Re: Ownership and "green" Growth (Economics of Ownership 3)

[Shann Turnbull <sturnbull@mba1963.hbs.edu>]

Keith posed the question: "Does ownership make green growth possible?"

To answer this question we need to know what is "green" growth?

Even if the word "green" is left out I would still not know how to answer
the question as
communist and socialist regimes have shown that growth is possible without
ownership.

I think that it is generally accepted that private ownership promotes
growth and this provides a fundamental reason for favouring a private
property economy.

Even if the question was simply: "Does expanded ownership accelerate growth?"
My answer would be that this would depend upon the institutional context.

If the country did not have institutional arrangements for financing new
investment from the savings introduced by the investment created then I
would argue that leveraged ESOPs provide a technique for introducing
confluent development processes to replace the contrary processes of having
to reduce consumption and so the incentive for investment to finance
investment.  (Refer to my "New Strategies" paper for my definitions of the
terms "confluent" and "contrary"
http://cog.kent.edu/lib/turnbull1/turnbull1.html).

I would also argue that the use of OTCs and CLBs or any other institutional
arrangements as used at Mondragon to exclude foreign ownership would also
accelerate growth of the community because it avoids the leakage of surplus
values, surplus profits and windfall gains.  The result would be a greater
average increase in incomes and/or net worth of individuals in the
community.  But this gets back to the problem that economic statistics do
not usually collect information to detect growth in these parameters.

If "green" growth means sustainable growth then the question becomes an
oxymoron if one believes unlimited growth is not possible.  A belief which
I believe I share with Keith.

The question which I believe is interesting is: Does expanded ownership
improve sustainability for a community?

I have added the words "for a community" to avoid the problem of one
community or Nation subsidising or having dependency on another as
discussed in Ownership and growth (Economics of Ownership 3)
http://cog.kent.edu/archives/ownership/msg00068.html.

In our book "Building Sustainable Communities" referred to in the above
posting, I argue that local ownership and control is a prerequisite for
sustainability to avoid leakages of value from a community by the way of
rents/rates/taxes/royalties/profit shares and interest. This situation has
largely been achieved at Mondragon.  Refer to my case study: 'Innovations
in Corporate Governance: The Mondragón Experience', Corporate Governance:
An International Review, 3:3, 167-180, July, 1995, Blackwell, Oxford.
http://papers.ssrn.com/sol3/paper.taf?ABSTRACT_ID=6455

Localised ownership and control provides the incentive and means to
minimise localised pollution and the use of non sustainable technologies
and practices.  Non localised pollution of the commons would need to be
controlled by higher social orders as set out in Table 7 "Global Governance
and Political Economy of my "New Strategies" paper.  To provides mechanisms
to maintain local ownership and control and so sustainability, even with
the migration of people between communities, I have proposed the
introduction of "ecological" forms of corporations (Table 3), ecological
forms of money (Table 4) to create an ecological economy outlined in Table
6 which in turn would create an ecological society outlined in Table 7.  

In my latest papers I have identified as ecological forms of control those
shown in Figures 15, 16, & 11.  However, these figures do not make it clear
 why their architecture of control is ecological.  My later papers, not yet
published in hard copy or on a web site do so and are available on request.  

In summary, Figures 11, 15, & 16 show that control is divided into what
Herbert Simon described as "sub-assemblies" in his 1961 lecture on the
'Architecture of Complexity' .  In social institutions, these
sub-assemblies or what I describe as "almost self-governing units"
decompose decision making labor to avoid what Oliver Williamson described
as information overload in Unitary form organisations.  In his 1926 book,
'Holisim and Evolution' Juan Smuts described such sub-assemblies as
"holons" while Dee Hock  much later coined the word "Chaord".  A hierarchy
of holons was described by Koestler as a "holarchy" in his 1967 book 'The
Ghost in the Machine'.  Smuts showed that the complexity of the universe is
created by holons and cybernetics reveals that this also provides the most
efficient way to manage complexity in nature or machine.  A fuller
explanation will be found in my Corporate Governance survey article in the
COG library http://cog.kent.edu/lib/turnbull4.html  

My current work involves investigating if holonic architecture also
provides the most efficient way to manage complexity in society.  But that
is getting off the topic except that this work has identified the
shortcomings of market information in providing a basis for making informed
resource allocation - especially decisions involved in establishing
sustainability.

Regards

Shann


At 01:22 AM 4/11/1999 , you wrote:
>
>-----Original Message-----
>From: Shann Turnbull <sturnbull@mba1963.hbs.edu>
>To: ownership@cog.kent.edu <ownership@cog.kent.edu>
>Cc: john.mathews@mq.edu.au <john.mathews@mq.edu.au>;
>jeffgates@mindspring.com <jeffgates@mindspring.com>
>Date: Monday, November 01, 1999 8:02 PM
>Subject: Ownership and Growth (Economics of Ownership 3)
>
>
>Shann has gone to considerable pains here to rescue me from conviction as a
>liar!  After pointing out that I was probably unjustified in believing that
>he claims his techniques to be an improvement in promoting general growth
>over the Kelso approach alone, SHANN observes  that
>
>....I have always considered leveraged ESOP's (ie the Kelso technique)
>complementary to my Ownership Transfer Corporations (OTC's) and Community
>Land Banks (CLBs).  However, I have said that I consider leveraged ESOPs
>more important in making economic development self-financing by providing
>an institutional mechanism for converting debt to equity to finance growth.
>
>However, I  could be proved wrong!  And on reflection I may be.  It may be
>useful to share my speculations in the matter and my concern that it would
>be difficult to prove from current economic statistics. ....
>
>
>Thence follows another of Shann's lessons in accounting which are so
>refreshing  to one confined by a stale and tenuous grasp on conventional
>concepts.
>
>By way of explanation for my gaffe, I have to confess that it was a
>superficial inference from my impressions of his emphasis on and
>illustrations of ways to be more effective and efficient in capturing the
>benefits of successful capital investments, combined with my failure to be
>thoroughly convinced by Kelsonian explanations for the power of "binary
>growth".  Alan Zundel seems to share some of my unease in this corner of the
>Kelso explanation, and I hope we will soon have a more complete exposition
>of his thinking on the subject.
>
>Since we are on the topic of growth, this may be an appropriate place to
>express my hope that some participants or onlookers will soon be picking up
>the subject of growth itself as a controversial issue.  When I first got my
>hands on a draft of Ashford's and Shakespeare's book, the part that most
>fired my enthusiasm was their observations on the different quality of
>growth that is conceivable if people have some security of income in
>addition to wages.  Economists are continually forced into defensive
>postures on the topic of growth in recent decades, and it looks a bit
>archaic to be promoting a solution to the poverty problem that appears to
>offer essentially the same cure as Lyndon Johnson's "guns and butter"
>promise of the 1960s.  Does ownership make green growth possible?  If so
>what are the secrets?
>
>
>>Keith Wilde
>>Canada Pension Plan
>>Ottawa
>>kwilde@magi.com
>>613 990-8125 (office)
>>613 747-6847 (res)
>
>

Shann Turnbull
P.O. Box 266 Woollahra, Sydney, Australia, 1350
Phone: 02 9328 7466 office; 02 9327 8487 home
Fax: 02 9327 1497 home & office.  Mobile 0418 222 378
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Life long E-mail: sturnbull@mba1963.hbs.edu
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