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APARIGRAHA,
A NEW ECONOMIC PARADIGM FOR A CULTURE OF PEACE
Steps Toward a Conscious Capitalism
By Jeff Gates
 

There was a time when economic decisions were guided by conscience and sensitivity to community values. That was a time when elders were honored and close-knit communities were the rule, not the rarity. Richly textured, multiple-agenda decision making has since given way to a detached, numbers-driven efficiency that grants deference, even dominance, to a narrow bandwidth of finance-denominated values.
Today, finance-myopic free enterprise is a system operating with "money on automatic." With approximately $16 trillion in the hands of U.S. money managers-mutual fund managers, pension fiduciaries, insurance companies, banks, foundations - financial values are now the proxy nor most human values.
This highly institutionalized form of free enterprise removes people from economic decision making and loses the foresight, concern and even the simple common sense that reside uniquely with individuals and communities. Economist Adam Smith, the father of free enterprise, would be appalled. That famous Scot envisioned a "self-designed" system informed by a complex range of overlapping values reflecting the purpose, aspiration and motivation that make people so uniquely human. He recognized that the moral foundation of markets, like that of democracies, is grounded in the notion that control is widely distributed; thus, deference is granted, in markets, to consumers and, in democracies, to constituents in these arenas that we routinely regard as the marketplaces of ideas.
To Smith, an engaged and concerned humanity - not financial markets was to be the animating force through which the pursuit of private gain becomes public virtue. Although financial calculation is a part of who we are, it is only a part.
Relying on financial values as a surrogate for other values - economic, social, environmental - lamentably finds vigorous support in our society's allegiance to an abstract, detached economic model, where financial returns and gross domestic product are viewed as separate from the larger concerns of communities and nature.
Although it's certainly true that global capital markets display an uncanny capacity to seek out financially denominated returns worldwide, that search has left in its wake grotesque social inequities and fast-mounting environmental tragedies. For instance, the U.N. Development Program reported in 1998 that the assets of the world's richest 225 individuals equal the combined income of the world's 2.5 billion poorest people. The three richest individuals have greater wealth than the combined GDP of the 48 poorest countries. Last year, the richest fifth of humankind had a combined income 82 times greater than the combined income of the poorest fifth. Just two years earlier, the top fifth had 61 times more income than the lowest fifth. In the United States, the net worth of the richest one percent is now 2.4 times the combined net worth of the poorest 80 percent. The sad truth is that present-day capitalism - both domestically and abroad - does a remarkable job of creating new physical capital but a poor job of creating new capitalists. Yet that is what it must do if ever we hope to inhabit a free enterprise system fully informed by the concerns of those whose lives it impacts.
As I show in my book, The Ownership Solution (1998), we can address concerns across three inescapably interdependent domains - economic, social, environmental - by evoking ownership patterns that are consciously people-ized, localized and human-ized - thereby empowering capitalism itself to become more community-wise.
To do so requires that companies include as owners their employees, customers, local residents and others with a stake in the performance both of the enterprise and of the community in which it is located.
Such "up-close capitalism" enhances both motivation and mindfulness while better aligning self-interest with the common interest. Indeed, much of today's violence - physical, psychic and ecological - stems from a pervasive sense of feeling apart from, rather that a part of, the free enterprise system and its impact on society and nature.
Happily, today's detached and concentrated ownership patterns are not some immutable trait inscribed in the DNA of free enterprise. Quite the contrary. Capitalism can be designed either for inclusion or, as now, for exclusion. It's a historic irony with potentially grave implications that the "self" is the element now most missing in this self-designed system. Over time, we've allowed free enterprise to become disconnected, detached, unconscious, unconcerned and uncaring. Yet with a policy environment that looks to ownership as a means for restoring human connectedness, economic policy can be redesigned to create a sense of community, to advance a feeling of civil cohesion and to evoke better collective foresight.
The very character of democratic free enterprise requires that it include notions of solidarity, mutuality and reciprocity. By turning to broad-based personal ownership as a means for deepening and enriching the relationship that people have with private enterprise, we can do much to ensure that decisions affecting peoples' lives and the environment are no longer resigned to the abstract realm of capital markets or left solely in the hands of a distant and detached financial and managerial elite. Neither left, right, nor centrist, this strategy suggests instead the public encouragement of private property patterns that are decentralized, devolved and personalized.
Property is a "property" of free enterprise much like wet is a property of water. Property patterns are an underutilized tool, a meta-tool if you will, that could be used to evoke a more conscious capitalism, one where a sense of interdependence is immediate, palpable and real. That sense of connectedness, along with newly peoplized feedback loops, could have remarkable implications not only for enterprise performance but also for rebuilding social capital while advancing environmental sustainability.
A modest step in that direction has been taken with the federal encouragement of employee stock ownership plans, now in place in more than 11,000 U.S. firms and covering some 10 percent of the work force. Incentives for related enterprise stock ownership plans could expand on that popular notion, providing a way for those working for a firm's suppliers or distributors to gain a stake in a larger enterprise. Similarly, customer stock ownership plans could provide a way for local residents to gain both a stake and a voice in investor-owned utilities. Things look far different for a company's stockholders when it's their family, not just their financial return, that's at risk.
In many disciplines outside the hard sciences it is said that we live within "fields" of thought and perception - nonmaterial, invisible forces that structure both space and behavior within it. The challenge facing free enterprise lies in creating an organizational field that engages the human conscience. It is in that context that ownership patterns, an invisible field, work their influence for good or ill.

Jeff gates, the president of the Atlanta-based Shared Capitalism Institute, has been a specialist in "ownership engineering" since 1973, including serving as counsel to the U.S. Senate Committee on Finance (1980-87) where, working with Senator Russell Long, he crafted federal pension law and the legislation encouraging employee stock ownership plans (ESOPs). He has since worked in more than 25 countries worldwide or various ownership engineering assignments (privatization, restructuring, corporatization, etc.). Gates is the author of The Ownership Solution (Addison Wesley, 1998) and he can be reached through the Web site: www.sharedcapitalism.org.

 

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