"What is at the heart of the BP debacle?"

Recent  media coverage has suggested that the leaders of BP should be held criminally liable for the injury to commerce and the environment resulting from the current deep water spill.  Because the platform was cited many times in the past for violations—the apparent negligence of managers becomes a claim of criminality.  Maybe.   Bernie Madoff is a criminal.  He is in jail.  His victims will never experience recovery.  

Criminalizing BP leaders is an idea supported by some BP shareholders.  Why?  Such an action may minimize the economic burden to the shareholders for the costs to remediate the damage to the Gulf of Mexico.  Yup.  Even the shareholders want fair weather protection from "themselves"--understood as their manager representatives when there is a big problem.  

BP shareholders should hope that there is no legal theory that allows the shareholder to be personally assessed in the event the resources of BP prove to be inadequate during the remediation phase.  This used to be how the “world” worked until theories of limited liability emerged a long time ago.  Yes, there was a time when investor liability was un-limited.  (This was a time when only the really really big boys could play--a topic for another day).

Too big to fail.  Too big to fix.   These ideas have defined the public debate in recent years as it bears upon the institutions of our financial system (investment banks, banks, brokers).   One of the proposed system design remedies for the financial industry is to compel surviving companies to assume the obligations of peer institutions that fail.  (Insurance companies have been doing this, by the way, for decades in many states).

If oil spill disasters had to be shared by the entire energy industry, maybe self-policing of platforms would have a better chance of working.  Maybe. 

If we try to get past the language---“too big to fix”, “criminalizing the managers”, and “too big to fail”—a simpler word that may be really useful is the word “utility”. 

Utilities make profits.  Utilities attract capital quite efficiently (which is to say they reward capital and have sufficient liquidity to support shareholder, bond and debt markets).

Instead of debating if we should “break up” a bank if it gets to big—as a measure currently holding sway in Congress---it might be easier to simply say, ‘when one institution controls more than 10% of all deposits—the industry, in this case all banks, are automatically subject to rules that govern utilities until such time as there is more marketplace diversification (less concentration risk). 

There would be no need to contemplate how to liquidate monster companies in the event of their failure—the financial equivalent of now trying to fix the Deepwater Horizon oil leak real time a mile down. 

When all is going smoothly, and the “big” continue to consolidate themselves until they are ever bigger—we stop “hoping” that everything is okay—that the public interest is somehow safeguarded.  We establish a standard that simply gets triggered when one company exceeds a certain pre-defined market share for several consecutive quarters—bingo—the entire industry, including all public and private companies in the space—converts to rules of governance and the public interest control of a utility.

This is the future. 

The public knows, and is at ease with the fact that it has no claim on company profits.  The public is learning (again) that it seems to have an implicit  “stake” in the downside performance of an industry. The essential nature of the theory of the utility addresses this dynamic. 

Before the downside is externalized to the public—this is the place to be proactive.  The model of the utility is a tested modality.  Even as the culture of capital likes “bigness”---because it likes efficiency, scale and the power of brands--it must be remembered that it also likes unfair advantage—when this can be accomplished.  There is no reason to hope that the culture of capital is going to somehow regulate its native impulse to dominate through competition.  Capital is a culture.  Cultures are irresistible and willful.  

Creating new government oversight or new government agencies—can be tempting to consider but they are largely irrelevant.  Subjecting an industry to the guidance of a utility, as it bears upon pricing and returns earned by capital—may do a lot to help mollify concentration risk (big getting bigger at society's peril).

What is at the heart of the BP debacle?  Two opportunities:  all energy industry members should be made to participate in the remediation of any one failure, for one.  And two, that portion of the energy industry not currently subject to utility rules, converts to a “utility” model as soon as any one member becomes “too big to fail or fix”. 

The Share-Capital Foundation provided this op-ed.  www.share-capital.com

"Is Commerce a Vector for Peace?"

We think the answer is “yes”.  

During the late 1980s and 1990s we had occasion to visit politically and economically unhappy places.  We made trips to South Africa before Mandela was released and visited the townships.  We were guests of Chevron in the Cabinda Province of Angola when we could not leave Luanda for the rioting. We have been in Kinshasa (of former Zaire) to witness the aftermath following one of its nameless pillages.  We visited Croatian refugee camps in Hungary shortly after the Berlin Wall came down and we were in Gaza just after the Hebron massacre in 1994.  The face of human misery is a horror--but none of what we witnessed was "caused" by commerce.  

We have witnessed the suppression of the Indian community in Fiji in the late 1980s, inter-tribal conflict in Papua New Guinea in 1989.  We have tried to conduct business in Peru during the reign of the Shining Path when hyper-inflation was more than 10,000% per annum. 

Much of what is being referenced was scary to behold.  Guess what?  Goods and services continued to move!  Commerce was not easy but it continued in some form or fashion.  People with any form of supply tried to identify and meet demand--no matter how challenging or perilous the circumstance.  A vector for Peace?  

Peace is an ideal.  Commerce is pure materiality.  Peace may be to Commerce what Spirit is to Materialism. These two ideas have been the twin poles of any dialectic defining social and economic progress before and since Engels and Marx. 

Today is different!  Despite all the confusion and anxiety of today’s economic climate—we live in unique times—because of the non-profit sector, the browser and the internet.

Notice the title of this blog: “Is Commerce a Vector for Peace?”  We used the word “commerce” not “big business”. As central banks of Western economies in recent years were being savaged by the draconian effects of derivatives and over-leveraging on a global scale—what else was happening?  A vanguard of new capital as “micro-credit” was in development!  Muhammad Yunus, winner of the 2006 Nobel Peace Prize was an early innovator and distributor of micro-credit as the Grameen Bank in Bangladesh (starting around 1976)!  Today there are more than 12,000 micro-credit banks throughout the world.  Some estimates indicate nearly 1 billion people have accessed credit for the first time via micro-credit.  And now, average people committed to taking action can serve as “new bankers” by contributing capital (not donations) for projects in Mongolia to Uzbekistan—at www.KIVA.com.   Capital as credit—not grants, is transformative.  Many people today know the phrase "Grameen Bank".  It is a brand that signals "leadership".  It came to the West from Bangladesh.  The leadership paradigm of the world is changing--because how we access capital is changing.  The new bankers are average people--not suits and corner offices. 

Commerce as grassroots capital is the new vector for Peace.  

Share-Capital is committed to promoting this idea—and to fostering grassroots action by “regular” people everywhere there is a browser--in order to radicalize the face (and effect) of economic activism.  If micro-credit is making a difference at the level of the small entrepreneur in remote places—then the Share-Capital initiative described as People Denominated Capitalization (PDC) will potentially transform worldwide capital markets themselves! 

See if you agree. Visit www.share-capital.com.

We bid you peace, until next time,

“Radicalizing Socially Responsible Economic Activism—according to Share-Capital…”

The Share-Capital Foundation is in the “business” of fostering discussion leading to action in the area of economic activism.

Activism to Share-Capital has only one face: it is the face of volunteerism—economic volunteerism.  And this form of activism is all about volunteer capital—not donation.  Activism and volunteerism—these two ideas go together—and when this combination is supported at a grassroots level—the effect on Managers can be palpable.

Why can’t our politicians lead the activism encouraged by Share-Capital? 

Share-Capital reminds us that public policy has historically been a process that works in arrears.  When we legislate voting rights for everyone as we did in 1964 (after nearly 200 years of history as a nation)—it hardly meets any standard one might describe as proactive.  Public policy is about the insight we glean through hindsight.

The fact that citizens choose to forget that legislation is reactionary—not pro-active, does not make Washington, D.C. more prescient or helpful. Only capital markets and volunteers pro-act.  

When capital volunteers itself—things happen.  Volunteer capital is code for: investment.  Think about it.  To have a chance at fulfilling a mission, no matter how modest or bold the initiative (a family or a big company) resources as capital (opportunity and treasure) must first show up.  The capital necessary for progress and growth comes in many forms—leadership, cash, equipment, facilities, networks, and relationships. 

Economic activism, understood as the investment of volunteer capital, is about leading through ownership—and in the Share-Capital model the ownership position of choice is the ownership currency of the shareholder. 

To what end? 

Watchdog groups, for some time, have purchased a small number of shares of a given company in order to have access to annual meetings where a protest or objection can be formally expressed to Managers.  This form of ownership, by shareholder advocates or watchdog groups, by definition, is adversarial to Managers.   In the Share-Capital model Managers are the change agents.  When the Managers want to change—things happen.

Managers, not always the CEO or the employees, are the “grassroots” engine of a company.  Workers are critical but Managers alone have the ability to deliver change—because they are expected to be able to message concurrently in more than one direction—to employees, customers, suppliers, directors and key shareholders.  Share-Capital holds that Managers are the secret sauce of change within corporations.  The competitive nature of the Manager culture, however, makes it almost impossible for Managers to cooperate among themselves spontaneously.  This is a big problem. This means the tip of the spear must come from outside—enter: Share-Capital as shareholder. 

Share-Capital also seeks to engage the management of companies that appear to be socially IRRESPONSIBLE.  Yup.  The more egregious the Managers are perceived to be, the better.

Really? Think about it.  If one avoids companies who externalize costs, who exploit tax laws, corrupt the lobbying process, defeat environmental codes, and stress labor conditions—they have to be thrilled when the “socially responsible” choose to go elsewhere—to reside among the green, the ethical and the firms with high satisfaction ratings by employees.  The companies with scary Managers are the companies worth engaging.

To change behavior?  Nope! To simply put light on the behavior.  


As shareholder, Share-Capital engages Managers and then reports what it learns by email and web site to its members—who are numerous, located everywhere, and anonymous.  

The goal of Share-Capital is to acknowledge aggressive Managers for aggressing in the name of competition and in the pursuit of creating shareholder value.  These are the two defenses that rationalize so much Manager content.  We all know (or suspect) that shareholder value and the pursuit of value creation does not require Managers to marginalize people or the environment, or to avoid recognizing the social costs of a given process or product.

Share-Capital focuses on three key economic sectors—food, energy and pharma.  These sectors represent basic security issues for people the world-around. The Share-Capital model of socially responsible investing is thereby a grassroots way to consider economic activism with a chance of making a difference. With the focus on Managers, who are not always paragons of social responsibility—the outcome can be transformative. 

To advance your thinking about the Share-Capital message, consider reviewing the concept of People Denominated Capitalization (PDC) as found on the web site www.share-capital.com under the tab “Programs”.

Until next time we post, we bid you peace.

"Why does Share-Capital care about Wisdom Literature and the Western Mystery Tradition?"

Does it indeed care about such matters?

While Share-Capital harbors no interest in competing for a seat at the table of religious institutions, it does hold that the culture of capital—may be best understood by heading towards, not away, from the deep considerations that have captured the imagination of humankind since pre-history: fairness, beauty, delight, duty. (Is Share-Capital suggesting a new secularism?)

The Share-Capital Foundation has written a private monograph (a series it calls “Chores”) suggesting that we may all be marooned to this place. The nagging urge to understand how to consider our source of origins may be explained by it. “We have been put ashore…”

This is a novel place for developing a point of view about capital, capital markets and philanthropy--nonetheless, it is the view held by the Share-Capital Foundation. If Share-Capital believes it is beholding to the legacy and contribution of Wisdom Literature and the Western Mystery Tradition for insight—we might just suspend judgment and watch this play out (Noam Chomsky befriends Joseph Campbell?)

Is this why Share-Capital views “capital” to be a fundamentally metaphysical, and not an industrial, phenomenon? Have you been to the web site, www.share-capital.com? On the home page it declares:

“The Share-Capital Foundation intends to bring together the best of two cultures: the best "value culture" contributions of the non-profit community, conflated with the best "fulfillment culture" of corporate capital and their management teams.

Non-profit meets Corporation. (Cinderella meets Godzilla).”

If there is room for the power of myth at the Share-Capital table (viz. Cinderella meets Godzilla) maybe Share-Capital is trying to remind us that the big issues facing us today are indeed accessible—if not to our leaders—they are accessible to the intuition that connects the vast majority of people as humankind.

In the weeks ahead we will work to provide more insight and nuance to the Share-Capital Foundation message. We understand the Chores series is scheduled to be published in late summer 2010 by Kicker Rock Press, a Share-Capital affiliate. We bid you Peace in the pursuit of grassroots proxy-guided philanthropy!

The Avarice Fellowship helps Share-Capital Foundation

The Avarice Fellowship has been asked to serve as the official blogging resource for the Share-Capital Foundation of Montour Falls, New York. The blog postings will be accessible by way of the www.share-capital.com web site navigation bar.


Jeff Snider writes for the Avarice Fellowship and is one of the early supporters of the Share-Capital Foundation. The Avarice Fellowship will provide ad hoc commentary on current events and economic topics that compliment or expand upon the work of the Share-Capital Foundation.


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