I attended a Commonwealth Club lecture today by Gar Alperovitz, author of What Then Must We Do? I won't spoil the book for you, but he contends that the concentration of the control of wealth among a small elite and a handful of corporations make America's systemic problems unsolvable. Labor unions are no longer powerful enough to serve as a countervailing power to corporate control of wealth and state socialism is an unsatisfactory alternative to free markets. His solution lies in democratic, decentralized ownership of wealth. I think he'd really like the concept of resilient communities but he touched on older concepts that already work. He mentioned some models; I'll mention others.
The Democracy Collaborative's Community Wealth project is a clearinghouse for models that share access to capital. The National Cooperative Business Association is a home for co-ops that have been around forever. The Bank of North Dakota is the only state-owned bank in America and it's been successful for almost a century in providing capital to private enterprise. Many of us have seen NCUA's credit unions in our communities. Entrepreneurs who sell their companies to their workers' own ESOPs can reap very attractive tax benefits. Real estate investors can use land trusts to limit liability and expand their options. The Mondragon Corporation is an example of how a cooperative ownership structure can adapt to a complex enterprise. The University of Wisconsin Center for Cooperatives studies, well, what else but co-ops. The Hub is a global network-cum-movement for microenterprises with a Bay Area presence. B-corporations are not-for-profit corporations that are chartered to serve a public interest. CiviCRM is an open-source platform for fundraising and contact management; I regret that I missed CiviCon 2013. I also regret that I'm missing the Public Banking Institute's Public Banking 2013 conference this weekend, but I've already got plenty to do.
Some of these models may seem a bit touchy-feely and environmentally green for die-hard free market fans but I hope they get over that knee-jerk reaction. I'd like to see an ecosystem of these types of grass-roots financing and organizing tools grow up as alternatives to the unstable model of TBTF megabanks that are wrecking the economy. There's enough room for profit in these enterprise structures for conservatives to like. The New America Foundation's Asset Building Program sure looks a lot like George W. Bush's call for an "ownership society."
The hodge-podge list of tools above begs a return to the author's question about what we must do now. I got a chance to ask a question of my own when I asked Mr. Alperovitz how the crowdfunding phenomenon can contribute to the growth of these concepts. He was optimistic about the potential of crowdfunding but didn't have specific data on hand. There's my window of entrepreneurial opportunity. I'll get specific right now.
B-corps are already using crowdfunding platforms like Kickstarter and Indiegogo to raise donations. Once FINRA finally completes its SEC-mandated certification of crowdfunding portals for JOBS Act compliance, they can raise equity capital. I think public banks operating in each of the fifty states could operate their own crowdfunding portals. Anyone who wants to start a co-op or credit union could step on up and launch fundraising from the public bank's portal. Companies that sponsor ESOPs could borrow directly from the public banks so the ESOP can buy the company's shares. REITs that organize as land trusts could use the public bank for 1031 exchanges and trust services. Makers, here's your chance to grow new organizations making brand new things.
The ecosystem I just described above will probably require legal changes that will enable public banks and crowdfunding portals to work together in the ways I've imagined. State governments can perform their traditional role as public policy laboratories by experimenting with different forms of governance for this co-op ecosystem. Resilient communities will need a myriad of management structures and funding mechanisms. Entrepreneurs should educate policymakers on how to make this happen. That is what we must do, answering the question above.
