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Financial and organizational basis


Complexity: its constraints on social innovation (Part #3)


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This section outlines how the different elements noted in the earlier sections may be linked together to the satisfaction of those concerned. It should be stressed that the objective is not to put forward a single rigid formula but rather a panoply of complementary organizational and financial devices which can be knitted together or used according to circumstances and particular cases.

1. Use of conventional corporate forms

The challenge is to be able to offer participation in financially sound, but specially constituted, corporate forms through one or more of the following:

1.1 Contract: This could be used where commitment is low or a trial period is desired. The contract could be designed to suit the participant by giving him access to some services in exchange for whatever use of whatever portion of his assets he was willing to associate with this project.

For example, he might simply be prepared to use one corporation in the network to supervise the rental of one of his estates on the open market and ensure that the property was appropriately maintained. The corporation in question could then be very similar to a normal real estate corporation. However, he might permit innovative rental conditions if suitable tenants could be found to use the property in some alternative manner (of which he might wish to approve and in which he night wish to participate personally). Contracts could be adapted to cover a wide variety of opportunities as they rose.

1.2 Incorporation: This could be used to cover the case of a particular set of assets belonging to one individual. It could also be used to link several individuals with similar or complementary assets. The owners could "loan" these assets to the corporation in exchange farad shareholding, for example. On dissolution of the corporation, the assets would be returned to the Individual owners.

1.3 Holding company: This device could be used to link together various corporations if such a linkage was considered desirable for tax or other reasons. The shareholders of the holding company could be Identical with the shareholders of the component corporations.

1.4 "Cross-linking directorships". This device could be used to link two or more corporations under certain conditions. The directors (or shareholders) of one corporation are also directors (or shareholders) of the others. In this way there is no legal link between the corporations, although from an operational point of view their policies would be harmonized.

1.5 Other devices: Where appropriate any of the following forms could be used: bank,insurance company, building society, etc.

The lack of originality in the possibilities noted above is a guarantee of their feasibility but not of their interest as an alternative approach to asset management. But as is implied in some of the points, there is no obstacle to linking together such Initiatives in a mutually supportive manner. The key to economic viability is firstly to ensure that complementary economic units are linked into the network in such a way as to avoid having to transfer funds out of it in exchange for services which could be supplied by an appropriately conceived addition to the corporate network. Secondly, if the services available from the corporations the network are sufficiently attractive and competitive, they will attract funds into the network.

2. Other fund-oriented organizational forms

As Is often the case, there is every advantage in linking such forms as foundations, trusts or similar bodies into the network. Again (and as is the case with corporate foundations in practice), the linkage could be achieved by having the same people as participants to the extent necessary.

3. Complementary function of other organizational forms

As outlined, the project is feasible but without special interest. In fact such projects could well be considered to have been Implemented already between individuals or groups with suitable assets (e.g. the extended families of the hyper-rich which use a complex mix of profit and non-profit forms to manage their assets). At the other extreme, Individuals without considerable assets can participate effectively in different cooperatives linked within the cooperative movement. (It is in the interest of cooperatives to transact certain business with each other rather than in the open market.)

But all the organizational forms and examples cited, although providing a viable economic base, do not supply any alternative element which would make the project both more interesting and more attractive. In fact, what is missing is the associative function whereby individuals are linked in terms of non-economic concerns which they share. As has been noted many times, economic and bureaucratic organizations necessarily deny any associative relationships amongst their staff or shareholders (although attempts may be made by their public relations departments to re-generate such relationships through staff dances, sporting activities, newsletters, etc.).

A whole range of non-economic activities may be developed amongst

(a) those linked within the essentially economic network noted above, and with (b) others who could be usefully associated with the network so that the economic aspects are appropriately counter-balanced.

Having provided an economic base through the first group, the mix of Individuals and activities included in the second should ensure the magnetic quality of the alternate network which is the justification for its continued existence.

4. Overall policy and control

The characteristics of a network preclude the emergence of any centralized control. The overall policy would consequently be the resultant of the interactions between the policies of different parts of the network - some of which might wish to be subject to centralized control or policies for some purposes or for specific periods of time.

The attitude toward overall policy might change in times of crisis for example or if efforts were made to take over or disrupt the network.

Policy guidelines might therefore be formulated in an association of all the people involved in the different units of the network. Those concerned could respond to them within particular more formalized units to the extent they considered appropriate in each case.

5. Externally-oriented policies

It is to be expected that any such network would be perceived as a protective device for elites and as such against the Interest of the underprivileged. Those maintaining this point of view would simply advocate that the assets of owners in any such network should be redistributed to the underprivileged. This well-known political issue will continue to be debated whether any such project is implemented or not The question Is whether the manner in which the assets are used within the network can attract non-owners, and whether the services t can perform both for participants and outsiders would be such as to counter much of the criticism that would otherwise be raised. As such the network could we'll constitute an asset protecting device in a hostile political climate (cf. the monastery network in the early Middle Ayes). Clearly different parts of the network could be more or less "open" or oriented specifically toward alleviating the conditions of the underprivileged - whether in the same area or in developing countries.

6. Management and operational support

The management of any particular unit within the network would clearly be the sole concern of that unit - except to the extent that it was deliberately constituted with the obligation to relate to other units on specific matters. However any unit could seek management and operational support in the form of advice or services from other units.

For example, it would clearly be in the network's interest to have mobile teams moving from one location to another providing specialized services. These might Include: building maintenance, garden/estate maintenance, accounting, crafts, group dynamics, medical care, etc. Such services could be funded from a specially constituted foundation within the network, under contract, or in any other manner agreeable to those providing the services. It is in fact the movement of people from location to location which would knit the network together, to the extent necessary, and ensure the necessary diffusion of skills and information.

7. Individual access policies

Given the basic flexibility and diversity, there are many ways in which Individuals could become Involved in the network, other than in their possible capacity as asset owners.

7.1 Club: One obvious conventional parallel is the club system or the country club. This gives individuals the right to use certain facilities for certain time periods depending on their commitment. The link to a club in one location may give reciprocal membership rights with clubs in other locations, possibly under specified conditions or for a defined period. Some clubs have residential facilities, again under certain conditions.

There is of course no need to make conditions explicit if those involved, or who might be Involved, have no difficulty in sensing the bounds which need to be respected to avoid abuse and disagreeable incidents.

Again, clubs may in practice be very exclusive or very open, depending on the environment which the membership core is attempting to maintain. Clearly care must be taken with any trend towards an environment where there is a high turnover of membership, little sense of permanence, and inadequate complementarity between the interests of participants.

7.2 Association: In addition to the club formula and its variations, of which there are many examples in practice, there is also the example of the association with a weekly or monthly meeting and related activities. Where the association's aims and members were in sympathy with those of the network, some of the network's facilities could be used by the association on whatever basis proved mutually satisfactory. It might even be of interest to explore the possibility of a reciprocal arrangement between the network and some existing transnational association with many local groups (e.g. Rotary, Scouts, etc.) if there was some basis for contact.

7.3 Innovative formulas: The above possibilities have the advantage and disadvantage of having been well explored. Other possibilities could also be envisaged with a stronger accent on the alternative style, for example:

  • alternation for an individual between permanent residential participation and occasional visiting (e.g. weekend) participation. This might involve periods of residence measured in months or years, alternating with equivalent periods of absence. The economics of some such arrangement might, for example, be worked so that the individual spent early years as a non-resident and later years as a resident
  • full or permanent involvement at a particular location might effectively be governed by the Individual's ability to have experience with some specified skills e.g. alternative technology, agriculture, music, group dynamics, meditation, etc.
  • again full or permanent involvement at a particular location might (also) depend on the individual's ability to adjust to either a maximum or a minimum of privacy, communality, noise level, psychic space, physical space, etc.
  • full or permanent involvement might or might not depend on the Individual's ability to bring in adequate funds, to loan his assets in some appropriate way (possibly at some other part of the network), to generate income through projects he initiates, to collaborate on other projects, or simply to perform a necessary minimum of work.

Such different conditions for participation would result in a variety of sub-networks more or less loosely linked together and into the larger network.


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