3DN Ownership of Assets
Ownership of the accumulated assets
- The CIE would need a legal structure that could own assets used in its operation and that protects the ownership interest of those contributing to the acquisition of those assets.
- One of the reasons to structure the CIE along the lines of a business corporation is that most people are familiar with the concept of stock ownership and the decision making structure in which the shareholders elect a Board of Directors which in turn appoints officers to run the day to day affairs of the organization. Other forms of limited liability organization could also be used – and may be more appropriate – considering the tax and securities laws of the applicable jurisdiction. Generally, a contribution to a business entity, in this case labor, is a non taxable event. When the interest in the business is exchanged for goods and services the value received is taxable. How that distribution is valued must be clarified under local law.
- As the CIE accumulates assets, we would want to have the entity incur the tax liability on the income used for the purchase, rather than pass that liability through to the owners. That is the way a “C” corporation works under US tax law – but it is also possible under a Limited Liability Company structure. Issuance of shares in exchange for labor is exempt from securities regulations in the US because of the direct involvement of the person receiving the shares. Sale of shares for cash, by either the company or the shareholder may be subject to securities regulations. The limitations that apply would also have to be clarified under local law. It may be possible to make changes to the tax and securities laws to encourage community investment enterprises.
- In a typical transaction we contemplate that a share would be issued for an amount of time spent working for the CIE producing goods and services. The worker would then redeem some or all of the shares earned in exchange for other goods and services. Any shares not redeemed would represent an ownership interest in the assets owned by the CIE. That would include a book value of the total value of the assets divided by the number of shares outstanding and a liquidation value of a percentage of proceeds on sale of the assets. The shares would also entitle the holder to vote for the Board of Directors. Typically there would be one vote per share held so that those who have put the most into the CIE, and taken the least out, have the most say in its operation.
- All of this is subject to modification based on the experience of actually running such an organization. In a typical business corporation, the shareholders have little involvement in the business and are not expected to interfere with management except in rare occasions such as takeover bids, etc. In this case, the shareholders will be intimately involved in the day to day operations. It may be feasible to include modifications such as having each occupation type select representatives to the Board and each Board member having a vote based on the number of people they represent.
- Operation of the CIE will depend on maintaining the value of the shares. Someone who understands the relationship between shares issued and value produced must be in charge and have the authority to make decisions that produce the desired results.
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Comments
Sepp said:
David, I think you have a problem of terminology here.
The word "shares" conjures up all sorts of complexities in me (shares are something permanent in my mind, they can be bought and kept and they pay a 'dividend', but here they come in small denominations, and apparently they can be spent like money - confusing) and I am sure it does the same in a number of other people.
Why not have an internal accounting system and run it on some kind of money or money equivalent - we need a good term for it that doesn't have the heavy baggage that the word "shares" implies.
Take the above sentence and read it like
just show up and see what tasks are available and how many credits the task pays.
Does that seem less complicated?
'Credits' in this case would be the term designating the internal currency of the CIE, something you can earn and spend, and which in a way gives you "a share" in the CIE's equity. Of course you can adopt another term, as long as it has the connotation of what we think of as money, rather than 'shares', which reeks of bureaucracy and complexity . . .
David responded:
I see you have a bias against bureaucrats and complexity too? :)
Yes, I understand the argument. The reason I use shares is to distinguish it from what people think money is. A national currency is an arbitrary measure of relative value - like an inch is an arbitrary measure of relative length. The only reason we trust it is that everyone else does and you can pay your taxes with it.
In this design the "credit" is tracking a percentage interest in every thing the organization owns and produces. I think your reaction has more to do with the association with "corporations" - that are so damaging the earth. In that case, the association is also useful. I think we want to take that part of the meme that makes corporations so successful and apply it toward "systems of production that heal nature and produce abundance". We can't do that if we can have nothing to do with the "corporations".
As far as complexity goes, that is what this is all about. Economies of Integration producing upward complexity spirals.
Then, this is the design phase and I am looking for people who understand the concept and can help me find more people interested in furthering the design and implementing it. You may be right when we go to market to potential contributors of labor. We would have to convey an understanding as simple as 'if you sweep floors for an hour you can get a meal'.
