I actually happen to have a medium sized farm in what may be the same South American country you're talking about, but regardless, if I wanted to develop that farm, how, specifically and mechanically, could I opt today to use the methods of funding investments that you propose, or do I have to wait for the state to create supportive conditions first?
Obviously you couldn't do it on your own, but you could provide liquidity in a new system based upon your production, and the use value of your land and buildings etc.
You could develop the farm by entering into revenue-sharing and/or production-sharing 'capital partnership' agreements with suitable partners. eg your current employees become a co-operative with an 'equity share' in production.
Secondly you could participate in - and promote the development of - a local Guarantee Society.
The components of this are:
(a) willing participants;
(b) a Value Standard - probably the dollar for as long as people trust it. NB - no dollars change hands: what happens is that money's worth, eg of your fruit, changes hands on credit terms priced by reference to the dollar;
(c) an accounting system - pretty trivial;
(d) a service-provider-formerly-known-as-a-bank;
(e) an agreement.
A unit of currency would be useful. Here you might find that renewable energy projects on your land eg biomass; hydro could be a source. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
More questions:
Why would I have to set up a cooperative with my workers? Is that really necessary to get this going, or just a progressive hand out to them? (And one they are likely to be wary of, given the security of being paid weekly in dollars instead of the risky alternative of being a shareholder.)
Willing participants: This would seem to require an organizer, aka a salesperson, to convince them to be willing. Are you taking into account how to compensate this particular effort and skill set?
Service provide formerly known as banks: What exactly would be the service they would be providing in this arrangement, and how much do you expect they would have to be compensated?
Is the whole system really less expensive/more beneficial to me than just going to traditional money lending sources? Where do you identify the savings/benefits and how can we quantify them to compare them to traditional means that entrepreneurs have to finance their investments?
So, why and how would I, as a farmer in a country where alternative arrangements are viewed positively right now in official discourse, get involved with another group offering a form a financing my investment instead of just going to traditional money lenders?
You currently borrow money - if you can - at interest in order to buy goods and services you need.
In the 'guarantee society' model your suppliers provide the goods and services on interest-free credit terms, and you give them your IOU based upon your capacity to provide 'money's worth' at some point in the future.
The result is that there are open 'bilateral' credit balances between you and your suppliers which are supported by the 'guarantee society' agreement.
Both you, and they, pay an amount into a 'default fund' in common ownership (a custodian) for as long as you have a positive or negative balance. This is a payment for the use of the collective guarantee.
Participants also pay a service charge to a service-provider-formerly-known-as-a-bank who administers the system; sets guarantee limits for sellers and buyers; manages defaults.
Essentially the outcome is an open-ended overdraft at the option of the finance user. Defaults can only be in respect of exceeding the credit/guarantee limit although it would be possible to mandate - in addition to the guarantee charge and service charge - a minimum payment.
Those with debit balances may settle balances bilaterally by providing money or money's worth to suppliers.
Those with credit balances have an incentive to spend, since they pay for the use of the guarantee as well.
This is of course the same Gesellian approach proposed by Keynes for positive AND negative Bancor balances in his Bancor/ International Clearing Union, except that there was a central issuer of 'fiat' Bancors.
Alternatively, your suppliers may in turn obtain goods and services elsewhere - thereby creating their own debit balances - and it is possible then for settlement 'chains' to take place eg A pays B pays C pays D pays A - which are identified by 'clearing agent' software like Ripple Pay.
This sort of settlement chain is precisely what happens now in Brent/BFOE forward crude oil contracts upon expiry when 'open' bilateral forward contracts are often netted out in this way. So called Brent Daisy Chains have been known to reach 100 links.
Such a guarantee society system could be started tomorrow.
Why would I have to set up a cooperative with my workers? Is that really necessary to get this going, or just a progressive hand out to them?
At the moment your managers and staff are costs: I am not sure what incentives they have beyond a salary.
I don't see it as a 'hand out' if you both cut your overheads and give them the incentive of an equity share in the production. In a bad year you share the pain, but conversely you don't get to keep all the fruits of a good year.
But my experience is that true 'co-ownership' will appeal to your staff as much as it does to (say) the John Lewis Partnership staff in the UK. I suspect the productivity will greatly increase if everyone feels they have genuine stake.
given the security of being paid weekly in dollars instead of the risky alternative of being a shareholder
It's not a matter of 'either/or'. Some (eg youngsters with no family) may opt to have a pure equity share: others may require a guaranteed minimum - which would come at the expense of part of their equity share.
It's entirely up to them and you to what extent they would opt in.
What exactly would be the service they would be providing in this arrangement, and how much do you expect they would have to be compensated?
See above. They would get agreed (on an 'open book' basis) costs covered, and would then receive a profit/surplus element paid from the bonus/ pool and based upon default experience.
Where do you identify the savings/benefits and how can we quantify them to compare them to traditional means that entrepreneurs have to finance their investments?
Firstly, there is no compound interest in the model.
Second, no deposits etc are required, and banking regulation (and all the crap that goes with it) does not come into it.
Third, the interests of the service provider are aligned with those of the service user, but it is not easy to quantify the benefit. Probably excessive management costs and empire building will be less likely.
Let's say a 1% charge is made per month to positive and negative balances. This would be pooled; then a % share would go to the service provider, and the balance would be distributed as a dividend to guarantee society members as they see fit.
This has the effect of compensating those who use less credit, but who still provide the guarantee. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
There's nothing inherent that would prevent a slave owning plantation, to be extreme, from also benefiting from a guarantee society relationship for financing investment in the same way that a cooperative farm would, as I see it. The co-op part seems entirely independent from the guarantee society part, right?
The co-op part seems entirely independent from the guarantee society part, right?
I advocate partnership frameworks for:
(a) Peer to Peer Credit - the 'Guarantee Society';
(b) Peer to Peer Investment - the 'Capital Partnership'
The latter is essentially a co-operative of owners of capital (investors) sharing revenues or production with a cooperative of users of capital (labour). "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
I want to make sure we separate the "touchy feely" stuff from what is actually required to make the system work for an entrepreneur with a practical need for investment resources
It's the part about giving workers an ownership in stake in the enterprise. Lots of people could have big problems with that because they don't trust their workers and their workers don't trust them. But Chris's plan here doesn't seem to rely on workers at all, just capitalists, so the worker co-op part of it seems completely superfluous in this scheme.
In fact, one of the most powerful applications is a worker buyout of an enterprise, whether that is an existing private company (where shareholders get a better 'exit' than using any other model, essentially by selling off future profits) or existing state provision, where it is a new and 'non-toxic' approach to public/private partnership.
In this context the City of Glasgow already has five such municipal partnerships (using LLP frameworks) between the council and private providers, but all are conventionally financed. What I am proposing is to bring investment within such partnerships.
The outcome is 'co-ownership' between labour and capital of productive assets, and a genuine alignment of interests. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
A more common business problem among entrepreneurs who might want to use your scheme is that a business owner just wants investment capital to expand, without changing the owner-employee relationship with his workers. So I just wanted to clarify that you don't need to change your wage and ownership structure to participate in a guarantee society or an investment society.
i have always taken a great interest in your ideas and would love to see them realized on a large scale (as far as i can understand them). but i am wondering if you have already implemented (or helped others to implement) them in actual enterprises. if so, could you describe some of them (or point to where you already have done so)? If you can't pay the bills, it's not sustainable.
There was a >£1bn embryonic capital partnership years ago involving 10 UK hotels.
A chateau in France is encapsulated within a 'Capital Partnership', but this is a very simple early variant.
There are several works in progress. We have a commitment from a major municipality to put 1.5 acres of waterfront land into a 'Land Partnership' but assembling the rest of it is slow going, since we lack the necessary 'walkabout money'.
One very exciting project - a distressed school currently in provisional liquidation - has bubbled up in the last week. It's got a short fuse, and if it happens it will happen fast. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
