Saturday, July 28, 2018
Well, it has been an interesting summer, to say the least. On Memorial Day, I was playing basketball and injured my foot. Another player stepped on it while knocking me over. The combination of his weight on my foot and my body falling sideways created enough torque to cause what I will fondly call the “Taysom Hill injury.” The more technical term is a Lisfranc injury. According to the internet, “The Lisfranc joint is the point at which the metatarsal bones (long bones that lead up to the toes) and the tarsal bones (bones in the arch) connect. The Lisfranc ligament is a tough band of tissue that joins two of these bones. This is important for maintaining proper alignment and strength of the joint.”
There are all sorts of Lisfranc injuries, most caused by car accidents. Others are sports-related, some from contact, like mine, while others, like Taysom’s, are noncontact injuries. The severity can range from sprains to fractures and dislocations. In my case, the first two metatarsals were displaced, and the cuneiform bone was cracked. So it was pretty serious. It took a couple of weeks for me to find the right doctors and for them figure out how messed up my foot was, but on June 20 I had surgery. I now have a plate and six screws to hold all the pieces together. I was instructed to not put any weight on the foot for seven or eight weeks. Being both active and stubborn, I wasn’t about to spend almost two months on a scooter and crutches. So I bought a “pirate crutch” (officially named the iWalk 2.0, see photo). It’s not good for long distances, but for getting around the house or office (or even walking the dog), it’s great. Whenever I go to a store, I get comments and questions. Most people haven’t seen a contraption like this, but they think it’s cool. I do too, but I’m getting rather tired of it.
I’m five and a half weeks into the no-weight portion of my recovery and will get an x-ray next week to see how things are mending. On the surface, things seem to be progressing nicely, but I know I’m in for a long stretch of no basketball. The surgeon told me it would probably be a year before the foot feels “normal” again.
This encounter with the American health-care system leaves me both amazed and baffled. The knowledge and technology we have is impressive, and so is our messed-up, profit-oriented medical industry. I use that word intentionally, because it really is an industry. It’s not a sector of society aimed at providing a public good, like, say, education (although some would like to see education become an industry too). This week I received the itemized bill from Intermountain Health Care for my morning in the operating room. The doctor’s bill as actually quite reasonable, but let me share with you a few of the highlights from the hospital’s “Itemized Statement of Services.” The prices I will list are what IHC billed my insurance. What the insurance paid was, of course, much lower, since the hospital was in their network.
I was surprised, when I received the initial summary from the insurance company that the biggest item was “medical supplies.” The hospital billed the insurance about $25,460 for these medical supplies. The operating room, by contrast, was a mere $7,547.40. The total charges amounted to $35,542.13, 70 percent of which was for medical supplies. I wondered what on earth could be that expensive. Well, this week I found out.
The plate (Plate Ankle Lapidus CP 0 Offset) was billed at $5,332.32. I don’t know why the name includes “ankle,” because my ankle is fine, thank you. The plate is on my instep, right where you’d expect it, holding the metatarsals in place. One of the six screws was billed at $2,852.28. I have to wonder about the twenty-eight cents. Really? They couldn’t round it to $2,850? Three other screws were $907.39 each. The other two were only $653.86. The Home Depot apparently doesn’t carry these screws. The hospital also billed for a pin, three reamers, a K-wire, and other odds and ends. One of the reamers was billed at $2,219.32. And some sort of unthreaded guidewire came in at $2,935.68. I’d hate to see what a threaded guidewire costs. But the item on this itemized statement that has me scratching my head is the “Bit Screwdriver T8 AO Quick Coup.” Yes, my insurance got billed for a $2,201.76 screwdriver. I can’t help but wonder why. Don’t they do surgeries like this rather frequently? Don’t they have a screwdriver in the drawer from the last surgery like mine? Couldn’t they sterilize it and reuse it? If not, then I want the screwdriver from my surgery. I mean, they obviously don’t need it. I think I’ll ask for it when I see the doctor next week. I’m sure he’ll look at me like I’m nuts, but hey, that screwdriver is a testament to the insanity of the American health-care system. I’d bet even the military doesn’t pay that much for a screwdriver. And even if they did, they’d probably use it at least twice.
Oh, I almost forgot. By comparison, the iWalk 2.0, which can be purchased on Amazon, cost me $149, and the insurance wouldn’t cover it. Maybe if it had cost $10,000, they would have.
Wednesday, July 11, 2018
Competition Restrained by a Higher Good (Part 2)
Who Really Believes in Unfettered Competition?
Unfettered competition, most free-market advocates insist, is the most necessary component of a successful economic system. And the most convincing argument supporting this assertion just happens to be communism. Ask any capitalist if unrestricted competition is good, and the answer will be, “Of course competition is good. All you have to do to see this clearly is to look at communism, a system that removes competition from economic endeavor.”
Any capitalist would tell you that competition is necessary in order to achieve quality, efficiency, and variety. Communism does not achieve these three desirable results, but is that because communism lacks the competitive forces of capitalism? Perhaps it lacks a great many other things too. Unfettered competition does indeed fuel the fires of quality, efficiency, and variety, but the reasons for achieving these ends are all wrong. Wouldn’t it be better to achieve them for the right reasons, for a higher purpose, such as the good of society and the full preservation of choice in the marketplace?
The conservatives, in particular, talk a good game when it comes to unregulated competition. In fact, given the opposing view, their talk makes a good deal of sense. They pledge allegiance to the banner of laissez-faire capitalism, all in the name of freedom. But do they walk their talk? Do they really believe their own words? The evidence here, I’m afraid, is against them. As David Barash explains:
We are supposed to believe that conservatives believe in the virtues of competition, tooth and nail, dog eat dog, and may the best man win. . . . But do they really believe in such a free-for-all? Consider the Lockheed and Savings and Loan bailouts, or the various and numerous forms of “corporate socialism” whereby government provides special benefits and tax breaks to large corporations, especially those engaged in military contracting. What conservatives really prefer is competition among the nonrich, the wage earners, the smaller and less well established . . . especially since out of this competitive fray generally come lower wages and a more docile workforce.1
Many people claim to believe in unhindered competition, but when push comes to shove, we discover that they’d actually prefer to have the government step in and ensure their success and prosperity, rather than having to “earn” it (and possibly lose it) in the mercenary marketplace they extol. It is only certain classes of individuals, apparently, who should be unprotected from the hostile, predatory environment. So who really does believe in a totally free market? Perhaps no one.
Both individuals and businesses usually believe in free competition only to the degree that they feel they can win. If I were scheduled to play Andre Agassi at tennis, for instance, I wouldn’t be so gung-ho about competition. Self-interest, as one might expect, lies at the heart of the competition issue. If unfettered competition is in our best interest, we’re for it; if, on the other hand, our competitors are in a position of strength, we immediately want the rules changed. Sure, I’ll take on Andre—if he wears leg chains, a straitjacket, and holds the racquet in his teeth.
A Better Metaphor
Three metaphors have often been used to define our win-lose competitive system: (1) the athletic contest or “game,” (2) war, which bears striking similarities to sports, and (3) the jungle. One major problem with these win-lose metaphors is that they all serve as excuses for not creating a system in which our unique American ideals can be practiced. They disavow any higher goal that should focus and mold our competitiveness.
The game metaphor is inappropriate, for life is not a game. Food and shelter and health care and education should not be the prize for winning a contest. The war metaphor is also improper, for doing battle over the necessities of life, or even the luxuries, is barbarous. We are a society, we claim to be civilized, and we must either unite and thrive or splinter, decline, and die as a society. The jungle metaphor is perhaps most repulsive, for human beings are not simply members of the animal kingdom. Our intelligence, creativity, self-awareness, advanced communication skills, preservation of history, and capacity to rise above instinct and exercise reason and compassion set us apart from other animals. Why, then, should we be satisfied with economic relationships based on a metaphor that applies better to lions or sharks or raccoons? Why can’t we adopt a metaphor that places our economic interaction on a par with our social and political aspirations?
What we need is a better metaphor to guide us in economic endeavors. Consider, perhaps, the orchestra metaphor. There is indeed competition between the violinists in an orchestra. They all desire to occupy the first chair. But this competition is not an unfettered, totally self-interested, win-lose type of competition. The last thing any serious violinist wants is for another violinist to play wrong notes, for this would reflect on the whole orchestra. A higher good governs the competition. Each violinist wants the orchestra—and, hence, all of its parts—to play superbly, flawlessly. But each violinist wants to be recognized as the best—not because others foul up, but because he or she is simply more excellent than the others. This healthy competition rests on the idea of being considered the best of the best. And it is all possible because a greater common good, a higher ideal governs the competition and binds the players together.
The only way we can have this type of competition in our economic pursuits is for us as citizens to recognize a higher ideal. If we can learn to view the American Dream as something more than an economic game of grabs, perhaps we can experience a quality of life and social excellence that has eluded us.
Free Competition Leads to Authoritarianism
Unfortunately, however, we do not yet live in such a society. We live in a system that permits unlimited capital ownership, and we behave according to the win-lose metaphors. And it is not surprising that this type of mercenary competition carries its own inherent flaw: The freely competitive marketplace becomes less competitive over time, the inevitable result being an increase in inequality—in other words, a swift departure from a central goal of the American Dream.
David Korten explains that “a competitive market is competitive only when there are enough buyers and sellers that each has many alternatives. However, by its nature, untempered competition creates winners and losers. Winners tend to grow in economic power while losers disappear. The bigger the winners, the more difficult it is for new entrants to gain a foothold. Market control tends to concentrate in a few firms, so that the conditions for competition are eroded.”2
The longer the free market remains totally free, the less competitive it becomes. This is inevitable, but to say that it becomes less competitive does not mean that it becomes more cooperative. On the contrary, as power concentrates, only the most successful predators thrive, and the resulting imbalance fosters autocratic rather than democratic relationships. Unrestricted competitive economies tend quite naturally toward authoritarian systems.
Because untempered competition destroys the competitive marketplace, there must be some sort of restraint placed on competition. And we have two choices. We can either change the structure of our system to make cooperation and fair play more attractive and then bridle our own behavior by following common sense and proven moral truth or we can pass laws and regulations to bind our hands. The latter, which we are now pursuing with a vengeance, is really no choice at all, for you can’t legislate morality. You can’t enforce it either. When internal moral checks and structural barriers to immoral behavior are nonexistent, no amount of enforcement on either Wall Street or Main Street will stop individuals and institutions from finding loopholes in the system, from behaving like predators. If we want a mercenary marketplace where competition is virtually nonexistent, then let’s make no changes in the status quo. But if we are even half serious about creating a moral, fair, cooperative marketplace, then we need both structural limits and internal moral barriers to protect us from the abuses that we’ve grown accustomed to.
In a significant paper titled “The Sympathetic Organization,” David K. Hart points to a philosophically sound path that would lead us to the type of economic relationships we need. He argues convincingly that “human nature [has] not one, but two, primordial aspects: the need to love self (self-love) and the need to love others (benevolence).”3 A major problem with modern capitalism is that it has enthroned self-love (“What’s in it for me?”) and abandoned benevolence. Hart insists that this organizational neglect of a fundamental human need has created a society in which individuals are alienated not only from one another, but from themselves and their work. “Alienation results when an individual is separated from something essential to the development of his or her full human potential. It is not, then, just a minor psychological dyspepsia, but rather the spiritual sickness that comes with the ruination of one’s life possibilities. Our modern age experiences it through the soul-destroying entanglements of modern organizational life.”4
Organizations, in essence, dehumanize individuals by treating them as functions. “In modern organizations, individuals are linked to other individuals in artificial relationships defined solely by the organizational mission.”5 Friendship and benevolence are not only unnecessary in such an environment, but often harmful to organizational objectives.
“The management orthodoxy,” Hart concludes, “is not only incorrect but unendurable. Based upon a mutilated version of the whole self, the orthodoxy reduces individuals to their organizational functions and estranges them from the rewards of their work. Work is devalued into an instrumental activity valuable only for what it contributes to organizational goals. It has no intrinsic meaning. The individual’s labor is a commodity and this makes the individual a commodity also.”6 Human beings who are treated as commodities cannot reach their full human potential, nor can they become truly happy.
What I wish to establish by inserting a portion of Hart’s argument at this point is not merely that the absence of benevolence and the abundance of alienation in modern society are negatives that we should correct. In the context of this book, the relevant point is that self-interest’s domination in modern capitalism is not mere coincidence. Self-interest and unlimited ownership are products of each other. Self-interest, of course, lies behind the desire to accumulate unlimited capital, but unlimited capital ownership also begets greater self-interest.
What I have proposed thus far is that we abolish unlimited capital ownership. This is a structural change. But if we change the structure without also correcting the moral and behavioral flaw it promotes, then the untempered self-interest rampant in society will pervert and perhaps destroy the new structure we attempt to introduce.
What we must undertake is not just an economic reformation; we must attack the very roots of our un-American economic system. We will be unsuccessful in this venture, however, unless we can embrace a higher goal than “What’s in it for me?” and unless we can restore that part of our nature that unrestricted capitalism has taught us to ignore: benevolence.
The reason for both restructuring the parameters of capital ownership and encouraging individuals to adopt benevolence as a guiding star in their economic dealings is to curb the competitive nature of our economy. As discussed earlier, the most compelling argument for a highly competitive economy is that competition is responsible for all the things that make our lives comfortable, secure, and healthy. Without competition, we are told, people are not motivated to succeed, and there is little impetus behind technological advancement. Competition, because it pits one individual or company against another in a struggle for survival, yields a never-ending stream of new products, each intended to give its producer an advantage over “the competition.”
While I admit that competition does spur technological growth, and that the by-products of corporate warfare have benefitted society in many ways, I have come to two other beliefs: first, that competition has also brought us the waste and inefficiency of planned obsolescence, the curse of a decimated environment, artificial growth that is becoming a straitjacket rather than a liberating force, and an economy based on adversarial relationships rather than cooperative ones; and second, that competition is not the only impetus for improving the human condition.
Indeed, I submit that a noncompetitive environment would actually free people to be more innovative, more creative, and more directly motivated to make life better for one another. Regardless of the competitive or noncompetitive nature of their environment, human beings have an innate desire to improve their individual and collective condition. And in a noncompetitive environment the risks of failure that deter all but the most daring innovators would be gone. In short, if we removed the rewards for self-interested innovation, I believe more people would be inclined to share Ben Franklin’s attitude and motives for bettering the lives of their neighbors:
To avoid or overcome the perpetual problems caused by miscalculations of self-interest, Benjamin Franklin chose the course of modesty and disinterestedness as a means for progressing. True, Franklin wanted to succeed in his business and he worked hard to do so. . . . But in all his endeavors, his objectives were to do good and to be useful as opposed to getting rich or gathering honors. His emphasis was on contributing rather than obtaining; on giving rather than receiving. Strange as it may seem, it was Franklin’s “indifference to the things of this world” that unleashed his full creative powers. . . .
Benjamin Franklin was one of those rare individuals who had it within his power to become immensely wealthy, but who declined the opportunity to do so. To his mother he had written that he would rather have it said of him that he had lived usefully than that he had died rich. When his business attained a level to assure him of financial independence he turned his interests to science and government. Believing “That, as we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously,” he made no effort to patent or profit from any of his inventions. The Franklin stove alone could have made him a fortune, but he chose not to patent it, and printed the plans for it in his own newspaper.7
A noncompetitive system based on limited capital ownership and benevolent behavior would breed this sort of outlook on life. It is our current system and its rewards that work to prevent this sympathetic way of living, which to varying degrees lies dormant in the hearts of men and women everywhere. A noncompetitive system, in which people didn’t have to fight and scratch for their “just due,” would unlock many of these latent qualities and put them into action. Large authoritarian organizations, on the other hand, must manipulate or force creativity and innovation to the surface.
If people were freed from the desperate craving to secure their future and the perceived necessity of acquiring more than they actually need, they might be surprisingly inclined, even eager, to focus their energies on assisting their fellow men and women—and find great happiness in doing so. In such a society, “What’s in it for me?” would become obsolete thinking.
1. David P. Barash, The L Word: An Unapologetic, Thoroughly Biased, Long-Overdue Explication and Defense of Liberalism (New York: Morrow, 1992), 176.
2. David C. Korten, “A Deeper Look at ‘Sustainable Development,’” World Business Academy Perspectives 6, no. 2 (1992): 26–27, adapted by Willis Harman from “Sustainable Development,” World Policy Journal (Winter 1991–92).
3. David K. Hart, “The Sympathetic Organization,” in Papers on the Ethics of Administration, ed. N. Dale Wright (Provo: Brigham Young University, 1988), 68.
4. Hart, “Sympathetic Organization,” 71.
5. Hart, “Sympathetic Organization,” 77.
6. Hart, “Sympathetic Organization,” 87.
7. George L. Rogers, ed., Benjamin Franklin’s The Art of Virtue (Eden Prairie, Minn.: Acorn Publishing, 1990), 115, 158–59.
Tuesday, July 3, 2018
Competition Restrained By a Higher Good (Part 1)
The fundamental question of management theory is: What links
individuals together in cooperative endeavor? The answer, according to the
contemporary management orthodoxy, is self-interest—the raw egoism of Hobbes
and Mandeville, refurbished in chic, modern, linguistic garb. . . . All organizational
behavior is summarized in the inelegant phrase, “What’s in it for me?”
—David K. Hart,
“The Sympathetic Organization”
The suggested changes to our ownership tradition discussed in the preceding chapter are entirely structural in nature. And although structural changes are necessary both to prevent economic suicide and to bring our economy into harmony with our political and social patterns, structural changes alone are not sufficient. Altering the structure of our economy without somehow modifying the habitual patterns of human thought and interaction would be similar to buying new computer hardware, but running the same old virus-infected software. In essence, as individuals we have been operating within the structures and patterns of unbridled capitalism for so long that even if we suddenly found ourselves on a completely different playing field, most of us would go right on behaving as the system has always rewarded us for behaving.
There is a moral aspect to this question of economics that we must deal with on an individual, rather than a structural, level. Implementing a new economic structure with new rules and restrictions would of course reward individuals for behaving in new ways, but some behavioral patterns are quite hard to break—and you can’t legislate everything, morality in particular. Consequently, we must develop a new economic rationale, a moral argument, if you will, to support the types of behavior that must accompany the necessary structural changes. This moral argument must address two related issues: self-interest and competition.
Why We Need a Guiding Philosophy
In The Worldly Philosophers, Robert Heilbroner explains in some detail why we have had political, moral, and social philosophers for millennia, but economists (or worldly philosophers) only in the past few hundred years. There are, he says, three basic approaches to ensuring the survival of the human race. First, society can organize itself by tradition. In essence, people serve particular functions in society because their fathers did, or because they are limited by their class or caste to certain types of labor. Second, authoritarian government can ensure that tasks get done by assigning people to do them, whether they want to or not. Neither of these approaches to ensuring survival required any kind of economic philosophy. Only the third alternative demanded an accompanying rationale. And this third alternative was “an astonishing arrangement in which society assured its own continuance by allowing each individual to do exactly as he saw fit—provided he followed a central guiding rule. The arrangement was called the ‘market system,’ and the rule was deceptively simple: each should do what was to his best monetary advantage.”1
This third arrangement was not unrelated to the social and political philosophies of classical liberalism, suggesting that individuals were more important than the traditionally authoritarian institutions to which they belonged. Liberty, self-rule, justice, equality, private property, happiness—all these ideas added momentum to the great change from traditional or command systems to a free-market economy. “No mistake about it,” says Heilbroner, “the travail was over and the market system had been born. The problem of survival was henceforth to be solved neither by custom nor by command, but by the free action of profit-seeking men bound together only by the market itself. . . . The idea [however] needed a philosophy.”2 And philosophies abounded. Starting with Adam Smith and continuing on to the present day, great and not so great thinkers have put forward their ideas on how to best order and justify this new system. “Out of the mêlée of contradictory rationalizations one thing alone stood clear: man insisted on some sort of intellectual ordering to help him understand the world in which he lived. The harsh and disconcerting economic world loomed ever more important.”3
Indeed, economic matters loom more and more important as time passes, for the simple reason that our economic system must continually rationalize its very existence. That third alternative requires a philosophy, a justification, because when push comes to shove it is in conflict with the political, social, and moral philosophies of classical liberalism, the foundation of our Western way of life. This third arrangement for ensuring the continuance of human society is based solely upon the principle of self-interest, a principle that, when isolated, is at odds with the political theories, social ideals, and moral principles that have shaped our Western world.
Self-interest, however, is too problematic as a sole motivator of people in a community. When made the guiding rule, when unchecked by social constraints, political intervention, or moral concerns, monetary self-interest leads inevitably to centralized power, authoritarian structures, and command systems. In other words, without a motive higher than self-interest to guide or at least temper it, the third alternative inevitably collapses back into some form of the second alternative, and the individual ends up again at the mercy of arbitrary authority. For a while our political system, our social objectives, and our good moral sense held this contrarious economic motivator at bay, but in the end the strain was too great. Something had to give, and self-interested economics had too much momentum, too much appeal. What we need desperately today is a fourth approach, an approach that goes beyond custom, command, and self-interest, an approach consistent with our political, social, and moral heritage.
Self-interest is actually a moral question, not just a value-neutral economic motor that is supposed to drive the mindless machinery of the free market. Indeed, self-interest is a very troubling moral question, for an economic system based on this principle creates almost irresistible incentives for people to behave in patently immoral ways.
Who would argue that we must be a moral people in order for self-government to work? This is what some would call a “no-brainer.” The freer we are, the greater a burden we as individual citizens must bear in creating a society of order and justice. Republicanism, succeeding monarchy as the dominant political system, “put an enormous burden on individuals,” says Gordon Wood. “They were expected to suppress their private wants and interests and develop disinterestedness—the term the eighteenth century most often used as a synonym for civic virtue. . . . Dr. Johnson defined disinterest as being ‘superior to regard of private advantage; not influenced by private profit.’ We today have lost most of this older meaning. Even some educated people now use ‘disinterested’ as a synonym for ‘uninterested,’ meaning indifferent or unconcerned.” Disinterest, however, is actually the exact opposite of self-interest.
“Republics,” Wood continues, “demanded far more morally from their citizens than monarchies did of their subjects. In monarchies each man’s desire to do what was right in his own eyes could be restrained by fear or force.” In republics, the only effective restraint on self-interest and private gratification is the sense among citizens that they must often sacrifice personal advantage for the public welfare. It is indeed ironic that self-interest—the one force that Wood identifies as needing to be restrained if a republic is to hold together—is the only force that traditional economic theory proposes as a social adhesive. This is not only a highly illogical thesis; it is also a disturbingly immoral philosophy.
What we have in modern America, then, is a form of government that requires a disinterested citizenry and an economic system founded on the principle of self-interest—a perfect mismatch. And, unfortunately, the economy is in control. To correct this problem, as I have already suggested, we cannot merely tell people to become disinterested. All the incentives in the present system encourage the exact opposite behavior. What we need is a fundamental change in the structure of the economy, so that our economic system actually encourages disinterested action. But we also need a higher ideal than self-interest to bind us together, for self-interest, even though it does cause us to “do business” with one another, also creates too many impediments to true economic and societal health.
The escalating height and frequency of the hurdles economic America requires companies to jump if they want to stay in the race puts immense pressure on them to increase their productivity and develop innovative new technologies. A very natural consequence of this pressure, within a system that enshrines self-interest, is for companies to become, over time, increasingly and hostilely competitive. American companies have always felt the need for, even thrived on, fierce competition, but as the growth spiral steepens and accelerates, making it harder for companies to climb to the next level, their perceived need to compete will intensify dramatically. In our twentieth-century mercenary marketplace you either eat or get eaten. Consequently, most companies nowadays focus primarily on beating their competitors and enlarging their bottom lines, rather than providing a service to society.
I used to ask the students in my management classes at the university, just to keep a finger on the pulse of their attitudes and misconceptions, what the purpose of a business is. I always asked this out of the blue, without any sort of preamble to bias their replies. And without exception, their first answer was, “To make a profit.” Rarely, even when I dug a little deeper, did they bring up the radical notion that businesses exist to provide a service to society. These were juniors and seniors in the business curriculum, and they had learned their lessons well. They were prepared for life in corporate America, or, as they called it, “the real world.” This “real world,” however, is anything but real. It is both inconsistent with the values of the American Dream and inherently illogical.
I remember reading the account of one business consultant who asked a group of high-level executives the same question. Their answer was identical to that of my students. They said their businesses existed to make a profit. This wise consultant then asked them how their drug and prostitution operations were doing. The executives were, of course, astonished at this request. “I just assumed,” he answered, “if you were in business to make money, that you’d be involved in the most profitable kind of business.” To bypass the best opportunities would be both inefficient and contrary to the stated purpose of their companies. These executives suddenly understood that their business activities were restricted by deeper purposes that they had perhaps not yet fathomed. And so it is with almost all companies.
Businesses today, for the most part, are so caught up in beating the competition, expanding their operations, and making a profit that they are either oblivious to or, at best, pay lip service to the idea of serving society. They are anything but disinterested. Corporate mission statements and hordes of management gurus notwithstanding, businesses have become ends unto themselves rather than instruments for achieving a greater societal good. And their recruits from the business schools already know which side their bread’s buttered on.
The problem with this acute management myopia is that on the practical, everyday side of the ledger the larger question of economics is ignored, thus focusing all the attention and resources of corporate America on the grand ideal of making a buck. The direct consequences of corporate America’s shortsightedness and misdirected energies are not trivial.
Because businesses and other institutions are not knit together in common purpose by an openly acknowledged concern for the greater good of society, but operate primarily on the principles of self-interest and self-perpetuation, the competitive climate in America has become one of hostility and aggression rather than cooperation and fair play. Because of this prevailing climate, modern businesses and business people are necessarily caught up in a brutal fight for survival. They must not only survive the inherent illogic of the system, but they must also survive head-on confrontations with competitors who wouldn’t blink an eye at putting them in their economic grave.
Survival is what twentieth-century American capitalism is all about, not service, not quality, not human development. Companies focus on quality, not for quality’s sake, but in order to survive. They emphasize service, not for the customer’s sake, but to increase market share. They create more humane workplaces, not because of their belief that workers in a free society deserve to more fully develop and express their talents and ingenuity, but because they can no longer compete in today’s demanding marketplace without intelligent, motivated, highly trained workers. At the bottom of American capitalism is the competition for survival—survival of the fittest. And as Abraham Maslow points out, when our survival is threatened, we are simply incapable of paying attention to higher needs and concerns.
1. Robert L. Heilbroner, The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers, 6th ed. (New York: Simon & Schuster, 1986), 20–21.
2. Heilbroner, Worldly Philosophers, 38.
3. Heilbroner, Worldly Philosophers, 41.
4. Gordon S. Wood, The Radicalism of the American Revolution (New York: Knopf, 1991), 104–5.
Friday, June 8, 2018
In honor of the fortieth anniversary of the announcement of the revelation that ended one of the two LDS priesthood bans, I am posting here a few paragraphs from the second of my two articles on priesthood and authority that Dialogue is in the process of publishing. The first appeared in the most recent issue (vol. 51, no. 1). The second will appear in the next issue (vol. 51, no. 2).
I have a confession to make. I grew up a racist. No, I wasn’t a member of the junior Ku Klux Klan. But I grew up in North Ogden, Utah, a very Mormon suburb of Ogden. I attended Weber High School. There was not one black student in the entire school of 1,500 students. We had maybe three or four Asian-Americans, a couple of Native Americans, and perhaps a couple of Hispanics (I don’t think either of them spoke Spanish). We did have a few genuine cowboys, but that’s another ethnic category altogether. In short, this was a very, very Caucasian school. Lily white. The student body came from the suburbs north of Ogden, the farming communities west of Ogden, and the frozen villages over the mountains in Ogden Valley where David O. McKay grew up. To my knowledge, I did not meet a black person until I played high school basketball against Bonneville High, and even then my only interaction with my black opponent was maybe a foul or two. We didn’t strike up a conversation during free throws. So I grew up believing the racial stereotypes that prevailed in a school such as Weber in the early 1970s. And I am not too proud to admit that I likely used a racial slur or two. This was simply the culture I grew up in. It was based on ignorance.
Then I was called on a mission to Germany. In my second assignment, we had a black member in the ward. He was a sweet, humble man from the Ivory Coast who accepted the fact that he couldn’t hold the priesthood. He impressed me, even though he spoke very meager German and English. Later, in my fourth assignment, my companion and I were street contacting in the city one day and spoke with a blond-haired German farmer who told us we could visit him at his home. We bicycled out into the countryside east of town one day and found an ancient farmhouse with an attached barn and a heavy thatched roof. We knocked on the door, and Hans invited us in. He then introduced us to his wife, Josephine, who hailed from Ghana. What a shock. As it turned out, he was as spiritually alive as a piece of petrified wood. She was very interested in our message. So we began teaching them, and soon Josephine told us she had some friends who would be interested.
Her friends were Leo and his wife (whose name I can’t remember). They were from Nigeria, and Leo was attending the university in Hamburg. Leo was perhaps the most Christlike man I had ever met. I knew instantly that he was a better Christian than I would ever be. He was intensely interested in our message and soon developed a conviction that Joseph Smith was a prophet. This was 1977. We knew we were not supposed to actively proselytize black people, so we were careful in our teaching. I counseled with the mission president a couple of times. I remember two things he said. First, “Elder Terry, I’m glad this is your problem and not mine.” I think he meant this simply as a vote of confidence that I would handle the situation with care. Second, “Whatever you do, don’t offend the Lord.” Well, that gave me something to think about.
We taught our three black investigators slowly and carefully, and we eventually reached the point where we had to tell them about the priesthood ban. I think the most difficult day of my mission was the day I had to tell Leo that he couldn’t hold the priesthood. He took it hard and wanted to know why. So we opened up the Pearl of Great Price and read a bit. We tried to explain how he and his people had been fence-sitters in the premortal world. We taught him about the blood of Cain that he obviously had running through his veins and the curse that attended it. In other words, we taught him all the standard LDS rationales for the priesthood ban. And everything we taught him was false.
Fast forward now a little more than a year into the future. It is June 1978, and I am teaching German-speaking missionaries at the MTC (it may have still been called the LTM at that point). One day, after teaching, I bounced on over to the teachers’ lounge. As I was entering the building, another teacher passed me and said, somewhat excitedly, “Have you heard the news? Blacks can have the priesthood.” Something in the way he said it made me think he was joking. I replied, “That’s not funny.” He insisted, “No, I’m serious. President Kimball’s had a revelation.” I ran out to my car and turned on the radio, and of course it was the only thing everyone was talking about. I sat there in that hot car and wept. I wept for the change, and I wept for Leo.
Fast forward again to 2007. I had been working for BYU Studies for just over a year. I was reading Ed Kimball’s biography of his father’s years as Church president, Lengthen Your Stride. But I wasn’t reading the Deseret Book version. I was reading the longer account that was on the CD pocketed inside the back cover. BYU Studies had edited and prepared the CD. In that version, I found four chapters describing in great detail the history of the priesthood ban and the events surrounding the revelation. Ed had access to his father’s journals, so this was possibly the most complete and moving version of these events that will ever be written. I said to myself, “We need to get this out where people will read it.” I knew few would take time to read the longer version of the book on the CD. So I combined those four chapters into a long article, worked with Ed to make sure he was happy with it, and published it in BYU Studies as “Spencer W. Kimball and the Revelation on Priesthood.”1 It is an incredible account and is available free for download at the BYU Studies website. Over the years, as I have studied and contemplated the reason it took so long for this change to come, I, along with others, have reached the conclusion that it did not come earlier because, essentially, the Church wasn’t ready for it. The members, not the Lord, were quite likely the reason for the delay. David O. McKay prayed about this issue frequently during his administration and was eventually told, “with no discussion, not to bring the subject up with the Lord again; that the time will come, but it will not be my time, and to leave the subject alone.”2 My own suspicion is that there were too many Mormons who shared the culturally embedded racism that I grew up with. It was only after the hard-fought gains made through the civil rights movement that much of this racism dissipated. My views changed because of Josephine and Leo. By 1978, enough Latter-day Saints were ready for the change that there were celebrations in the streets and many prayers of gratitude from Saints in all walks of life. The Church, as a whole, was ready in 1978.3
As a postscript here, let me mention that I learned later that Josephine had joined the Church but had not stayed with it. When I was working at Church magazines, I had access to membership information if it was relevant to a story. What a story it would make, I thought, if Leo had joined the Church. So I called and asked if they could check and see if Leo had ever been baptized. It turns out he had, in 1984. But they had lost track of him, so they had assigned him to what the Church refers to as an “administrative unit,” a ward that exists only on a computer where lost members reside until they are found. I have to assume that Leo, like Josephine, didn’t stay with Mormonism.
1. Edward L. Kimball, “Spencer W. Kimball and the Revelation on Priesthood,” BYU Studies 47, no. 2 (2008): 5–78. Available for download at https://byustudies. byu.edu/content/spencer-w-kimball-and-revelation-priesthood.
2. Church architect Richard Jackson, quoted in Gregory A. Prince and Wm. Robert Wright, David O. McKay and the Rise of Modern Mormonism (Salt Lake City: University of Utah Press, 2005), 104.
3. Eugene England called for Latter-day Saints to prepare and pray for the priesthood ban to be lifted. See his “The Mormon Cross,” Dialogue: A Journal of Mormon Thought 8, no. 1 (1973): 78–86.
Thursday, May 31, 2018
A Nation of Owners (Part 2)
The Federal Model
Each responsible citizen in the United States has a vote, but each citizen doesn’t vote on every issue, every bill, every executive decision, every Supreme Court ruling. Such a voting system would create political and social gridlock. Instead, we elect representatives, then they vote for us, make executive decisions, and appoint judges and other government officials. If we don’t like their voting record, we don’t reelect them. It’s not true democracy, but it is a workable compromise between potential anarchy and the imposed order of arbitrary authority.
We are, at least in theory, a democratic republic. And economic democratic republics would follow the same principles. Equal ownership, equal voice, equal representation. To prevent the abuses of power and position that we see in Congress, we would have to designate a limited term for those elected as managers within corporations and other organizations. Four or five years would be sufficient. And after a manager’s administrative term was completed, he or she would then return to the regular workforce. This would eliminate the professional managerial class and would prevent the politicizing of organizational leadership, which is exactly what has happened to American government on the national level.
The advantages of this form of economic organization would be similar to those created in government by the U.S. Constitution. These advantages were laid out by Alexander Hamilton, James Madison, and John Jay in The Federalist Papers, which were arguments made in support of our particular form of constitutional government. Among these advantages were the following.
The U.S. government represents a federation of states. The states retain some power and autonomy, but are bound into a greater whole. The creation of this federation was a move toward centralization, the intent being to overcome the major weak point of the Articles of Confederation—dissension among the states. The states needed to be strong, to be unified in a larger cause, and only a strong central government could achieve those ends. This move, of course, was also based on military, security, and commercial concerns.
In most businesses today, however, the movement would have to be in the opposite direction, toward decentralization, since most organizations are authoritarian in nature and dominated by strong central control. Departments or divisions, acting much as states do in the federal government, would retain certain powers and perform certain roles. Limited, universal ownership, however, would create strong incentives toward smaller, community-oriented businesses, and away from national or international conglomerates. There would be little purpose in or justification for large, nonregional businesses under such an ownership arrangement, and great impetus to break down today’s conglomerates into regional- or community-sized pieces that focused on one particular product or a set of related products. Some companies might divide up into several small, independent, department-sized groups.
Checks and Balances
Our federal government, as established in the Constitution, is a brilliant plan for preserving political freedom and democracy by preventing one individual or a segment of government from gaining too much power. Power is balanced in at least four ways: between the states and the federal government, between the two houses of Congress, among the three branches of the federal government, and between the people and their elected leaders. It is not my purpose here to explore all the ramifications of these governmental checks and balances, only to say that a similar system would need to be established in large economic institutions.
In the vast majority of today’s businesses, large and small, the owner or CEO or perhaps a small group of leaders hold total power. They function more or less as dictators, exercising the legislative (policy-making), the executive (administrative), and the judicial (decision-rendering) powers in the organization. They can do just about what they want to, with no internal checks and balances, for only certain (usually inadequate) external restraints prevent them from abusing the awesome power that is theirs. Separating the executive, legislative, and judicial powers in businesses makes perfect sense. It is the best way to prevent the abuse of authority, even if that authority is granted by the employees themselves through elected management.
Because in the United States the people are sovereign, their will influences all branches of government. Supposedly, the only tyranny possible under such a government would be the tyranny of the majority, which worried Tocqueville.
Time, however, has proved this supposition wrong. The tyranny of the majority is not, in fact, the only tyranny possible in America. Our political system has been reshaped over time so that the wealthy and influential can exert a form of tyranny. This oppression will be with us until we accept certain types of political and economic reform. But tyranny of the majority is a very real thing in America. And, ultimately, it has but one check: the virtue of the people.
If the majority is wise and moral and virtuous in its selection of leaders, the potential tyranny of the majority will be of no consequence. The danger comes only when the majority forsakes its virtue. The Founders were well aware of this, but they had enough confidence in mankind to try this experiment anyway. Said Madison:
I go on this great republican principle, that the people will have virtue and intelligence to select men of virtue and wisdom. Is there no virtue among us? If there be not, we are in a wretched situation. No theoretical checks, no form of government can render us secure. To suppose that any form of government will secure liberty or happiness without any virtue in the people is a chimerical idea. If there be sufficient virtue and intelligence in the community, it will be exercised in the selection of these men; so that we do not depend on their virtue, or put confidence in our rules, but in the people who are to choose them.1
The Founders quite clearly trusted the overall virtue of the people regarding the selection of political leaders. And I believe their confidence was well placed, for even though times have changed and our choice of political leaders is regrettably limited by money and influence, we still scrutinize these candidates through the lens of a morality that no longer governs our own lives. We expect (even demand) of our elected leaders standards of morality and virtue that we do not apply even to ourselves. The day may come when the majority totally loses its sense of virtue and surrenders to outright depravity, but sufficient moral feeling has survived to prevent the tyranny Tocqueville feared. [Okay, I have to insert a comment here. This may have been true in 1995, when this book was published, but I would argue that we have reached the point where the majority has lost its sense of virtue (at least the majority as represented in the Electoral College). The fact that America has elected the most corrupt president in its history, a completely amoral man who embodies everything the Founders tried to prevent, says something about where at least one of our political parties has gone. In 1995, I was pretty sure something like our current mess would never happen. Where we go from here will tell us who we are as a nation. I certainly hope for a strong reaction against the corruption of the Trump administration that has also infected the Republican Congress. Time will tell.]
If we organize our economic institutions according to the principles set forth in the Constitution, they would be subject to the same threat of tyranny from the majority. But this threat is insignificant next to the actual tyranny we see in our present authoritarian organizations. What this system would remove from our economic institutions is the ignorant body of employees that is willfully blind to injustice, pollution, dishonesty, and unfair business practices. No longer would there be powerless employees who say, “Hey, I didn’t know. I just do my job and don’t ask questions. I have no influence over what management does.”
The leaders we elect after examining them under the media microscope are our representatives in government. They speak and act for us. The president of the United States executes the public will; the legislature enacts laws through the authority given it by the people; the Supreme Court acts for the people in determining whether laws (and decisions of lower courts) are in harmony with the guiding principles set forth in the Constitution. None of these branches of government, however, pleases everybody. Sometimes they don’t please the majority. How is this possible?
Regardless of whether they were elected by popular vote or appointed by an elected official, these individuals have their own interpretations of right and wrong, good and bad, just and unjust. Representing a diverse populace is no easy matter. Sometimes special interests, because they have purchased influence (or gained it some other way), sway public representatives away from the majority position. Sometimes representatives, because of individual conscience, vote or act contrary to the will of their constituents. Sometimes there are several options, and pursuing even the most popular one still leaves 75 percent of the people dissatisfied. Representation, in short, is a compromise between the tyranny of the majority and the tyranny of individual rulers. It is the most necessary element of a republic.
In businesses this element would also be necessary in order to control the chaos into which a purely democratic workplace would inevitably fall. Every worker can’t have a voice in every decision, nor would he or she want to. That would be highly inefficient. But every worker would need a voice in the overall management of the enterprise and a knowledge of what is being done and why—because the workers would be the owners. And they would exert the powers of that ownership not only in choosing those who represent them, but also in establishing limits on the power of their representatives.
These four features of our democratic republic, established by the Constitution, should apply to any organization comprising more than, say, fifty or so individuals. We must put ownership back where it belongs—in the hands of the people—but we must also avoid the chaos that a purely democratic system would spawn. The federal model is a viable solution, a perhaps imperfect although workable compromise.
Business leaders have recognized the benefits of giving employees at least the illusion of democracy, although they generally give employees only a fraction of the voice they deserve. The recent movement to permit employees to participate in ownership—from PepsiCo’s “Share Power Plan” to Wendy’s stock options for employees—is commendable and is gaining momentum in the United States. Much of this growth in employee ownership has come through employee stock ownership plans (ESOPs), now in place at some eleven thousand companies, involving 11.5 million employees (13 percent of the civilian workforce). Employees now own more than $120 billion in their own companies’ stock, which though impressive represents only 3 percent of all shares in U.S. firms.2
These plans are popular because they (predictably) increase employee commitment and generate cash flow, but they do not go far enough. Employee shareholding at limited or token levels should not be mistaken for actual employee ownership. A business can never become an economic “democratic republic” if most of the stock is held by either a few powerful individuals or a multitude of distant, uninterested shareholders. Authoritarianism with a democratic facade should not be confused with republican democracy.
If we are serious about overcoming our nation’s deep problems, we must make sweeping fundamental changes in our economic system, in both theory and practice, by bringing it more in line with our political philosophy and our social ideals. Says Shann Turnbull:
To minimize corruption of all sorts, we need to decentralize power to the greatest extent possible so as to maximize checks and balances. The most fundamental sources of power in society arise from the ownership and control of land, enterprise and money. The current ownership system was developed to serve the needs of past rulers who sought absolute powers. As a result, there is no limit as to the extent and value of property which any person can possess. New rules are needed to decentralize the power of owning things—rules which follow the self-limiting and self-regulating principles found in all living things.”3
Given the fact that capitalism as we know it is both corrupt and rapidly deteriorating, we are faced with the dilemma of how to get from our present system to one that is both more equitable and more workable. This will not be an easy transition, for it will involve the conversion of our present authoritarian organizations into democratic institutions. Unfortunately, recognizing that we need to make this transition is much easier than actually making it. How do you convert from a system of either narrow, unlimited ownership or widely dispersed absentee ownership to a system of limited, universal ownership?
A good argument can be built for making this transition gradually, over a long period of time. If we were to try to make this shift overnight, the consequences would likely be as horrible as they are predictable. Suddenly abolishing our present system of ownership would create a crisis far more perilous even than the Civil War, which arose from abolishing a different, although related, form of ownership. It would be naive to think that those who have accumulated vast amounts of money, property, and power would simply yield to reason (or even newly enacted laws) and give up these possessions without a fight. And I mean a literal fight, one in which the odds would be stacked against change and democracy. It is not difficult to imagine an actual civil war far more devastating than the one fought over slavery.
How then can we make this transition? Turnbull takes a shot at this dilemma. He proposes a system in which ownership of corporations transfers gradually, at a rate of 5 percent per year, from investors to stakeholders (employees, customers, suppliers). The investor would reap profits for ten years, after which this gradual transfer would begin. What this means is that thirty years after the initial capital infusion, the investor would have no ownership in the enterprise. This, says Turnbull, “would make corporate investment consistent with the time-limited rights provided to all investors in intellectual property like patents and copyright.”4 Mature corporations, according to Turnbull’s plan, would then finance new technology and market growth by transferring parts of their operations to spinoffs or “corporate offspring,” which would attract new investors.
This system, although a far cry better than our present heap of perpetual, monopolistic shareholding, is still a system in which technology and economic growth would be supreme, and in which capital would still be concentrated enough that individuals and groups could invest heavily in new spinoffs or corporate offspring. Seen in the context of these issues, Turnbull’s vision of economic change might be an intermediate step that would pave the way for a system of complete equality and limited, universal ownership.
The first question we should ask, though, is this: Do we have thirty years to convert our present system into Turnbull’s vision, which is still only a halfway house from our current economic prison to the free society we would become? The answer, I fear, is that we may not have even ten years. Time is not on our side in this matter.
1. Alexander Hamilton, James Madison, and John Jay [“Publius”], The Federalist Papers (New York: Bantam Books [1787–88] 1982), xxi.
2. Corey Rosen, “The Options Option: A New Approach to Employee Ownership.” Management Review, December 3, 1991, 30.
3. Shann Turnbull, “Transforming Society,” World Business Academy Perspectives, winter 1992, 6.
4. Turnbull, “Transforming Society,” 6.
Saturday, May 19, 2018
A Nation of Owners (Part 1)
Employees are being paid to produce, not to make themselves into better people.
Corporations are purchasing employee time to make a return on it,
not investing in employees to enrich their lives.
Employees are human capital, and when capital is hired or leased
the objective is not to embellish it for its own sake but to use it for financial advantage.
But somewhere in this philosophy there is an inconsistency
with the notion of a society of self-governing individuals.
The large corporation has become an organizer of people,
a user of people, a molder of identities, according to criteria that it has evolved,
without regard to the effect on those people except as this is registered on the balance sheet.
—Neil W. Chamberlain,
The Limits of Corporate Responsibility
The first step we must take, if we wish to design an economic system independent of growth and progress and more tuned to serving the real needs of society, is to reconsider the most fundamental principle of capitalism—namely, the license to accumulate unlimited capital. Limitless ownership. This is the grand key that turns the lock on Pandora’s box and unleashes the demons of relentless, interminable growth in our economy. Consequently, a change in our ability to own things is the most fundamental change we must make, a change that will affect us not only economically, but socially and politically also, for it will serve as a first and pivotal step in bringing the ideals that compose the American Dream back into harmony.
As mentioned earlier, a fundamental philosophical incongruity separates the founding principles of our nation from the economic tenets that govern modern capitalism. This disparity would be of little consequence if its impact were limited to the esoteric arguments of scholars. Unfortunately, this is not the case. The incompatibility between our political ideals and our economic realities affects each individual in society at a very personal level. Indeed, the authoritarian nature of our economic institutions effectively prevents most American citizens from achieving their innate potential as they seek a fulfilling life, an equal share of liberty within the bounds of democracy, and a true and independent sense of happiness.
Some may choose to discount this argument, insisting that most workers prefer to be employed from eight to five each day by someone else and are fully satisfied with their work. This argument, however, runs counter to both common sense about human nature and the cold, hard facts. A recent Roper poll, for instance, found that only 18 percent of American workers consider their careers personally and financially rewarding.1 Eighteen percent. Apparently, spending forty hours or more each week performing tasks that someone else tells them to perform is not so enjoyable to most Americans—especially when they are paid the bare minimum while those who own their time live in comparative opulence. If the rebellion in the former Soviet Bloc should have taught us anything, it is that people do not enjoy being subject to unaccountable power.
Building a House of Happiness
One idea we often overlook in both politics and economics is the notion that our nation’s founding was the beginning of a process, not the end. It was the planting of a seed, not the harvesting of ripened fruit. The Founders changed many things, but they did not change everything. Indeed, what they changed more than anything was direction. There was not total agreement among the Founders on all issues and, in some ways, more than moving toward a specific goal, they were moving away from certain evils, establishing a system that would prevent them from cropping up again. Unfortunately, they had no way of predicting some evils, such as the concentration of power in large economic institutions (that in many ways resemble the vessels of arbitrary power they so vehemently opposed). Had they foreseen our day, they likely would have included in the Constitution specific limitations to the accumulation of economic and not just political power.
Perhaps the Founders didn’t totally understand the forces of societal change their Revolution had set in motion, but they did understand one thing. They knew that the new nation would reach its ultimate destination not in one giant leap, but in countless stages over time. The Founders were bound by the reality that some things must change gradually, that some ideals are beyond our present reach. This does not mean, however, that those ideals are not worthy, or that we shouldn’t strive toward them.
The Founders, if you will, drew up the blueprint and laid the foundation. Later generations would then follow that blueprint and build on that foundation, perhaps changing a few features as circumstances warranted (this is why they provided a means for amending the Constitution). Whether they actually got so specific as to designate what sort of roof or veneer the structure would eventually have is both debatable and irrelevant. They knew what kind of edifice they wanted: a free one to which each citizen would have equal access and in which every American could reach his or her human potential. Some of the details, they knew, an informed and moral citizenry would have to put in place.
Unfortunately, in some ways we are not changing in the right direction. We have tossed the Founders’ blueprint aside and are building a sprawling prison on the foundation that was to have supported a beautiful mansion. In our economic institutions, we have not followed the blueprint, which included such values and principles as democracy, equality, the sanctity of each human life, individual liberty, and the pursuit of happiness. Instead, we have built up authoritarian economic institutions that operate in direct conflict with the values and principles of our founding. The industrialists and the professional executive class would have us believe that those values and principles do not apply to economic matters, or that we should apply them only in a token or metaphorical sense, but that is nonsense.
“As free agents,” David K. Hart maintains, “individuals can magnify or squander the possibilities of their lives, but those lives are sacred. Therefore, no organization, public or private, has any right to deny, or even trivialize, the possibilities of individual lives with organizational requirements.”2 We must remember that the American Revolution was fought to protect individuals from the exercise of unaccountable power in their lives. If authoritarian institutions—be they political, social, or economic—oppress us, we can never achieve true democracy, equality, freedom, or happiness.
As suggested in an earlier chapter, our current belief in the idea of progress, in unbridled technological advance and economic growth, has no overriding purpose, no end objective, no destination. But our society, as defined by the founding values, does have an overarching purpose: to empower each individual to achieve true happiness. We are to arrive somewhere as American citizens, and that destination is a happy and healthy society.
“Happiness [is] the aim of life,” wrote Jefferson. “The happiness of society is the end of government,” John Adams concurred. And the pursuit of happiness, which Jefferson categorized as an unalienable right, just happens to be inseparably connected to the right to hold property. As noted in chapter 5, the historian Paul Johnson asserts that happiness is only achievable if people, by honest effort, can acquire property. “Without widely dispersed property,” he adds, “true individual independence, and so a sound Republic, [is] impossible.”3
Widely dispersed property, not the concentration of property (and therefore power) that we see in modern capitalism, is the precondition to happiness and a sound Republic. If our society is to reach its true destination, if our government is to achieve its proper end, we must address this question of ownership.
A pivotal question, if we are concerned with achieving personal happiness, preserving the sanctity of each individual life, and creating a sound Republic, is the question of ownership—and not just ownership of property and capital, but the ownership of human time and energy, which has been labeled “human capital,” a callous and demeaning term.
The fallacy we too often fall into is assuming that we can correct basic inequities by either transforming the American workplace or taking money from the wealthy and giving it to the poor. Corporate restructuring, flattening, or reengineering; team building; employee empowerment; and all the other buzzwords we have dreamed up to give workers the illusion of ownership (and thus motivate them) quietly bypass the real issue, as do all the liberal social redistribution programs. Not one of the currently popular approaches to achieving greater equality and democracy in the workplace addresses the fundamental obstacle to universal human happiness: lack of true ownership. We must transform our thinking on that issue.
To put it bluntly, we must prevent the three basic sources of authoritarian organizational control in our lives: unlimited capital concentration, absentee ownership, and state ownership (or state control, which is the aim of many liberal programs).
This is not a difficult problem to solve. Using a simple process of elimination, if we refuse to allow individuals to control large quantities of capital (and thus control the lives of hundreds or thousands of employees), if we disallow absentee ownership (which has created America’s new ruling class, the professional executives), and if we don’t permit state ownership or control of industry (a fraud perpetrated by the power hungry who insist that state ownership is really ownership by the people), then only one alternative remains: widespread, limited, direct ownership by the people, individually, not collectively.
Limited ownership is not a new idea. Thomas Paine, for instance, declared in The Rights of Man (1792) that “commerce is capable of taking care of itself,” but he also condemned “all accumulation . . . of property, beyond what a man’s own hands produce.” This idea of limited, universal ownership persisted well into the nineteenth century. A mid-century labor leader named Robert MacFarlane declared that “small but universal ownership” was the “true foundation of a stable and firm republic.”4
Three Levels of Ownership
Limited, universal ownership of property and the means of production is the only form of ownership that is consistent with the founding values of the American nation. Specifically, under a system of limited ownership, an individual would be allowed to own only as much property as he or she could make productive use of. This is the basic principle. It prevents an individual or group of individuals from accumulating more property than they themselves can effectively use, which in turn prevents them from buying time and talent and energy from the unpropertied or disfranchised (who have nothing else to sell) to work their fields or staff their offices or man their factories. It permits individuals, however, to prosper to the full extent of their intelligence, talent, diligence, and ingenuity. Above all, this principle allows every individual to own his or her personal labor and not be required to sell it. Only the fruit of that labor, which each individual owns, is for sale.
Although ownership based on ability to make productive use of the thing owned is the fundamental principle at work here, we must distinguish between different levels of use, different levels of ownership. The Indian philosopher P. R. Sarkar suggested a three-tiered economic system, an idea that makes good sense. The following description is my own extrapolation from Sarkar’s basic formula.
The first level of this three-tiered economy would consist of small enterprises that produce mainly nonessential goods and services and perhaps a few essentials. These enterprises would generally have a single founder or perhaps two or three, and maybe a few “partners” who come on board somewhere downstream. To be consistent with the guiding principle of ownership limited by contribution, each new addition to the business would receive a share of ownership.
If a doctor needs to hire a receptionist or a bookkeeper to make his or her practice more efficient, if a restauranteur needs to enlist the help of waiters and waitresses, if a CPA requires the services of a secretary or a clerk, then the new member of the team would be given a share of ownership. Why? Because without that new member’s contribution, the business would be less effective and a portion of the work wouldn’t get done. But how much ownership should each new member of the business have? An equal share? Probably not. That would not be just, particularly in the case of a doctor or dentist or CPA who must invest much more time to be trained than, say, a receptionist or a bookkeeper. Ownership must also reflect seniority and other factors such as personal sacrifice, start-up funding, and risk. Perhaps my own business can serve as an illustration.
When a partner and I formed a small enterprise to design and market a humorous calendar system, we determined that we would not hire any employees, although we could very well have done that. We agreed, simply, that if we needed help, we would bring in new partners. But these new partners, although they would add value to our business, wouldn’t have been there at the start. We, the two original partners, worked and scraped and worried and sacrificed and risked bankruptcy to get the company to the point where we would need more hands to do all the work. For that we felt we deserved a proportionally larger share. So we developed an ownership formula based on seniority. If you’ve put in ten years to make the tree grow, you should own more of the fruits than someone who has put in just two years. This formula doesn’t guarantee us twice as much ownership as new partners, or even one and a half times as much, just a fraction more, based on years of association. And as more partners are added, equality increases, until, if the company ever becomes large, there will really not be much distance between the founders and new owners.
An economic system based on this philosophy does four things: First, it gives you incentive to find the right outlet for your talents and energy and to stay there, because if you keep jumping from company to company you never build equity in an enterprise, never own a significant portion of your work. Second, it prevents you from using people, from hiring them to do unpleasant tasks for you and paying them as little as possible. When you’re giving a share of your company away, you don’t do it with the intention of using someone to further your ends, because, third, it causes you carefully to select individuals of excellent character and ability who are willing, as it were, to jump in and get their hands dirty and take over responsibilities you can’t handle. Consequently, fourth, it provides a natural disincentive for companies to grow larger than they need to. We don’t want deadwood in our company. We can’t afford it. We also don’t want to jump into fifteen new markets with three hundred new and diverse products. We know what we do well, and learning our own well-defined market is sufficient challenge. If all companies had this philosophy, imagine the incentive it would create for children in our society, who would know that if they didn’t prepare themselves well—educationally, socially, and morally—to contribute something of value, they wouldn’t ever find a place to make a living.
As a precaution in our business, so that we won’t bring in a new partner who is merely putting on a good show in the short term but would be a bad fit in the long run, we have adopted a mandatory one-year probation period, during which any prospective partner is guaranteed near full compensation but must prove his or her worth. If, in that time, there arise personality conflicts or indications of moral defects or a mismatch of skills, we can terminate the association. Or the prospective partner can do the same if he or she doesn’t feel comfortable or happy in our company.
Under such an arrangement, your work colleagues become just like family. There’s more holding you together than self-interest. You depend on one another, and you’re very careful about whom you adopt. You also discover that you yourself can accomplish more actual productive work than you would if you were merely somebody else’s employee (or a manager who gets paid primarily to see that others get their work done), because you own your work and the fruits of your labors. This type of organization virtually eliminates dependence and replaces it with interdependence. And it totally abolishes the tyranny that often prevails in the world of small business.
The second level of economic activity would consist of larger enterprises owned collectively by the “employees.” But of course they would no longer be employees. They would now be owners. No shares of ownership would be held by “absentee owners”—outside individuals who do not give their time and talents and energy to the creation, marketing, or distribution of the company’s products. This level would encompass basically the bulk of what we now call corporate America, organizations producing products whose efficient creation and distribution require the efforts of many people.
Because these are large organizations, a form of management different from that found in level-one businesses would be necessary. Whereas level-one enterprises could operate quite easily as true democracies, level-two organizations are often too large for this. Pure democracy in organizations of more than, say, fifty people would turn quickly into chaos. Rather, these organizations would have a republican form of management, patterned after our political system. Later in this chapter I’ll discuss this “federal model” of management in detail; for now suffice it to say that managers would be elected by the owners.
The third level of this economic system would consist of basic industries that benefit everyone in the community: transportation, communication, education, defense, utilities, and so on. These industries, more or less, belong to everyone. They are too large to be managed effectively by cooperatives and are too important to be driven by the profit motive. Many of them must, of necessity, be monopolies. Therefore, they must fall in the public realm. Public boards or local governments would be the logical bodies to manage these entities. The people who would work in these organizations would be owners, of course, along with all other members of the community, but they would also be public servants in the truest sense of the word.
Let’s now take a look at an alternative to the form of authoritarian management that at present prevails in our economic institutions, large and small. This management model, as suggested above, would apply primarily to the second tier of organizations in a new, more equal system of ownership.
1. Andrew Leckey, “Only 18% Regard Jobs as Rewarding,” Deseret News, December 5, 1993, M, 6.
2. David K. Hart, “Life, Liberty, and the Pursuit of Happiness: Organizational Ethics and the Founding Values,” Exchange (BYU School of Management, Spring 1988): 5.
3. Paul Johnson, “An Awakened Conscience.” Forbes, September 14, 1992, 183.
4. Christopher Lasch, The True and Only Heaven (New York: Norton, 1991), 205.