of it to another Investor
should he require the liquidity.
Proposition for Investees
(a) Equity Release
There is estimated to be at least £650 billion in
equity tied up in UK residential
property: at least a third is in respect of properties owned
by pensioners for many of whom it represents a major proportion
of their retirement capital.
There are currently two ways in which pensioners can release
(a) Reversion where part or all of the
property is sold in return for an annuity, and the property
reverts to the financier upon the death of the pensioner;
(b) Roll-up mortgages where the interest
on a mortgage advance rolls up exponentially for as long
as the property remains unsold;
and both are extremely expensive and poor value.
The PIP represents a simple and elegant way for a pensioner
to release Capital by simply renting a proportion
of the Equity. If a pensioner decides not to pay the rental
in cash he may instead do so through transferring more equity
to either the existing or a new Investor.
(b) Property Purchase
The PIP represents a simple and innovative form of property
purchase, which happens to be Islamically sound in that
debt and interest are not involved. Since property prices
are widely perceived to be on a long-term upward trend most
property purchasers prefer to purchase with a mortgage loan,
since they then receive the entire benefit of the rise in
property prices. However, a PIP created by a Pension scheme
in which an individual is a Member creates an entirely new
Pension Funds and PIPs
The equity release use of the PIP is perhaps the most relevant
initially for Pension Funds, whose exposure to property
is currently typically restricted to commercial property.
Here a Pension fund has a portfolio of existing pensioners
to whom it could offer this entirely new Equity Release
product. But in doing so a Pension fund also acquires a
pool of investments in UK residential properties with a
rental income and potential capital growth.
Having tested the model in an equity release application,
it is envisaged that it would rapidly be possible to extend
it to pension investors wishing to acquire equity in property.
For instance, if a pensioner leaves his PIP property to
enter (say) sheltered accommodation, it would be simple
to find a new occupier prepared to rent the property and
begin to acquire equity as a member of the Pension funds
scheme. In this situation the property occupier participates
in any increase in property values both directly
to the extent that he has equity and indirectly
to the extent that his Pension Scheme owns any balance.
It is envisaged that occupational pension schemes would
find the PIP approach extremely useful in providing affordable
property to their Membership during their working career.
The development of this new asset class would face similar
challenges to those which faced the nascent unit trust industry
ie taxation issues, regulation, accounting. It would also
be necessary to establish intermediary liquidity providers,
and other service provision.
Open Corporate Partnerships as a Co-operative Enterprise
A Co-operative is not an enterprise structure: it is a set
of Principles that may be applied to different types of
enterprise structure. Considering firstly Limited Companies
operating under the Companies Acts: the unsuitability of
a For Profit Company Limited by Shares as Co-operative
is inherent in its divided and essentially competitive structure;
the mutual company Limited by Guarantee is restricted
in its ability to raise Capital or pay dividends.
Enterprises operating under the Industrial & Provident
Societies legislation, while better able to comply with
Co-operative Principles: suffer from a vulnerability to
asset alienation though demutualisation
by carpet-baggers; in that they favour the interests
of other stakeholders, are relatively restricted in accessing
investment; are arguably deficient in incentivising innovation.
The proposed Community Interest Company merely adds a new
layer of regulation and complexity to manage the conflicts
inherent in closed Capital.
Consider Partnerships however: the very word partnership
is redolent of collaboration and co-operation in the mutual
pursuit of the creation and exchange of Value. Partners
do not compete with each other they collaborate together,
sharing risks and rewards, rather than seeking to maximise
reward and minimise risk at each others expense. Within
a Partnership there is no Profit and no Loss.
While a partnership is an inherently Co-operative model
in the way that risks and rewards may be shared, the crippling
factors in practical terms have been, inter alia: the liability
to which Member partners are exposed from the actions of
their co-partners on their behalf; limited ability to raise
The new LLP was expressly created to solve the
former problem by limiting the liability of Member partners
to those assets which they choose to place within its protective
semi-permeable membrane. However, the ability
to configure the LLP as an Open Corporate permits
a new and superior form of Enterprise.
Firstly it is possible to re-organise any existing enterprise
as either a partnership or as a partnership of partnerships.
This may be accomplished either by linking LLPs as
Members of an umbrella LLP or more likely by
the creation of sub Enterprise Agreements between
individuals who are all Members of the same LLP.
A LLP Agreement would define the different classes of stakeholder
Members (eg staff, investor) and then, through suitable
provisions covering majorities (>50%) or super-majorities
(>(say) 75%), it would be possible to ensure that certain
events, such as amendments to Aims and Objectives, or the
disposal of key assets, could not take place without the
agreement of all constituencies of stakeholder.
As in all partnerships, the revenues net of costs external
to the enterprise (ie the surplus of income over expenditure)
would be divided among Members in accordance with the LLP
Agreement. This means that all Members share a common interest
in collaborating/co-operating to maximise the Value generated
by the LLP collectively as opposed to competing with other
stakeholders to maximise their individual share at the other
The outcome is to facilitate the creation of LLPs
as Co-operatives of Co-operatives. This is particularly
relevant in those areas of public service provision which
are natural monopolies such as utilities but
also extending to other forms of public service provision
where privatisation is (rightly) being
Through investment in Temporary Equity
users of Social Enterprises will be able to invest in the
secure income stream of such utilities, drawing down upon
their partnership capital account when they utilise the
service provided. A season ticket in a transport utility
is an exact analogy. Such Social Enterprise LLPs would
be for the mutual benefit/ Profit of all Members,
even though this may not manifest itself in Money terms
for all of them: for service consumers, the dividend takes
the form of the Quality of service provided.
Finally, there is the Commercial Enterprise
LLP where the object is for a closed group of individuals
to maximise the value generated in their partnership. There
are already over 7,000 of these.
`In essence, the Profit generated in a competitive economy
based upon shareholder value and unsustainable growth results
from a transfer of risks outwards, and the transfer of reward
inwards, leading to a one way transfer of Economic Value.
This, depending on the degree of imbalance in economic power
between the parties, will very often impoverish one or more
constituency of stakeholders materially, intellectually,
spiritually or emotionally. A partnership, however, involves
an exchange of value through the sharing of risk and reward.
Whether its assets are protected within a corporate entity
with limited liability or not, it will always operate co-operatively
for mutual profit.
Open Capital, Economics and Politics
The concept of the Open Capital Partnership gives rise to
a new form of Financial Capital of indeterminate duration.
It enables the Capitalisation of assets and the monetisation
of revenue streams in an entirely new way.
Moreover, it leads to a continuity between Capital as Static
Value and Money as Dynamic Value which has never before
been possible due to the dichotomy between the absolute/infinite
and the absolute/finite durations of the competing claims
over assets Equity and Debt
- which constitute the existing legal constructs of Financial
The assumptions of conventional Economics are based upon
definitions of Value and concepts of absolute certainties
and the rationality of the Individual which do not exist
in the real world.
The opening up of Economics to new thinking based upon reality
rather than a closed dialectical loop could lead to a similar
wave of research and progress in Quantum Economics
to the advances which were made last century in Physics.
Moreover I believe that the application of a co-operative
networked information-sharing enterprise model incorporating
shared transaction repositories and pervasive
information sharing - as opposed to obsolete Double
Entry Bookkeeping and proprietary information
retention - could lead to creation of Value an order of
magnitude greater than that possible using current closed
and linear structures.
Numerous parallels between Economics and other disciplines
remain to be explored, now that the unreality of current
thinking is plain to see.
In relation to Politics, the introduction of new a priori
economic assumptions will lead to new analyses outside existing
sterile dialectics. Such a new Politics defies classification
but will necessarily be based inter alia upon co-operation,
consensus and a decentralised non-hierarchical Society.
Elements of virtually all political strands of thinking
are relevant, and it will hopefully be the case that all
will be able to unite in a constructive alternative to a
clearly defective model.
It is possible to envisage a Society within which individuals
are members of a portfolio of Enterprises constituted as
partnerships, whether limited in liability or otherwise.
Some will be charitable, or voluntary, to which individuals
give their services, or other value freely. Others will
be social where individual citizens will invest
in and subscribe to (say) health, education, transport and
other utilities through functionally decentralised partnerships
operating at the neighbourhood, community, area, regional
or national levels. These will essentially be partnerships
between co-operatives of service providers and co-operatives
of service consumers ie the public. Finally, individuals
will be Members of Commercial enterprises of
all kinds aimed at co-operatively working together to maximise
value for the Members.
A pipe-dream? In fact, the process has already begun. The
current form of competitive Capitalism was not planned:
it is what is known as an emergent phenomenon
which continues to exist because it has demonstrated itself
to be superior despite its manifest and documented
flaws to all other models, such as Socialism.
It can only be replaced by another emergent
phenomenon, which is adopted virally because
any Enterprise which does not utilise it will be at a disadvantage
to an Enterprise which does. By way of example of emergent
phenomena, we have seen how a 19 year old US programmer
has single-handedly destroyed the entire business model
of the global music industry through inventing on-line sharing
of music in a network which grew to 60 million users within
18 months. In the same way, the small but powerful community
of traders in physical oil moved their negotiations from
the telephone into Yahoo instant messaging chat rooms
without their management even being aware of the fact. They
did so because it was free, because they could, and because
The Open Corporate Partnership is: capable of
linking any individuals anywhere in respect of collective
ownership of assets anywhere; extremely cheap and simple
to operate; and because one LLP may be a Member of another
it is organically flexible and scaleable. The
phenomenon of Open Capital which is already
visible in the form of significant commercial transactions
- enables an extremely simple and continuous relationship
between those who wish to participate indefinitely in an
Enterprise and those who wish to participate for a defined
period of time.
Moreover, the infinitely divisible proportionate shares
which constitute Open Capital allow stakeholder
interests to grow flexibly and organically with the growth
in Value of the Enterprise. In legal terms, the LLP agreement
is essentially consensual and pre-distributive:
it is demonstrably superior to prescriptive complex contractual
relationships negotiated adversarially and subject to subsequent
re-distributive legal action. Above all, the Open
Corporate Partnership is a Co-operative phenomenon which
is capable, the author believes, of unleashing the Co-operative
Advantage based upon the absence of a requirement
to pay returns to rentier Capitalists.
So perhaps in the Open Corporate form of the
LLP the unintended consequence of a 21st Century
UK legislative initiative arguably implemented for the wrong
reasons in the wrong way - we now have the means to create
a truly Co-operative alternative form of Open
Capital which will make obsolete the current toxic
form of Global Capitalism.
Behind it all is surely an idea so simple, so beautiful,
that when we grasp it in a decade, a century or a
millennium we will all say to each other, how could
it have been otherwise? How could we have been so stupid
for so long? John A Wheeler
in "Authentic Business" 6/5/2004