Episode 4 – Social Business and Nu Capitalism

Research Bibliography While Watching Video:
http://altbib.com/r/174/ra/4._Social_Business_and_Nu_Capitalism

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Full Transcript/Essay

We now see Americans increasingly rebelling against the endless predictable crises promoted by the established left and right throughout this decade. Even the mainstream media has had to cover such transitions both parties must undergo.

Acknowledgment of the corruption found on both sides of the political aisle is one of the core concepts which amazing outlets like We Are Change, Infowars and the Corbett Report attempt to spread. I have always found the current two-party system completely inadequate for aggregating the will of the people. I have long adored the idea of having either more parties or no parties.

On larger issues, both parties give us the same results. On smaller manufactured issues, the polarizing effects of having primarily two extreme camps to choose from is hurting more than helping. The negative effects of such polarization also skyrocket when single ideologies are forced on all scenarios, instead of a more flexible case by case basis.

Fortunately the freedom movement has loud voices warning people not to follow any one ideology. So this is a humble request for everyone to keep pushing past the confines separating us, to keep finding increasingly targeted solutions to counter-offer those provided from the top-down system. Avoiding the following two pitfalls might help the movement hone our arguments and improve the messaging of our alternative analysis of deep politics.

More Government VS Less Government?
No. Quality Over Quantity.

The first pitfall I see appeals to many of my good patriot friends who stand firmly behind slogans for “Less Government.” To my eyes and ears, such statements feel a bit counterproductive to our shared goals.

The concept of “Less Government” (or “More Government” for that matter) is vague enough to be co-opted by almost any harmful solution provided. This formula should also not be endlessly applied, and our libertarian friends sometimes follow this mantra far too blindly. Most importantly, the slogan implies that the size of government has a causal relationship with its level of corruption or negative impact. Larger organizations of any type may have more room for bad apples to hide and prosper, but they also have potential for greater good as they grow, like Grameen Bank in Bangladesh. So I argue that our society’s policies and incentives, promoted by our manufactured culture, have far greater influence on the positive or negative nature of the impact of organizations (governmental or not).

With a smaller government than our current monstrosity, in a similarly apathetic political climate, it might be even easier for a given corporation to influence the government and its policies. At the same time, there is a real threat of “Big Government” when corporations can entrench entire departments. They are pro-actively using government agencies to directly enact their corporate agenda and creatively increase their government contracts and budgets in order to keep growing.

We saw this quite publicly during George W Bush’s years as the military-industrial puppet, when in that “small government” administration we saw corporate-owned departments strip themselves down as much as possible, completely disassembling any form of meaningful regulation over themselves. A fresh and painful example of this came to light with the documented failures of the Minerals Management Service to provide any meaningful oversight or regulation on British Petroleum’s Deepwater Horizon oil rig. But don’t worry, the department has been re-branded as the Bureau of Ocean Energy Management, Regulation and Enforcement so we should probably assume it’s all fixed. Our current, predictable “Great Recession” also could have been avoided or at least postponed if trillions of dollars in profit incentives had not been allowed to manifest in the first place as derivatives, sub-prime mortgages and other legal Ponzi schemes.

But if the incentives of our culture were shifted enough, and more procedures were made ~100% transparent to the public, we might be able to find some governmental G spot where the government actually reflects the public’s interest. This may be theoretical, but it should be nearly attainable, not even requiring a revolution but incremental changes in the correct direction. And isn’t this what we should be striving for: an ever more pure realization of those constitutional ideals inspiring us to believe in our remarkable republic, or democracy?

But this process must begin with all deliberate speed. The Tea Parties, initially started years ago by the Ron Paul rEVOLution, were recently co-opted and largely taken over by the GOP in 2009…at least as far as the mainstream eye can see. And I give props to the now very rare Tea Party candidates and their supporters who remain opposed to the GOP, and are willing to keep thinking outside of the mainstream box and trying new things…no matter how distasteful some of their select views may be to me.

On the other side, Democrats don’t seem to be promoting interesting candidates to vote FOR, and are settling in for classic fights for the lesser of two evils…despite ever present disapproval for congress and their utter failure to progress in the past two years. I need to see more liberal candidates to grow balls as big as those rare tea partiers, resisting the lame/moderate/useless Democratic party line…no matter how distasteful select views of theirs may be to me.

The causality implied between more government and bad government does not seem theoretically sound. With a truly responsible government, an increase in size could simultaneously increase citizen freedoms. We must look at the results of our government’s efforts, and its degree of transparency, in order to judge it. We need to focus on uprooting the incentives for corruption in government, perhaps starting with campaign finance reform and revolving door protections, instead of just saying we want to change its size. A wise woman once told me it is not really the size of your government that matters, it’s all about how you use it.

The Capitalism VS Socialism Paradigm

This paradigm is even more polarizing, and I consider it another ridiculous pitfall. Capitalism and socialism often represent the only two options offered to align with, but we don’t even consider trying to come up with any new forms of national economic or governmental organization. Case by case, those rooting for capitalism might tend to dismiss socialist solutions, and vice versa…staying loyal to their dominant ideology. But as humans we sometimes get trapped into acting like these ideologies are some mythical unified theory.

How many “socialized” or “nationalized” services and industries does the public generally approves of? I think of “free” government services like the Highway System, Federal Waterways, National Park Service, Federal Bureau of Investigations, Bureau of Prisons, Census Bureau, Social Security, Small Business Administrations and of course, THE MILITARY and the services for veterans. And how many “capitalist” services does the public generally approve of? And are we the people currently healthy and happy with the choices provided for necessities like our food, housing, health care and energy?

From the start, our country (and most “developed” countries) has used a collection of “capitalist” and “socialist” tools. For an added challenge, try to factor in the constant increase of private contractors used by nationalized services, like with Blackwater and Halliburton. A September ProPublica headline highlights a classic example of this: “This Year, Contractor Deaths Exceed Military Ones in Iraq and Afghanistan.” Even better are the number of recent cases we’ve seen where the profits were privatized while the risks were socialized, such as the painful bank bailouts and the Deepwater Horizon oil spill.

I also think the nature of who or where the finances come from to run our government should be a critically important factor in what people think is worth paying for. Just 100 years ago, typical American citizens did not pay ANY income tax. Now Fortune 500 companies just move to the Cayman Islands and in August of 2008, CNN reported:

The Government Accountability Office (GAO) examined samples of corporate tax returns filed between 1998 and 2005. In that time period, an annual average of 1.3 million U.S. companies and 39,000 foreign companies doing business in the United States paid no income taxes – despite having a combined $2.5 trillion in revenue.

The study showed that 28% of foreign companies and 25% of U.S. corporations with more than $250 million in assets or $50 million in sales paid no federal income taxes in 2005. Those companies totaled a combined $372 billion in sales for the largest foreign companies and $1.1 trillion in revenue for the biggest U.S. companies.

I strongly oppose any Bush-style income tax cuts which worsen our wealth disparities. But I do like the idea of taxes being collected from corporations where profits are created from business models, instead of collecting from a laborer’s wages. There are also many who argue that our income tax of last 100 years is even unconsititutional, and I think this is a topic worth considering. For more info on this, you might start your research by watching Aaron Russo’s 2006 film, America: Freedom to Fascism.

The point of terms like ‘crony capitalism’ or ‘predatory capitalism’ is to point out just how far we are from the pure idealized form of capitalism touted by talking heads, or even Adam Smith. It seems the massive mutant capitalist corporations have become so efficient at their business that they went ahead and took over our governments for us, saving us the trouble of regulating those companies. But if we reign in the corporate-industrial complex soon, and we force our government to start buying solar panels instead of bombs, we will encourage the growth and development of less destructive markets.

Unfortunately these ‘ism’s may be false options on yet another level. Because for decades now, our country might best be defined as fascist. This is rooted in the comprehensive corporate influence on the most important functions of government, and controlling both candidates in a single-party state. It might also be defined as a plutocracy (or corpocracy, or corporatocracy) — whatever it is, it has now emerged quite clearly.

I also find it bizarre that there is such passion for any of these existing economic systems, as we have seen examples of all of them producing failed states when implemented inappropriately…bringing us back my focus on quality over quantity. Our capitalist experiment has been going for just a few hundred years, and this current incarnation of crazed crony-capitalism has clearly dominated at least for the past three decades.

Our form of capitalism has been incentivized by selfish wealth maximization without regard to externalities, while providing amazing technological advances with potential for enormous benefits for our species in the long run. But the jury is still out due to our pollution, loss of biodiversity, food mono-cultures, unregulated GMOs, and nuclear and biological weapons industries. But at least we’ve got record-high wealth disparities.

The final problem I have with these false options is that capitalism and socialism don’t seem to be mutually exclusive. As Noam Chomsky says, there is no reason businesses cannot be managed democratically, controlled by their workers and community, and compete with other businesses managed the same way and others. But there are other ways to improve the capitalism formula without even giving up the typical management hierarchies of today’s world.

Social Businesses and Nu Capitalism

One of my dad’s core mantras I’ve adopted is about looking for the right questions to ask. Despite Chomsky’s blind spots and/or self-censoring on select topics he is of course brilliant and inspiring, and he is a relatively early influence on my world view. I really like his approach on this (click here for video):

“We don’t have capitalism, it’s nothing remotely like it. We have some various varieties of state capitalism, including the USSR. That was one variety of state capitalism, was based on wage labor, on management control, central coordination of production. In fact its’ in many ways very much like corporate capitalism. It’s just a different kind of organization.

So of the various kinds of state capitalism that are around, which are the best? I don’t honestly think that’s the kind of question we should be asking. Suppose you’re in the 18th century. Should you be asking, ‘Which is the best kind of feudalism?’ I mean that’s all it was. So which is the best kind of feudalism, and slavery, and monarchy and so on and so forth. It just wasn’t the right question. I mean the right question is, ‘Is there something better?’ Like say, parliamentary democracy. Even though there were no examples of it. There were seeds of it, but no functioning examples. I mean seeds of had it been developed and usually crushed, as in England, but these were legitimate struggles. And you know, they succeeded. I mean by now you have parliamentary democracies, which aren’t fantastic but are better than feudalism.” – The World: The Noam Chomsky Sessions

So suppose you’re in the 21st century, what is the best kind of capitalism? What is the best kind of socialism? Is capitalism better than socialism, or vice versa? Why are we limited to these options?

Currently, businesses think they must only compete by maximizing-profits in ways which are very selfish and short-sighted. But this is just how we’ve been taught to play, and what consumers have been taught to buy. Businesses used to be thought of as helpful members of their communities, not psychopaths. If you haven’t yet, please watch the 2003 film titled, “The Corporation.”

Capitalism is very flexible, and we must stop supporting large-scale businesses which make themselves legally bound to maximize profits for shareholders no matter the side-effects. We must support businesses which try to maximize benefits for all dimensions of human life. But customers and investors must take more initiative to carefully vote daily with their dollars for social-benefit-maximizing businesses which show enough conscience to mitigate their externalities while providing the world beneficial products and services.

In the “Nu Capitalism” paradigm, the companies which provide the most net social benefit will also be the most profitable. Let me repeat that. In the “Nu Capitalism” paradigm, the companies which provide the most net social benefit WILL ALSO BE THE MOST PROFITABLE.

The Social Business model of maximizing social-benefit is a marvelous idea championed by Muhammad Yunus. Yunus pioneered the potentially world saving concept of microcredit when starting Grameen Bank in Bangladesh in 1976 which is credited for bringing millions out of poverty. Wikipedia describes the Grameen Bank as

…a microfinance organization and community development bank … that makes small loans (known as microcredit or “grameencredit”) to the impoverished without requiring collateral. … The system of this bank is based on the idea that the poor have skills that are under-utilized. A group-based credit approach is applied which utilizes the peer-pressure within the group to ensure the borrowers follow through and use caution in conducting their financial affairs with strict discipline, ensuring repayment eventually and allowing the borrowers to develop good credit standing.

I will discuss microcredit more in a future episode on why and how we should End The Federal Reserve. And I strongly recommend you explore this concept and this beautiful human much more, but here is a quick excerpt to whet your appetite:

Muhammad Yunus – The Social Business Model

This general concept of a social business is also finally catching hold in America. Yunus was just last year awarded the Presidential Medal of Freedom by Barack Obama. And a few test-runs of similar microcredit banks are finally being started up in America.

B Corporation (B Labs) is a leading firm to certify businesses adhering to enough social business principles. According to their web site, over 300 companies have become certified with a branded B Corporation status since 2006, including one I always see at the store named Seventh Generation. The 315 businesses represent $1.5 billion in revenues and 54 industries.

There is a parallel movement around the country to grant legal tax status to B Corporations which will offer various benefits back to these businesses. Already, my home state of Maryland signed the nation’s first Benefit Corporation legislation on April 13th and Vermont passed it on May 19th of this year. Whether or not your state is ready for it yet, your business can start NOW by taking a confidential survey on their website to learn what areas they need improvement on, to work towards a longer-term goal of becoming fully certified, or just becoming a Social Business.

Dollar votes are currently the most powerful form of voting we have, far better than false choice A or B every 2 to 4 years. Quick resources of information needed to educate our daily decisions will be in higher demand, like the The Better World Handbook and a very intriguing iPhone App called the GoodGuide. The GoodGuide app takes advantage of the Universal Product Code system and allows you to scan product barcodes at the store with your iPhone’s REGULAR CAMERA (not the special barcode scanner) and pulls up a quick rating of the product and the company that makes it. It gives four scores for each product scanned: Health, Environment, Society, and an Overall Rating, plus more detailed breakdowns if you’re interested. It of course doesn’t have every product in the world rated yet, but the app is free and you can suggest new items to be rated if you don’t find them in there.

GoodGuide is also certified as a B Corporation, but just like with food, we must perpetually fight to ensure product labeling is as honest, accurate and informative as possible. This is absolutely essential. There is also a separate problem of people buying all the totally useless sh*t they don’t need, whether or not it is made by a good company in a good way. We call this “trinket capitalism.”

So tools like the GoodGuide are already helping consumers take charge of their purchasing powers to make capitalism more consciously democratic. But at the same time, wise progressive businesses will find more ways of clearly posting (and lying about) how good their products are for the health of your mind, body, community, society and world. Already, the battle is on for proper labeling of organic or non-GMO foods. But companies can, and hopefully will, also start directly labeling their products with something like their GoodGuide scores or B Corporation ratings to make it easier for consumers to choose their products over others.

———

Used alone, neither left nor right, neither more nor less government, neither capitalism nor socialism can save us. So let us please not choose our preferred solutions solely because they fit into one ideology or another. We need to rationally look at the situation and find the maximum good we can muster, no matter what ‘ism’ it implies.

Either ideology, taken to the extreme, can become quite a scary beast, so please don’t use them as your primary basis for every decision. We cannot be tempted to just vote with our party on every issue…are we voting for the lesser of two evils? Such ideologies are like many drugs, which can only be used safely in moderation.

‘Do you lean towards Capitalism or Socialism?’ – Nope, I’m mostly into Social Businism!

In this current economic transition, we need to replace a portion of the worthless trinket capitalism products and services, as well as industries of destruction, with social businesses. We must compete with the corporate-industrial complex, first targeting the industries vital to human life and well-being. With the proper public education via accurate product labeling and wider accessibility to healthier products, we can gradually shift to only pay for products made with our long-term interest in mind, instead of someone else’s bottom-line.

We absolutely need our key industries to start offering competitive Social Business options in the marketplace. There will also always be room for profit-maximizing businesses to coexist, but the decision between social businesses or purely profit-maximizing options would be in the hands of consumers. Simultaneously, we need efforts to upgrade labeling to help customers support healthier options for our minds, bodies, communities, societies and planet.

We can fight with our dollars NOW. We can buy products from Social Businesses NOW. We can start Social Businesses NOW. We can start converting our current employers into Social Businesses NOW. Why wait for Washington when we can make these moves ourselves?

In the 21st century, we the people of the world will do everything possible to ensure that companies which provide the most net benefit to the world WILL ALSO BE THE MOST PROFITABLE companies in the world.

Appendix A: My Personal Preferences for Nu Capitalism

For each area of our society I have listed, I will describe my best estimate for how our current system runs, followed by my current preference…the point to which I want to see us grow.

Current System
My Preference
Judicial and Legislative Branches Public, with some private non-governmental organizations (NGOs) providing additional oversight Public, with increased private NGOs providing additional oversight
Regulatory Agencies (for all types of industries) Public, with some private NGOs providing additional oversight Public, with increased private NGOs providing additional oversight
“DEFENSE”/MILITARY, Homeland Security Public, with significant outsourcing to private profit maximizers Public, but dramatically reduced, and no more contracting to private profiteers, and far greater transparency
Federal Bureau of Investigations, Immigration Enforcement, Bureau of Prisons Public, with significant outsourcing to private profit maximizers Public, but dramatically reduced, and no more contracting to private profiteers, and far greater transparency
Central Intelligence Agency Public with private contracting, but also has significant secret budgets (and actions) for which we have NO oversight Public, but completely REPLACE it with Public Open Source Intelligence with 100% transparency
Federal Reserve System Quasi-Public (Dennis Kucinich: “No more federal than Federal Express”), with risks public and profits private Public, but REPLACE with a publicly controlled, completely transparent system serving the needs of the other 90% of the world’s population
Highway System, Federal Waterways, National Park Service Public Public, but always room for more transparency
Social Security, Medicare, Medicaid Public Public, but work on solving the root causes, work to change the systemic policies which intentionally keep low-income families down
Energy Private, with some rare Social Business and Public Options Private, but dominated by Social Business, kick started by the federal government switching as many purchases as possible over to renewable energy
Health Care Private, with some very rare Social Business options, and Public Option still in debate Single-Payer Public Option, with other Private Options dominated by Social Businesses
Food Private, with increasing Social Business options Private, but dominated by Social Businesses
Housing Private, some limited Public Options for low-income families, plus the Quasi-Public cases like Freddie and Fannie with public risks and private profits Private, but dominated by Social Businesses, with some limited Public Options for low-income families until unnecessary
Transportation Private with limited Public Options, and Social Businesses are now finally showing up more Private, but dominated by Social Businesses, and vastly expanded Public Options
Education Public, with Private Options Public with far greater funding but also reduced federal control of curriculum, plus Private Options dominated by Social Businesses