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[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index] OWNERSHIP: Personnel summary (Not a rebuttal)
At 02:05 AM 18/5/2001, you wrote: Where there is discussion and different opinions, itDear Dan Set out below is my response to your general invitation for participants to provide their own summary of the discussion group to be appended to that provided by the moderator. Please note that my 1259 word summary is "complementary" to those of Keith Wilde and Rodney Shakespeare and is NOT a "rebuttal" of either. Please also note that I have revised the last paragraph of my off line draft to recommend that COG change its mission statement. To illustrate the need for this change I have pasted in a message that I received today concerning the lack of responsiveness of employee pension funds to social issues. -------------------------------------------------------------------- Complementary report from Shann
Turnbull
This is a complementary report to those prepared by Keith Wilde and
Rodney Shakespeare. Their reports did not cover part of the
discussion which bore on the topics that were the basis for my suggestion
that COG establish the "Economics of Ownership" discussion in
the first place. It was my intention that the discussion would develop a
framework to analyse the economic implications of the various types of
ownership as put forward in my paper 'New Strategies for Structuring
Society From a Cashflow Paradigm',
http://cog.kent.edu/lib/turnbull1/turnbull1.htmlIn the discussion I pointed out the different economic consequences of owning different types of assets and that it was useful to identify three categories: (1) Procreative, (2) Degenerate and (3) Consumption. By definition all procreative assets generate sufficient cashflows before interest and tax to pay for their cost and so became "self-financing". I noted that the concept of self-financing assets is not found in economic texts and so economic analysis fails to understand that the process of economic development must also be self-financing. This means that economic development can be internally financed by poor countries from the savings created by the investment provided that (a) they have institutional arrangements to provide the credit to bridge the investment payback period and (b) foreign exchange was not required for the investment. When these conditions are met there is no role for international bankers or a World Bank except to advise countries on how to establish the institutional framework. I then pointed out that the only way a country can increase the income of its citizens without them working harder or longer, or exploiting non sustainable resources, is by the use procreative assets that provided the technology to make "nature yield her resources more abundantly". Also, that after procreative assets paid for themselves they created surplus value for their owners to increase their incomes. Procreative investments could also distribute surplus value to the community through transfer payments of taxes and interest paid to credit providers. However, the surplus of values created by procreative assets to raise the income of citizens would be reduced by the extent that productive assets intended to become self-financing did not. I described these as "degenerate" assets as they reduced the rate of economic development even though they contribute to production and consumption. The net worth of the owner of degenerate assets being reduced and distributed to suppliers, employees and/or consumers to democratise wealth while in aggregate it declined. Any net increase in surplus value would be reflected in an increase in current consumption and/or consumer durables described as "consumption assets". The usefulness in identifying the different types of assets is that it provides a basis for managing economic development so communities, regions and nations do not get caught in a "debt trap". This arises when external credits are used to finance consumption assets that could not be paid for by the surpluses created by procreative assets after making up any shortfalls in value from the formation of degenerate assets. Over investment in degenerate assets would produce the same result. I argued that failure in economic development initiatives could be expected if economic analysis did not identify the different economic consequences of investing in different types of assets. However, an economist employed by the World Bank did not think that it was useful to make the distinctions in the economic implications of the various types of ownership suggested. A contribution that was generally accepted as being original and useful was my concept of "surplus profit". Surplus profit being defined as any cash returned to an investor beyond the time required by the investor to obtain the incentive to invest. I argued that the reason why economists cannot understand all the reasons why wealth gets so concentrated is because accountants do not report surplus profits and economists are not aware of the concept. The concept of surplus profit was not part of the analysis provided by the followers of Louis Kelso who have branded themselves as "binary" economists. However, it is implicitly recognised in their view that the concentration in wealth is created by the already wealthy having greater access to credit. Thus they are able to acquire even more wealth producing (procreative) assets on credit. The insight of surplus profits being captured by the owners of procreative assets illustrates the importance of identifying procreative assets as reinforcement to the policy prescription of binary economists that democratising credit is a way to democratise wealth. However, without the insight of surplus profits, the binary economists posses only a partial explanation of how wealth becomes concentrated. As a result, binary economists limit their policy prescriptions for achieving broader ownership of wealth producing (procreative) assets to changing the way credit is distributed. My book, Democratising the Wealth of Nations http://cog.kent.edu/lib/TurnbullBook/TurnbullBook.htm provides a second policy prescription based on changing the way surplus profits are distributed by changing the nature of ownership for corporations and land. Another reason for suggesting the formation of the economics of ownership discussion was to develop a fuller typology of ownership, one that included the political and social implications, as well as the economics of various types of ownership. I introduced the ownership typology used in my 1977 Australian Parliamentary report on The Economic Development Aboriginal Communities in the Northern Territory, but there was little discussion on this except by the binary economists and David Ellerman. Ellerman wanted the ownership of productive surpluses to accrue only to the workers of a firm. This would deny wider direct democratic distribution of income in a community and so the need to rely more on political processes to distribute income. Binary economists, on the other hand did not accept ecological forms of ownership with dynamic, non-exclusive, time limited property rights to distribute surplus profits from production and windfall profits from land ownership to the stakeholders responsible for such profits being created. I describe this form of ownership "ecological" because like all life forms it has limited life and it changes over time and have an in-build feedback processes to establish equilibrium conditions. In addition, it is my belief that the current forms of ownership are not sustainable with an increasing population competing for the limited resources of the planet. Ecological ownership that replaces static, exclusive and perpetual property rights create a "third way" alternative to taxes and welfare for distributing national income. The use of tax incentives to introduce ecological forms of ownership on a voluntary basis by establishing Ownership Transfer Corporations (OTCs) obtained general acceptance. However, there is still a need to continue the discussion to develop a typology and a framework for analysing the various types of ownership and the architecture of control. I made the point that the COG mission of democratising the wealth of nations need not result in democratising the control of nations. The USA, Canada, UK and Australia are widely distributing the beneficial ownership of procreative assets through pension funds but with control becoming highly concentrated through an elite coterie of investment managers. Investment managers are beholden to corporations for increasing the size of their business and so have a disincentive to make corporations accountable financially let alone socially or environmentally. The result is that unlike corporate managers in socialist countries, those in market economies have less accountability to their owners! The development of "pension fund socialism" in market economies is subsuming the sovereignty of nations as well as the role of democratic governments around the world. Spontaneous protests and riots have been the result to reinforce my concern that the mission of COG should be changed to democratising not just ownership but also the control of the wealth of nations. ------------------------------------------------ X-eGroups-Return: sentto-1029824-823-999208872-sturnbull=mba1963.hbs.edu@returns.onelist.com X-Sender: NJWollman@manchester.edu X-Apparently-To: corp-ethics@egroups.com To: NJWollman@manchester.edu X-Mailer: Lotus Notes Release 5.0.1 July 16, 1999 X-MIMETrack: Serialize by Router on castor/Servers/Manchester(Release 5.0.5 |September 22, 2000) at 08/30/2001 05:00:12 PM From: NJWOLLMAN@manchester.edu Mailing-List: list corp-ethics@yahoogroups.com; contact corp-ethics-owner@yahoogroups.com Delivered-To: mailing list corp-ethics@yahoogroups.com List-Unsubscribe: <mailto:corp-ethics-unsubscribe@yahoogroups.com> Date: Thu, 30 Aug 2001 17:00:02 -0500 Reply-To: corp-ethics@yahoogroups.com Subject: [corp-ethics] Demonstration on Sep 13 Sep. 13, THU, 6:30-8 PM - TIAA-CREF: "Out of the Bad & into the Good," demo to call for $280 billion pension giant to invest in positive ventures (like low-income housing) & divest Unocal, Nike, BP, and Philip-Morris. At residence of TIAA-CREF trustee Edes Gilbert, 175 E. 79th St. (between Lexington and 3rd Avenues; subway #6 at 77th St.). Sponsored by Free Burma Coalition, Students for a Free Tibet, Infact, Global Sweatshop Coalition, Press for Change, and Social Choice for Social Change. Contact 212--674-9499, nicadlw@earthlink.net ============================================================================== ACTIVISTS PROTEST OUTSIDE HOME OF TIAA-CREF TRUSTEE: URGE MANHATTAN RESIDENT TO INVEST PENSION FUNDS MORE RESPONSIBLY WHAT: Activists, community groups, and professors are rallying outside of the New York City residence of TIAA-CREF Trustee Edes Gilbert, calling on her to do the right thing with CREF investments: "Get Out of the Bad, and Into the Good". Free Burma Coalition, Global Sweatshop Coalition, Infact, Students for a Free Tibet, Nikeworkers.org, Press for Change, and Social Choice for Social Change: Campaign for a New TIAA-CREF are urging TIAA-CREF to divest of Philip Morris, Nike, British Petroleum, and Unocal stock and invest in more socially responsible ventures. Ms.Gilbert is on the TIAA-CREF committee that oversees social responsibility concerns. After properly notifying her neighbors, activists will sport creative and effective costumes (such as academic caps and gowns), props and signs, bringing the message home to Ms.Gilbert. Residents of her apartment building will be mailed a letter talking about a mystery resident of her building who could help direct billions of dollars to more responsible use--and that at the appointed time listed below, we will reveal that person via banners and other materials. WHEN: Thursday, September, 13, 6:30-8 pm WHERE: 175 E. 79th St. (between Lexington and 3rd Avenues; subway #6 at 77th St.) WHY: As the nation's largest pension fund, TIAA-CREF, a retirement fund mainly for educators, prides itself on being responsive to shareholders and a "concerned investor"on social responsibility matters.. The fund, however, continues to hold large investments which put public health, factory workers, and citizens at risk. Why should life-giving pension money be invested in deadly tobacco, sweatshop labor, or an oil company tied to one of the most brutal dictatorships in the world? There are more positive ways to invest and still earn good returns. A broad-based coalition is calling for funds to be invested in affordable housing and in companies which are, for example, pioneering socially or environmentally responsible products or services. A flier with Ms.Gilbert's ' photo and details on our relevant campaigns will be distributed at the event. Contacts for further information: Main contact in NYC is Dave Wilson, 212--674-9499, nicadlw@earthlink.net ; or national campaign organizer, Neil Wollman, 219-982-5346, njwollman@manchester.edu. Shann Turnbull Ph.D.
P.O. Box 266 Woollahra, Sydney, Australia, 1350
Ph: +612 9328 7466 office; +612 9327 8487 home; Fax: +612 9327 1497;
Life long E-mail: sturnbull@mba1963.hbs.edu Alternate:sturnbull@optusnet.com.au
with other papers & book at http://cog.kent.edu/library.html
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