Book of the Day: The Emerging Ownership Revolution

“ownership design is the most foundational” (David Korten)

* Book: Majorie Kelly. Owning Our Future: The Emerging Ownership Revolution. Journeys to a Generative Economy. Berrett-Koehler Publishers, 2012

Here is the summary from the publisher:

“As long as businesses are set up to focus exclusively on maximizing financial income for the few, our economy will be locked into endless growth and widening inequality. But now people across the world are experimenting with new forms of ownership, which Kelly calls generative: aimed at creating the conditions for all of life to thrive for many generations to come. These designs may hold the key to the deep transformation our civilization needs.

To understand these emerging alternatives, Kelly reports from across the globe, visiting a community-owned wind facility in Massachusetts, a lobster cooperative in Maine, a multibillion-dollar employee-owned department-store chain in London, a foundation-owned pharmaceutical in Denmark, a farmer-owned dairy in Wisconsin, and other places where a hopeful new economy is being built. Along the way, she finds the five essential patterns of ownership design that make these models work.

As financial and ecological crises multiply and linger in our time, many people remain grim adherents of the TINA school of thought: There Is No Alternative to capitalism as we know it. Yet emerging alternative designs show that there is a real and workable alternative, which goes beyond the dusty 19th century categories of capitalism vs. socialism. It’s “yet to be recognized as a single phenomenon because it has yet to have a single name,” Kelly writes. “We might try calling this a family of generative ownership designs. Together they form the foundation for a generative economy” – an economy whose fundamental architecture tends to create beneficial rather than harmful outcomes. A living economy that has a built-in tendency to be socially fair and ecologically sustainable.

Kelly writes: “This is a book about deep change. It’s about hope. It’s about the real possibility that a fundamentally new kind of economy can be built, that this work is further along than we suppose, and that it does deeper than we would dare to dream. It’s about economic change that is fundamental and enduring: not greenwash or all the other false hopes flung in our faces for too long. The experiments I’m talking about are not silver bullets that will solve all our problems. They have flaws and limitations. But they nonetheless represent change that is fundamental and enduring because it involves ownership. That is to say, what’s at work is not the legislative or presidential whims of a particular hour, but a permanent shift in the underlying architecture of economic power.”

Author Majorie Kelly describes the contents:

“In part 1, I trace how extractive design in one industry, the mortgage industry, drove toward financial overshoot and collapse. I start with the foreclosed house that a friend of mine was trying to buy, for which he couldn’t find any owner to whom he could make an offer. I follow this thread to the New York Stock Exchange, and into other worlds of financial engineering, to trace what went wrong in the social architecture of ownership. Ultimately, I set out to find the couple that the house once belonged to, to see how the subprime mortgage collapse impacted the life of one family.

In part 2, I look for the seeds of a new value system that might give rise to a new economy. I visit experiments in ownership of the commons: the Maine lobster industry, community forests, community wind, a cohousing community, and others. Embodied in these ownership models are values of sustainability, community, and sufficiency (the idea that after the pursuit of “more” comes the recognition of “enough”). These may be the values that one day replace the pursuit of limitless financial wealth, the focus on individualism, and the insistence on maximum growth, which remain embedded in today’s ownership designs.

If part 1 is about the breakdown of ownership, and part 2 is about the ground of its evolution, part 3 looks at design patterns that are bringing generative ownership to life on a broad scale. Each chapter takes up one key pattern of generative design, looking at how these combine to keep social mission alive over time. I’ve seen many companies that once were generative lose their social mission when they grow large or when the founder departs. In part 3, I search for successful, substantial companies that have solved the “legacy problem”—keeping social legacy alive long after the founder is gone. I tour the employee-owned John Lewis Partnership in London. I visit foundation-owned Novo Nordisk in Denmark, a pharmaceutical with production based in Kalundborg, home to a famed example of “industrial symbiosis,” where this company’s waste becomes food for the ecosystem. Among other expeditions, I revisit finance, talking with a couple of investing advisers to see how I can use my own small investment portfolio to help in the transformation.”

In the foreword, David Korten explains why this is an important book:

“Of all the important elements lacking from much progressive thought and action, the issue of ownership design is perhaps the most foundational. Marjorie Kelly illuminates this crucial topic in a way that can drive it home to everyone. Owning Our Future offers the most thorough and properly nuanced treatment of the subject I’ve seen anywhere.

Most of the great political struggles of the past 5,000 years can be reduced to a simple question: who will own land, water, and the other essentials of living—and to what end? In the earliest human societies, ownership of the essentials of living was held in common by members of a tribe and included responsibilities of sacred stewardship. We might describe this as a form of shared ownership that confers shared responsibility. As societies transitioned to centralized power structures, ownership of land, water, and other essential means of production was monopolized by the few. Even with the movement toward democracy, ownership of wealth has remained largely in the hands of an elite. Today, debilitating debt, bankruptcies, and foreclosures are a reminder of how little has changed and how many among us—including young people burdened by student loans—live under the power of those who control the issuance of credit.

Behind the workings of our economy lies an invisible issue that few of us focus on—the issue of ownership. During my years working in Africa, Asia, and Latin America, I came to realize that what we call “development” is in fact a process of transferring control over the basic resources essential to daily life from the people who depend on them to foreign corporations, whose primary interest is financial gain. Ownership of corporations is, in large part, in the hands of the wealthiest 10 percent.

Our well-being, indeed our future as a species, depends on restoring our relationships to one another and with the land, the water, the sky, and the other generative resources of nature that indigenous people tradition ally considered it their obligation to hold and manage in sacred trust. The architecture of ownership is key.

The defining debates of the 20th century were crudely framed as a choice between two simplistically defined economic models: private ownership (capitalism) and public ownership (socialism/communism). Neither capitalism nor socialism ever achieved its ideal, but each came sufficiently close to reveal that both failed. Both support a concentration of the power of ownership in the hands of an oligarchy. In Owning Our Future, Marjorie shows that a new model of ownership is arising and spreading in our time, which she calls generative ownership.

It’s most often private ownership, but with a purpose of serving the common good. Generative ownership models include cooperatives, employeeowned firms, community land trusts, community banks, credit unions, foundation-owned companies, and many other models that root control in the hands of people who have a natural interest in the health of their communities and local ecosystems. These are in contrast to the dominant ownership models of capitalism, which Marjorie calls extractive. She offers a simple pattern language to describe what makes these two different models of ownership work. Extractive ownership features Absentee Membership and the rapid speculative trading of Casino Finance, built around the purpose of maximizing the extraction of financial wealth. This creates a disconnect between the common good and the global banks, corporations, and financial markets that control the means of living. Extractive ownership is at the root of most of the social and ecological ills we face today.

In Marjorie’s prophetic words: “Ownership is the gravitational field that holds our economy in its orbit, locking us all into behaviors that lead to financial excess and ecological overshoot.”

Generative ownership, by contrast, has the purpose of creating the conditions for the fl ourishing of life. It features Rooted Membership, in the living hands of employees, families, communities, and others connected to the real economy of jobs and homes and human life. It features Mission-Controlled Governance that keeps firms focused on social mission, Stakeholder Finance that allows capital to be a friend, and Ethical Networks that provide collective support for social and ecological norms. Most of these enterprises are profit making, but they’re not profit maximizing.

Since her groundbreaking book The Divine Right of Capital, Marjorie has focused her attention as a writer on how to resolve the foundational issue of ownership, and in Owning Our Future, she shares the story of her personal journey of discovery. The book is written as a travelogue, with detailed accounts of her visits to each of the major initiatives she profiles. Marjorie combines the perspective of a tenacious reporter, the writing skills of an accomplished novelist, and the open and inquiring mind of a thoughtful and critical economic theorist. Her central theme is that the architecture of ownership defines the business purpose of the enterprise and largely determines whether it will operate in a generative or extractive mode. It is the design of ownership that creates the essential framework for the capitalist economy that is beginning to break down—and for a potentially new generative economy we can bring into being.

This is one of the most important books of our time. I found it so informative and inspiring that reading it literally brought tears of joy to my eyes. It gets my very highest recommendation.”

1 Comment Book of the Day: The Emerging Ownership Revolution

  1. AvatarMarvin Brown

    I find it interesting that you focus on the subtitle of the book and not the title: Owning the Future. My guess is that the idea of treating the future as controlled by owners is a bit much. I think this book needs a more critical analysis. As I read Elinor Ostrom, for example,she is not talking about some kind of ownership of the commons, but citizens governing the commons. Kelly, on the other hand, sees the commons as a type of ownership. I think there remains a difference between an economy based on ownership, even co-ownership, and one based on civic membership. Citizens, of course, will design different ways of governing the commons, and in some cases, different types of ownership will be chosen. To choose ownership without a civic conversation among members of the civic seems to keep us in an economics of property rather than moving toward an economics of provision.

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