Santa Rosa, California

Monday, July 3, 2006


Section D (Business), pp. D1, D3


Q&A|  ART WARMOTH, psychology professor at Sonoma State University, discusses forms of capitalism that he believes could protect the North Bay economy from stock market mania, job loss, globalization and damage to the environment.


Understanding the best of capitalism


PRESS DEMOCRAT:  You have said that capitalism could be more democratic, that it could have better feedback mechanisms so decisions are not made exclusively for stockholders and defined by the accumulation of money.   What do you mean by that?


WARMOTH:  There are actually two parts to this question.  Democratizing ownership to include producers, consumers, and communities would improve the quality of feedback by making corporations directly accountable for their decisions to a broader range of stakeholders.  The “accumulation of money” assumes that there is only one kind of money: national currencies.  That assumption is obsolete.


PRESS DEMOCRAT:  In the tumultuous decade of the dot-com bubble, Enron and World Com, U.S. citizens lost hundreds of thousands of jobs and billions of invested dollars. That has spurred an interest in finding alternative ways to do business. What are the key elements of the capitalism you have in mind?


WARMOTH:  There are two key strategic elements: 

•Creating strong local economies as a countervailing force to globalization. 

•Promoting investment in real wealth and well-being  and avoiding unproductive speculation and what Robert Reich called “paper entrepreneurialism.”

      Globalization is primarily about the global integration of manufacturing and trade.  It is not doing much for meeting our needs in areas such as education, health care, and ecosystem management.  These areas require the effective mobilization of local and regional human resources.


PRESS DEMOCRAT:  Major companies have begun adopting a Triple Bottom Line approach to accounting.  What is that?


WARMOTH:  Triple Bottom Line accounting uses an economic (financial) bottom line, an environmental (sustainability) bottom line, and a social (quality of life) bottom line.  Accountability in these three areas works at the micro level for the individual and the firm.  It can also work at the macro level for communities and regional governments.


PRESS DEMOCRAT:  What are some alternative kinds of business ownership that might not have as harsh an impact on employees and the community as capitalism in its current form?


WARMOTH:   The Employee Stock Ownership Plan (ESOP) proposed by Louis Kelso in the 1950s is the granddaddy of stakeholder ownership.  This possibility has been elaborated by Jeff Gates in The Ownership Solution (1998) to include such things as producer and consumer ownership.

The key is self-financing.  That means that ownership is financed on the basis of a claim on a future income stream, rather than by a claim on currently held assets.  This approach does not avoid risk-taking and accountability, which are desirable.  But it does avoid the further concentration of assets, which undermines the fabric of community life.


PRESS DEMOCRAT: Some people are experimenting with local currencies, as a way to keep money at home and protect the local economy from outside impacts. How might this currency work?


WARMOTH:  Local currencies are designed to complement national currencies.  They strengthen the local economy by providing sufficient liquidity to assure that all potential economic transactions in the local economy can be realized, even under conditions of recession or currency scarcity.

Government action is required to create legal tender.  But money can be created by an agreement within a community to use something countable as a medium of exchange.  This can be cowry shells, cows, or gold bars.  It can also be Ithaca Hours or data points in a reliable information processing system.


PRESS DEMOCRAT:  What are some real-life examples of this kind of business ownership and currency?


WARMOTH:   Ithaca Hours is the best known complementary currency system in the United States.  The oldest and largest system in the world is the Swiss WIR, which has recently reported the equivalent of more that $2 billion in annual transactions.  The Mondragón Cooperatives group in Spain is an example of successful stakeholder ownership.  The Buy Local First campaign in Bellingham, Washington is another effective approach.  In Sebastopol, the Sebastopol Economic Forum and the Livability Project are local initiatives that are gathering momentum.  The Sustainable Enterprise Coalition is promoting sustainable business in Sonoma County.


PRESS DEMOCRAT:  In a service economy, you have proposed looking at labor as an asset instead of a cost. How would that work?


WARMOTH:  Human creativity and relationships are intrinsic forms of wealth and well-being, not just costs in the schema of industrial production. Realizing this potential probably requires Social Bottom Line Accounting and local currencies such as Edgar Cahn’s Time Dollars.


PRESS DEMOCRAT:  Why do you urge people to get a more sophisticated understanding of economics?


WARMOTH:  Most of our everyday lives are shaped in major ways by the assumptions built into our economic institutions.  Few of us fully understand how these institutions work or the consequences of the assumptions they embody.


PRESS DEMOCRAT:  Where can readers get more information about these alternative ways of doing business?


WARMOTH:   Some Web sites include:


·      Skaggs Island Foundation/Sustainable Community Economics


·      The Livability Project.


·      Sustainable Enterprise Coalition.


·      Community Information Resource Center (CIRC), Tom Greco.


·      Time Banking, TimeDollarUSA, Edgar Cahn.


·      Catherine Austin Fitts. "Solari & The Rise of the Rule of Law."


·      Michael H. Shuman. "An Open Letter to Bellingham."


Some books Include:


·      “The future of money: Creating new wealth, work, and a wiser world.” Bernard Lietaer,  2001.


·      “No More Throw-Away People.” Edgar Cahn, 2004.


·      “The ownership solution: Toward a shared capitalism for the 21st century.”  Jeff Gates, 1998.


·      “Money: Understanding and creating alternatives to legal tender.” Thomas H Greco, Jr., 2001.


·       “Plan B: Rescuing a planet under stress and a civilization in trouble.” Lester Brown, 2003.


·      “Natural capitalism: Creating the next industrial revolution.” Paul Hawken, Amory Lovins & L. Hunter Lovins, 1999.