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July 22, 2008


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ikorush sikorsky

Even "local" strategies like that promoted by Solari suggest that 49% of class A voting shares be made available to outsiders, as well as any of amount of class B shares. I'm not sure how that would keep things local, as the flow of dividends and other benefits can still move outward. With 49% of voting shares you'd need the cooperation of just 2% of of the local shareholders to get control. I suppose something is better than nothing, but once you eliminate the spurious rhetorical distinction between local and global (which also relies on a definition of globalization that is completely pejorative), how is this different from any other capitalized business? I mean in terms of tapeworm theories. Redirecting, for instance, government subsidies from CDC's to privately owned neighborhood groups with outside investors sounds like a privatization strategy that's keeping with the dominant trend of the times, rather than against it. You're making the CDC structure more granular. What would be the unintended consequences of introducing into casual neighborhood relationships the formal structures of capital, particularly the information gathering requirements...


Actually, I share some of your concerns. I raised them and never totally understood the answer. The idea, I believe, is to band together to own, but also sell shares in, such things as the local water supply. Securitizing these assets would attract outside money, make a liquid market, and make a bundle for local investors. The A shares, as I understand it, are designed to keep control local. They would be held by fiduciaries, maybe elected? Whether A shares can be sold to outsiders I do not know. If so, the plan would be vulnerable to your argument. If the shares are restricted and voted only by some kind of elected council, then we seem closer to a co-op kind of thing. But clearly Fitts is an investment banker. Her perspective is that the commons will be sold. To whom? She wants to arrange it so the winners and those in control are the people who drink that water, not Nestles that plans to buy the mountain springs. Another solution altogether is political, to hold the assets as public good under public stewards. Another solution would be to use a Trust form, as some have suggested.

Public goods will be privatized. So who will own, profit, and control? That is Fitt's core question, I think. If you start with the idea that pubic good must be kept at public goods and protected you come up with another structure, but is there any will for it today? Anything more than pure theory? It would be vilified as communism or socialism.

The local/global rhetoric rather than right/left, or red/blue seems about as good as these dichotomies get. And, yes, one pole is presented as good, the other as sinister. We are talking here about marketing, about propaganda, if you will. Us/them is the lexicon of the general public. Sadly, for certain purposes narratives of black and white, us and them, good and evil are what works. Increasingly you can see why Fitt's message resonates with thoughtful talk radio people in the hinterlands - her current audience. When you wander through a neighborhood of foreclosure signs, the idea that your money left town makes sense. When the local plant shuts down and the jobs go overseas, you may also feel unhappy with globalism. When your kids leave town in pursuit of a job, same feeling of loss. When your pension goes bust, or the fixed income you had from Social Security depreciates with inflation, you may not like the way money works today. You may yearn for something solid, something local and tangible, some gold standard.

Here is another Fitts dichotomy: unreal versus real wealth. Unreal are financial assets. Real wealth is actually productive or a resource for production, like labor, skills, knowledge, land, water, gold, copper.

As gas goes up, supply chains need to shorten. Food raised far away becomes more costly. So, how do we keep the money flows local to support local producers? Isn't that the kind of question you hear people asking across the political spectrum? Progressives no less than Fitts and her crew?

ikorush sikorsky

I got the stuff about share ownership from an old Hamilton Group site:


It does say that the Class A ownership can tailored to suit people's comfort levels re outside ownership, whatever outside is...


Ike, here is the kind of thing that concerns her and me too. Do you know that firms like Nestles are buying up the local water supply? Local to specific communities? If you don't like it, how fight it? The A/B concept is her answer. Sell Nestles the B shares, but keep the A under the control of the town whose water supply is now privately owned. http://tiny.cc/chGTV I have not followed this particular Mt Shasta controversy, but it looks like Nestles was going to make a fortune while giving the locals not much. Who profits from the resource extraction?
I gather this particular deal is slowed by rising gas prices making it less economic to bottle water and ship it all around the country. The bottled water costs locals 1,000 times what the tap water (same water there) costs.

ikorush sikorsky

If you don't like the deal your town board has cut with Nestle, you can vote the members out of office. All you have to do is register to vote. If you've privatized some of the functions of a town board in a private corporation, you have to purchase shares in order to vote on the composition of the board, the more dollars, the more votes you get. Since class A voting stock can be priced/valued arbitrarily, participation can be made prohibitively expensive. Even if a community initiated the new corporation with a low-price level, that would not prevent the board from raising it in the future.

ikorush sikorsky

hmmm, perhaps you could fix the spelling in that last comment.


Good points, Ike. I will fix the misspelling in your comment. What Catherine's plan is responsive to is capital gains, not just cash flow. In her plan the stock could significantly appreciate. That might make it a good investment for the townspeople, so they would be investing in their own community. That is the end she has in view, to capture the capital gains in the hands of local people in their own town, rather than in the hands of Nestles stock holders.

ikorush sikorsky

Hmm. Yes. Capital gains. Now, in the case of the town that had a Nestle contract, in which Nestle's extraction of a huge volume of water caused a water quality crisis and the townspeople organized themselves in that Rumsfeldian oh so "messy" democratic manner in which neighbors bad-mouthed and committed minor vandalism against neighbors: if instead, they had a private interest in capital gains from the Nestle deal: they would have to weigh concerns about present and future water quality against their personal financial interest in extracting as much as possible profit at the present moment: their concerns would be weighted and valued according to their percentage ownership of the stock: if the groundwater is destroyed for a few generations afterward, but they made some handsome capital gains, they will be able to afford to move.


Right, the question of who bears the harms is the critical point. The idea is to move the benefit/harm equation as close to home as possible. Isn't that sensible? What do you care if you live in NYC what happens to the water supply is Mt Shasta? Not in your back yard. But if it was your own water? That of your neighbors and respective children? Not a perfect solution, but the logic seems sensible, not perfect. When you look for another equally good answer, what is it? Public ownership and control of public goods by public stewards elected to office, and of sterling character, incorruptible? How harness the forces of greed to at least moderate the harms and create healthier benefits? Give people a way to invest locally to keep the money in town. And give people a way, at the same time, to draw in outside money to their community, while controlling or moderating its excesses. That is what C.A. is trying to think out, and would prototype if able, given the complexity and the issues of "critical mass."

I wonder too if a chunk of A shares might not be purchased by, say, a community foundation. Then the corpus and the grants might be aligned with the health of the community. That would ameliorate your objection about having the A shares influenced unduly by outsiders.

ikorush sikorsky

Well, the street equity site recommends forming a Delaware corporation, no matter what your locality. This might seem a trivial detail, were it not so suggestive of the need for further thought. I haven't thunk it through yet, though.


Capitalism 3.0 proposes a trust structure to hold public assets. Here is C.A.'s critique:

I am not sure the critique is that clear, but she raises key issues. She does not pretend to have turnkey solutions. She sees us as engaged in an economic war, with many of those in charge benefiting from that war. They have great advantages. She saw that in DC and on Wall St watching the deals and dealings. Against it, who is devoting brilliance to helping the often naive everyday people defend themselves and get something for themselves that will have some inflation adjusted, gasoline adjusted, real-dollar value?

C.A. is making an effort to get the gains in the hands of the average person, rather than using her wiles to see them bled. She grew up in the inner city and saw what foreclosed housing does the neighborhoods, and how the criminals move in, and how the community is effectively stripped, looted, and then gentrified, all to the disadvantage of ordinary, often quite responsible people. She is looking for a way to use investment banking smarts to protect, rather than strip, the ordinary person, and that person is partly selfish and needs the wealth creation badly, and is partly neighborly too. That neighborly part she calls "financial intimacy."

Her thought process is new enough to me that I find it intriquing.

ikorush sikorsky

"Public ownership and control of public goods by public stewards elected to office, and of sterling character, incorruptible?"

The Founders did not presume incorruptibility in elected representatives, individually or in concert, which is why they constituted a deliberative system of checks and balances.

There is no binding court of appeal for a private board, and the market is not deliberative, but adrift in the immediate.

People of different persuasions can agree on the shortcomings of democracy as it has manifested itself in the liberal-democratic form, but to react to those short-comings by proposing a legitimized pay-for-play system is to embrace a worse solution to a bad problem. Pumping up enthusiasm for said bad solution by contrasting it with imbecilities like Capitalism 3.0 might gain it support in some quarters, but I really doubt that type of victory can produce a desirable outcome.


I guess what I keep coming back to is stewardship. We can't trust the stewards, of course, but we can have that as an ideal. It has to be drummed into the young, as unfortunately today it is not. Instead we glorify celebrity, quick success, wealth, power. We make heroes of people who are mediocre and worse, though celebrated. That is a moral/political issue. But the Happy Tutor is fighting a losing cause and knows he is and always has been a Fool in the Court of the King.

So, when you get down to practical matters like the MT Shasta watershed, something has to be done, and soon. Like now. My influence on public opinion is close to zero. I don't see myself drumming up support for any specific practical plan. Catherine's right now is theory. She has an outline of what such a public/private investment would look like, but prototypes are few.

Again, you come back to social ventures, double bottomlines, co-ops, b-corps, and other efforts to derive public benefits from private ownership. I am skeptical, too, that these are "of a scope" to get the job done. They are small scale, and easily perverted to private ends plus hype.

What the Founders envisioned is my ideal too. But the halls of congress are empty, as you can see on C-span. Speeches are made in empty halls. The work is done in committees with documents already drafted by lobbyists.

The private rules the public good. You know it does. That is Reagan, Thatcher, the Chicago Boys, the Washington Consensus. The stewards are subservient and eager to please those who cut the checks, now and later, as the legislator becomes a lobbyist in his turn, or a CEO, or board member.

How do we break that system? C.A. is playing with eyes wide open, knowing the worst, seeking something better by her own lights. When you look for things moving across the landscape in a positive direction, against long odds, you bestow attention.

If you can point to something(s) more practical and more responsible for protecting the commons, public goods, the public trust, democracy, social capital, believe me, I will amplify that signal as best I can.

JJ Commoner

The bottled water costs locals 1,000 times what the tap water (same water there) costs.

There's a growing movement here in BC, started by the municipalities and backed by marketing $$, to get people to start drinking the tap water again, now that a large number of people have been conditioned to drink bottled water. The argument put forward by the municipalities is that the tap water is of equal or better quality than the bottled water sold by the multinationals.

Of course, you have to pay some taxes to some form of government services to have effective water treatment and transportation, but that's a piffling detail, isn't it ?

JJ Commoner

Public ownership and control of public goods by public stewards elected to office, and of sterling character, incorruptible?

What exactly is wrong with re-instituting this model .. when did it go out of fashion ? Isn't it a form of stewardship, in effect ?


I like the ideal model of stewardship too. Maybe it is at the heart of Jane Jacobs work. She made clear that the ethos, and ethics, of the stewards is historically clean contrary to those of the mercenary class. As we have become market based the ethos of stewardship has dwindled to almost nothing. It may still be taught in some elite US prep schools, but that world where the WASPS ruled their way, with some limited sense of stewardship and honor and noblesse oblige is long gone. What replaces it is an alibi, that greed is good, that doing what profits us (whether as investors, or as government officials, or CEOs) is for the greater good. Of course it often is little more than graft. The double bottom line movement in business is a reductio ad absurdam of Adam Smith, though it is presented as a modest supplement. We may well need overarching stewards, JJ, but who will be the stewards of the global commons? The UN? WTO? Informal meetings at Davos?

JJ Commoner

We may well need overarching stewards, JJ, but who will be the stewards of the global commons? The UN? WTO? Informal meetings at Davos?

Yes, this is indeed an issue. What does the Solari model suggest about this ? Is the ownership of / stewardship of community-owned capital able to "work around" the probability of having overlords ?


That is the idea between two classes of stock for the assets in a Solari. One class has control. The class with control is locally owned. That is the concept. Local stewards own and control the A shares. B share are sold through Wall St. Because they are, local people can buy shares too, even if they are not wealthy. Without some such model, without taking stock public, private equity interests could only be sold to wealthy people who qualify as sophisticated investors. C.A. is trying to come up with an equity structure that uses Wall Street, makes equity shares available for purchase by ordinary people, so they can invest in local companies, without ceding local control. That is what I got out of it, reading her stuff.

JJ Commoner

C.A. is trying to come up with an equity structure that uses Wall Street, makes equity shares available for purchase by ordinary people, so they can invest in local companies, without ceding local control

Not enough, I don't think (and maybe that was what Ike was getting at a while ago). I don't think Wall Street, the Fed reserve, the big banks and the capital markets writ large will let themselves be worked around in quite so clear and simple a way.

But that's just a relatively ill-informed guess ... I don't know the deep inner workings and the key people (as CA Fitts seemed to), but it all comes down to what kinds of laws get passed and what kinds of laws don't get passed in terms of regulation, non-regulation and permissible corporate and financial-transaction structures, and the little woman or man on Main Street hasn't got any high-priced lawyers on retainer


Every dollar of sales withdrawn from a corporation drops the equity value by, say, 5-10. Driving revenue across locally owned entities gives them the "pop." That is the kind of thinking she promotes. It is as you say working on the margins, but if people band together ("Solari Circles") to do business with one another locally, it seems a small step in the right direction. The megatrend, sadly, is for the smaller firms to sell out to Wall Street people.

JJ Commoner

"Money makes the world go round, the world go round, the world go round ... money makes the world go round"

Cabaret - Liza Minelli & Joel Grey

Money Makes The World Go Round: The Role of the Federal Reserve
Economic Summit 2007
Dallas Federal Reserve


The Three Penny Opera runs on and on.

ikorush sikorksy

Hmm. There's nothing preventing non-wealthy people from making market investments presently. They're just not likely to afford stocks with high P/E ratios. That wouldn't prevent investment in less expensive stocks or an index fund with a fairly steady return greater than 10%. Which would also be more secure than investing in exclusively local businesses, which are subject to localized hazards. On the other hand, outside investors in these local "circles," if they held interests in a number of them spread over many localities, would probably be better insulated.


Of course we can all invest in publicly traded stocks. Private equity investment is limited to those who qualify as high net worth or sophisticated ("Reg D Investors" in SEC parlance.) Wall St has discovered the upside in private equity. The question, in part, is how such investments could be made available to smaller investors without the stock becoming public in an unrestricted way and so becoming at the mercy of quarterly returns as measured by Wall St, with management of the firms becoming increasingly subservient to the financial bottom line. The answer being explored by C.A. is two classes of stock where one is traded on Wall St and the control shares are closely held by people locally who have a stake in the other more social bottom line. Today, closely held means illiquid and open only to a few. Public means liquid and open to all, but with the financial bottom line driven by stock analysts without much regard for social effects. The question is whether a hyrbrid could be created that is a) closely held as to control b) public for purposes of liquidity. "Our town will take your money, Wall St, but thank you we will control the decisions about our water supply."

ikorush sikorsky

The only relevance Regulation D has to the preceding conversation is symbolic, as rhetorical invocation of a system of pervasive unfairness; it is hardly related to the nuts and bolts of the Solari plan.

"Our town will take your money, Wall St, but thank you we will control the decisions about our water supply."

This is a point made earlier, which you are studiously avoiding: localities already control decisions about their water supply. Why such decisions should be further privatized and further removed from free democratic decision-making is an assertion you have not defended adequately. My only conclusion is that you have given up on formal democracy, or that a deep skepticism has led you down a narrow path whose sign at the fork read "no hope."

Perhaps the example of Bolivia, whose people fought a water privatization crisis through years of organizing and, ultimately, an old-fashioned electoral victory, can form a counter to your pessimism about the chance for establishing democracy here in the US.


If you form a new venture and want to sell equity, Reg D says you can only sell to qualified investors, ie wealthy. If the idea is to form a company to own the water supply Red D would likely limit who could invest. I am not an expert on this, but it is an issue that will likely come up. Your point about government versus private ownership is on target. Solari is about harnessing the market to keep local assets under local control. Maybe good government could too. Couldn't a person be interested in understanding more about both? Couldn't we have better government and market innovations that might benefit communities?

ikorush sikorsky

No. The impediments to re-writing a corporate charter are far less steep than to rewriting a national constitution, a point also made earlier. The only way this would not raise a big red flag is if the belief that democracy is, er, totally "kaput" became pre-eminent.

Unfortunately, the constitution, however seemingly attenuated by crises of the moment, still has force. I can see why people would want to compromise with it, temporarily.

Vote like a butterfly...

Before a trend reverses, it must flatten. If it flattens, there is no guarantee that it will reverse: it may reverse; it may consolidate its gains and continue.

The long-term trend toward democracy has flattened. The intermediate-term trend toward democracy has flattened and reversed. The short-term trend toward democracy is down.

The longest-term trend is toward oligarchy. The long-term trend toward democracy is contained within the mega-trend toward oligarchy.

Short-term trends, or reactions, are playable, even livable. The mega-trend concedes these freedoms. The mega-trend promotes these freedoms. The mega-trend subsumes these freedoms. They are its engine...

...sting like a flea



Let's take the last point, about oligarchy being on the rise. That to me is the mission critical point. Oligarchs are natural or nonnatural persons, that is human beings or global corportations who now have many of the legal rights of people but who have more power including more political clout than any person. Let's say you wanted to fight that trend, or buck it. It would be a two front war, at least. One front would economic, to try to spread wealth around so it does not heap up in a few hands. The other is political (starting with a defense of the Constitution). To have your own little business, farm or ranch, to have your own way to live without having to truckle is part of economic freedom and ties into political freedom. When you see this as a two front push against the forces of centralization or oligarchy, you can begin to make common cause with Main Street, and with thinkers like Fitts who see oligarchy happening and want to reverse the economic drain. This does make for "strange bed fellows," and offends certain instincts that have been with us since at least Nixon, pitting hard hat and silent majority types against progressives. Now what I am feeling is more and common interest with small business types, internet utopians, rights activists, and basically thoughtful people of many stripes. I see building such coalitions as essential if we are to have any hope of change in the direction of shared prosperity, and democracy too.

I do agree that stronger governmental regulation will be a point of contention. I agree that market solutions are only a piece of the puzzle; government is also a part; so is giving or philanthropy.

ikorush sikorsky

Incoherence, reiterated, can resemble sense. If the shoe Fitts, wear it.

Flea Bitten

Whew. Just had an Orwellian nightmare. Glad to be back in the land of the living and that things are ok. :-)


Is Fitts' solution (somewhat) akin to the advice they give you when you are caught in a riptide? Swim with it until the tug diminishes sufficiently that you can swim laterally and then back to shore?

This requires that you recognize that you are in a riptide, that you understand the nature of it, and that you soft-harness its dominant energy so that you may ultimately escape its deadly influence?

Back on shore, you can rest, restore, contemplate the full ocean (not just its rip tides) and plan your life's full dance with it?


Ike, how diminished is formal democracy, currently, would you say? 10% ? 20% ? ... ?


Fitts is a capitalist in the spirit of Adam Smith. She wants to get rich, wants others to have a chance to prosper financially, particularly through entrepreneurship, farms, ranches and small businesses. She contrasts that with the forces of centralization that pull money and jobs out of the local economy, and which centralize political power as well. So, yes, she wants to harness the energies of the market, but in the spirit of small town face to face neighborliness, rather than Wall St. Or, if Wall St has the economic might today, to find structures that partner with Wall Street but for the benefit and under the control of Main St.

I don't see a huge contrast between that vision and democracy. They grew up together in America. They were longtime allies. What we have now is something new with the powers that be in DC working with the powers that be on Wall St, clearly to the detriment of Main Street. The current subprime and financial crises being clear cases in point.

The post above was about how Wall St is buying Main Street firms. Assume that is a megatrend. Is is good for our country? Is it a reversible trend? I think it is not so good, and not easily reversible, but that many clients (of advisors I work with) would like to see it reversed. They want their little business to say in the family or under the control of an employee or partner. They sell out with some reluctance, but the money may be too good to pass up, or the kids or insiders are not ready or able to take over.

Catherine has not addressed this particular issue, about how Wall Street is rolling up the firms on Main Street, but it is a topic for which her background would be well suited.

I know that my readership has been progressive and that historically progressives have not been politically allied with small business owners who tend to be values conservatives and political conservatives. But I can't leave out of my own thinking the small business owners. They are just too central to the world in which I move professionally. In fact, they are going to have a huge impact on philanthropy and civil society as they sell out, retire, or downshift.

ikorush sikorsky

"What we have now is something new"

This is the presupposition from which both the paranoia and the anti-democratic impulses follow. Perhaps it's worthy of examination.

Flea Bitten

Here's a definition from the dictionary that is free:

1. A psychotic disorder characterized by delusions of persecution with or without grandeur, often strenuously defended with apparent logic and reason.
2. Extreme, irrational distrust of others.

[Greek, madness, from paranoos, demented : para-, beyond; see para-1 + nous, noos, mind.]

ikorsuh sikorsky

The attempt to prosecute Fitts was very real and not a delusion at all, although her subsequent voluminous and copiously footnoted gloss on it afterward may make it easier for observers to come to that interpretation. Irrelevant, though, to the broader discussion.

Stepping away for the moment from the question of whether globalization is new (it isn't), and back to the nuts and bolts of the Solari plan, which Gifthub nostagically terms as Wall Street vs. Main Street:

The actual plan as I understand it, is to create a Real Estate Investment Trust (REIT), a corporate form which has two interesting qualities: earnings are not taxed, and 90% of earnings must be returned to investors. The investors would be local businessmen and other community leaders, and outsiders (Wall Street and everybody else). The outsiders would be limited in the amount of voting stock they could own, keeping control "local". Once this equity investment is secured, the REIT would go about the business of buying up defaulted mortgages in the local area. The REIT would earn income via interest payments on these mortgages, or by taking title to the properties and either charging rents or selling them. Perhaps if the property had significant natural resources, like water, the sale would be to an affiliated local Water Trust (there are many non-profit water trusts in the US, but the Solari plan is to create private, for-profit trusts).

Now I would wonder what difference it makes to the poor indebted homeowner or farmer whether his home or farm is now owned by Goldman Sachs or by a private board composed of members of the local chamber of commerce. I can't quite wrap my head around why it would be advantageous to the homeowner to now be indebted both to a local group that might include his employer, for instance, and to Wall Street. It seems an arrangement that might be advantageous to his employer and Wall Street, but I don't see how it improves the situation of the indebted underpaid worker who has just lost his house.

Perhaps they'll offer him an opportunity to purchase stock in the RIET that has acquired his debt.

I must be missing something.


Ike, you seem to have the basic shape. The long term idea, though, is to find a structure in which small investors in the town could also invest. In other words the idea is to end up with shares or interests that could be owned inside a 401k or bought and sold in small amounts. If high returns are available today for private equity, why not make that return capturable by those who live in the town whose water is being privatized, as well as by, say, hedge fund investors? The second thing is the local control via A shares or general partnership interests.


The Wall St/Main Street dichotomy, or "forces of centralization versus forces of decentralization" is the part of C.A.'s work that I find most illuminating. I am seeing it clearly in "the small businss market," currently 64% of GDP. Those family owned firms are being bought out at a rapid rate and consolidated with money from private equity buyout firms. That will change the financial dynamics of our towns and cities as locally owned businesses give way to larger publicly traded firms. How do you feel about that?

ikorush sikorsky

I see the rhetoric about the forces of centralization vs. decentralization as a red herring. It's a interpretative framework that you're forced into accepting only after you've already conceded that it's not possible or not desirable to undermine the fundamental system that causes inequity, capitalism.

The economic journalist Doug Henwood has written two very good and readable books, Wall Street (available online) and After the New Economy which illuminate some of the topics broached here, particularly in the last chapter of Wall Street and the chapters on Globalization and Finance in After the New Economy.

Particularly relevant is a passage from Wall Street criticizing the strategy of "changing the instrument of circulation alone" - relevant in the case of Solari, given that all the rhetoric about localization is actually occurring in the broader context of a conflict between two elite groups: Securities investors and commodities/precious metal investors (Solari).

From Wall Street:

While finance is expensive and wasteful, profit always takes the form of money, capital yearns to be liquid and easily mobilized, and financial instruments are the means by which ownership and control are organized. If Negri is right, and he is, that money has the face of the boss, then taking on money means taking on the boss.

It would be much easier if the populists and Proudhonists were right in arguing that money and credit are kept artificially scarce, and the generous provision of both would make life profoundly easier for most of us. But Marx’s critique of Proudhon, like that in the Grundrisse, should chas- ten every financial reformer. Marx argued that changes in the instrument of circulation alone do not address the relations of production and distribution, because these relations are embedded in the very notion of money. The need for money makes workers work and capitalists compete; it’s not some quantity that comes from outside the economic system, but from deep within it. To be meaningful, any attack on the money system is an attack on the prerogatives of ownership and class power.

Instead of socializing capital through taxation or some other form of expropriation, loose-money dogma simply reduces to a desire for loans on easy terms. “The notion of crédit gratuit, incidentally, is only a hypo- critical, philistine and anxiety-ridden form of the saying: property is theft. Instead of the workers taking the capitalists’ capital, the capitalists are supposed to be compelled to give it to them” (Marx 1973, p. 123). Or in the case of the American populist, compelled to lend it on easy terms. While it’s certainly the case that the working class is better off with a central bank that targets a 5% unemployment rate than one that targets 6%, the differences are not that fundamental.


So any call for financial transformations has to be considered only as a part of a broader attack on the forms of capitalist social power. As this is written, that seems almost unimaginable.

Flea Bitten

Another from the dictionary that is free:


    a. Health, happiness, and good fortune; well-being.
    b. Prosperity.

2.  Welfare work.
    a. Financial or other aid provided, especially by the government, to people in need.
    b. Corporate welfare.

on welfare
    Receiving regular assistance from the government or private agencies because of need.

[Middle English, from wel faren, to fare well, from Old English wel faran : wel, well; see well + faran, to get along; see fare.]


Seems key to me. Can't we do something about it?


Ike, I agree with the bit from the Wall St Journal, but this post was addressing something quite different, not about alternative currencies. In the world of life insurance agents, the key market is called "the small business market." For a long time now agents have used life insurance, along with intra-family gifts, intra-family loans, and buy and sell arrangements to move a family business from mom and dad to son and daughter, or to an employee. Today, when these deals are discussed an investment banker may show up to offer money from outside the community, money that may be coming from a hedge fund. The idea may be to buy out and consolidate the little family owned firms into larger publicly traded companies. As the little firms get rolled up into big ones, the control shifts to national management in another city, and pressure is felt from Wall Street stock analysts to get a high rate of return. This can lead to outsourcing and offshoring of jobs. Also, if there are "harms" associated with the business, the management may let them fall into the local community of which the manager is not a part. This is the trend I am exploring. I am interested in whether it is good for the communities, good for democracy, or whether it is not so good, and if so how it could be pre-empted, or whether this kind of centralization (consolidation, roll-ups, private equity taking smaller local companies public) is irreversible.

So centralization in this context is a word to describe very concrete transactions: business is groomed for sale, purchasers are sought, investment bankers show up, investment banker outbids family, dad sells out, business is rolled up into a national firm. Then, perhaps, the restructuring begins, perhaps to the detriment of the local community. You see this in locally owned banks, for example, being rolled up into bigger and bigger corporations. You see it in investment advisory practices, furniture stores, and on and on.

Nostaligia? Yes, in a way. I am working in a country where 64% of GDP is from closely held locally owned firms. I know such firms, and their advisors. I see them being rolled up and it does make me wonder. Also, what I like about the closely held business owner is that he or she is very independent. Yes, most often Republican, but independent minded, not subservient and broken to a corporate mold. I like that, admire that, and hate to see that independent way of life replaced by a corporate mentality. I do think democracy historically was rooted in small proprietorships, farms and ranches, as they give way to cubicle ville, I do think habits of independence tend to disappear, and we become prone to thinking that our President is CEO in charge, and that it is his way or the highway, and that we cannot buck the higher ups - all ways of thinking characteristic of corporate employees, but not characteristic to the small business owners. There is much more to be said about this, and hard to generalize about small business owners. Overall, I would prefer an America in which small business types can thrive, and where those business most often pass to family and neighbors, rather than being devoured by national or international firms.


Welfare can be contrasted with self reliance and mutual aid. In the picture based on decentralization, the emphasis falls on rule of law, access to capital, access to opportunity, personal effort, and neighborliness. Aspects of this world view are found in C.A. Fitts and in Bill Schambra. Undermining that Eden would be hedge funds buying main street out and rolling it up. Also undermining it would be socialism, welfare, and other programs that address local issues of poverty or other social ill from the top down. What C.A. does that Bill does not is to be quite clear that Wall St is a centralizer and as such is a bad for Main Street as is Big Gummint. C.A. in effect splits off the Main Street small business Rotarian republican and gets them ticked off at the red suspender wearing, fast talking Harvard MBA toting investment bankers. I find that refreshing. Divide and conquer, or divide and build new alliances. In the process, of course, she also offends those who would drive social programs from the top down. At the same time she makes common cause with the hippies ("The Farm" in Hickory is a commune dating back to the 60s) who live on the communes and want no part of either big gummint or big bidnis. She also is vehement about rights, starting with property rights and rights to own a gun, but going on to constitutional rights and protections. To react to her work at a gut level, seeing the paranoia, and seeing her pro-business attitudes, is to miss what makes her thinking original and timely. She is not just theorizing. She is trying to create structures that will harness decentralized capitalism to decentralized or popular democracy, and as such will slow our movement towards oligarchy.

Is hers the only approach to that goal? No. The best? I don't know. I just see her as offering seriously considered alternatives to the usual left/right, red/blue, rich/poor, conservative/progressive dichomtomies. Given her lack of capital, her Solari concept is just a concept, really. It has not been implemented much, so it is hard to assess a practical thing. Any real world effort along those lines, with new investment forms, will evolve under pressure of markets, evolving regulations, and events.

ikorsuh sikorsky

I realize I hijacked, much earlier, the focus of your post, only because in so many other posts you have discussed the ideas of Fitts, which had some unexplored and troubling aspects I thought were interesting.

I agree, Flea, that the re-establishment and expansion of the public-sector social safety net is a priority after its evisceration by welfare reform. People support such notions when they are presented in neutral terms, but the political rhetoric about "top down" solutions drives the public debate and has successfully divided folks from pursuing their own self interest.

More taxes on the wealthy, taxes on equity holdings - any way to soak the rich, sounds good to me. Nationalization of large corporations, too. Building support for that will take a long time, in the US. Most likely some other lucky countries will go that way first, and their influence on us might have some effect. Thank god for globalization.

Ms. Fitts dalliance with ex-hippies only interests me as manifestation of her strategy to hijack progressive organizations in service of less progressive ends, a goal which KPFA finally woke up to, I suppose. I doubt anything will come of it, and I don't really see anything laudatory in "hippie" practices in any case. Perhaps someone can illuminate their value.

From the prospective of a worker, there isn't anything particularly laudable about small businesses, as they are more likely to cut corners and violate labor laws than large or national corporations, who as a consequence of their "centralization" also have educated human resources professionals and personnel policies, and more likely to stick to the letter of the law regarding labor issues, despite the hostility to labor rights that they share with small business owners.


Nationalize Wall Mart and put Brownie in charge? I agree that big companies do have to play by more stringent human resources policies than do firms below a certain size. (I have forgotten the number.) Employees of small firms can indeed be exploited, with little say, low pay, few or no benefits, and little recourse. Mom and Pop can be autocratic. I agree a lot depends on whether you imagine yourself as a business owner, or see yourself as an employee. A mid level corporate employee might well envy the autonomy of an entrepreneur, and the equity that grows as the business grows. Likewise, thinking of oneself as an enlightened employer who was willing to trade off return against doing the right thing for community and employees is attractive. That is the dream of the double bottomline social venture, a dream it seems easier to realize with a small privately held firm than one that has to jack up profits or disappoint stock analysts. I am certainly not defending hippie ways of life. I just find it interesting that the return to the land, to financial intimacy, to circles of friends is a mood that encompasses many progressives I know and also the people around C.A. Fitts.

Nationalization - doesn't that presuppose a class of public servants? Who have honor? Who are not going to game things for private advantage, nor become a sluggish bureaucracy? France produces such a class of public servants. Do we? We certainly don't seem to elevate such people to high office. Or maybe they are just unsung heroes?

Painting rainbows all over your blues since 1969...

>...I don't really see anything laudatory in "hippie" practices in any case.
> I am certainly not defending hippie ways of life.

Hippies are soft. They compress well and you can fit many in a tight space (when push comes to shove.)

If you ever pick one up driving cross country, though, be careful.

There smiles are deafening.  :o)


I write a thread about private equity investors buying closely held businesses. And this is how the thread ends? With a Volkswagen bus stuffed with 121 hippies?

O Lucky Man

No worries. There are capitalists at the core.


Right, without Dad and Mom sending the checks to the Haight, there would be no flowers in their hair.

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