Huffpost Business
THE BLOG

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Terry Mollner Headshot

Common Good Capitalism to Emerge Via Voluntary Movement in the Private Sector

Posted: Updated:
Print

I grew up in Saint Joseph's Parish in South Omaha, Nebraska. We were an Austrian village transplanted into the USA; nearly everyone had come from a small peasant village named Apetlone. The old people still spoke the old language and all the local businesses did business with each other in a full understanding that that was the route to mutual survival.

My father, Heinie, with his two brothers, Emerick and Leo, ran Mollner's Meat Market. We bought our groceries from Stiles Grocery, our bakery from Ferdie's Bakery, our hardware from Schneider's Hardware, our drugs from Lymon Drug, and our beers from Al Nick's Bar. If at the dinner table each night one of my five brothers or sister made a noise that sounded like buying something from outside the village, such as getting a car repaired at the Ford dealership, my father's fork would be waived at you and he would declare, "You get your car repaired by Runa's Auto Repair, and I don't want to hear another word about that Ford place!" Well, at least that is the way it was until my father's youngest brother got an administration job at Ford Motor Company. From then on we always bought Fords.

This is how it happened. Little by little our allegiance to each other became allegiance to survival through alignment with large companies. Those large companies did not get their cars repaired at Runa's, buy their groceries from Stiles, or their meat from Mollner's Meat Market. They had a new priority: profit.

Ok. We can see how it happened. So now what do we do about it? Well, we have moved, thank God, far beyond getting our dictator in charge and organizing everything the way we want it. The next option is to elect people into our democratic government who will turn things in a more mature direction. But that necessitates them having some idea what a more mature direction is and how to get there. Is anyone reading this optimistic about that happening soon in the good ole USA? With the current Congress? Especially when five of every six dollars they raise to get elected comes from the current crop of for-profit corporations? I don't think so. That leaves only one other option.

A movement in the private sector.

I believe the next stage in our human maturation will be, as it was in Saint Joseph's Parish, "to freely choose to give priority to the common good." All our spiritual and religious leaders preach this as the mature way. Our scientists are coming to see it as natural for us to mature to where this is our voluntary choice - time and space are increasingly seen as mutually agreed upon illusions that are as valuable as the oneness of nature because they allow us to be self-conscious. Even some libertarians are coming to see that mature human behavior is when we freely choose to give priority to the common good.

I had the good fortune a few years ago to have dinner with John Mackey, the founder and Co-CEO of Whole Foods. He stated that he was an "integral libertarian." He took more than five minutes to explain what it was. I listened intently. When he was done, I said, "I think I can say in one sentence what an integral libertarian is."

"Go for it!" he said as he finally took another bite of his fettuccini.

"An integral libertarian is someone who gives priority to free choice and when he or she reaches full maturity freely chooses to give priority to the common good."

He all but jumped from the table, threw his finger at me, and shouted, "That is it!"

What I had done is bring in the third dimension of maturation. When I honored that the highest priority was individual freedom, he was happy to have the conclusion, when I included the addition of the third dimension of maturation, be that a person freely chooses to give priority to the common good.

Yes, we are not born with the skills of language and self-consciousness. And, yes, we do go through stages of maturation that build on one another. And, yes, at the lower stages of maturation we do give priority to the self-interest of our physical bodies because we think they are, like a word in the languages we use, separate from the rest of the universe (the other words). And, yes, at full maturity we realize that the universe does not die and we do die and it is an indivisible whole and, therefore, happiness lies in freely choosing to give priority to the common good of the whole enchilada. Those damn preachers were right! However, like John, they too were stuck in a two-dimensional world: freedom or oppression. Or being a good person or thriving in a dog-eat-dog-world.

So, how will common good capitalism come into existence through a private sector movement? Through a private sector maturation? Here is how I think that will happen.

People will start creating for-profit and non-profit organizations based on giving priority to the common good and second priority to self-interest relative to the interests of others -- they will be three-dimensional thinkers. These enterprises will take many different forms. It will probably be quite delightful to see the many different ways people do it.

First, the freely chosen highest priority of a common good business is the common good of us all, not just our family, town or nation. The interests of any of the stakeholders are second in priority. So the goal of our movement is to convert all enterprises into common good enterprises.

Secondly, this emergent common good capitalism will self-finance its growth. An organization, perhaps called the Common Good Enterprise Association (CGEA), will come into existence. It will be a global organization, have local chapters, and have three levels of membership.

An enterprise, for-profit or non-profit, will only be able to become a member by declaring that its highest priority is the common good and its second priority is anything else. Thus, as a result of becoming a member the world will know that your enterprise has committed to this set of priorities. This will be the strongest definition of this movement in the public's eyes. They can see who proudly reveals that they are a member of CGEA on their stationary, on their website, and on their windows. To increase their recognition as leaders in this movement, those who invite an evaluation can also become "common good certified."

CGEA, of course, will do much to bring the attention and support of the public to the companies that have joined it and particularly to the companies that have become members of the 10 percent Club and Cap Club.

There will be three levels of membership: membership, 10 percent Club and Cap Club. The first level is when the enterprise becomes a member. The second level of membership, the 10 percent Club, will be for common good enterprises that commit to set aside for the life of the enterprise ten percent of their net profit each year and solely invest it in common good investment banks.

The "common good investment banks," of which there will be many, will solely purchase companies and convert them into common good enterprises that operate as level three members. Level three members, the Cap Club, also place a cap on the return on equity. We do not care what the cap is as long as it is made public. Then there will be an open conversation about the appropriate cap, higher for start-up companies and lower for mature companies. Any profits earned above the cap will be set aside, also for the life of the company, and also and solely invested in the common good investment banks of their choosing. The latter will also be Cap Club members. They will try to provide a consistent low market return and also have a low cap.

Eighty percent of the capital on Wall Street is managed by financial advisors who seek a 9 to 12 percent annual return for their clients. Also, much of it is invested for retirement. Mature companies will work their cap down to 12 to 15 percent. These very stable companies will be the most appropriate investments for that 80 percent. Financial planners will love being able to put a portion of their clients' assets in companies that have this strong public support, financial stability and the ability to provide a consistent 12 to 15 percent return.

Of course, if an enterprise needs the capital invested in common good investment banks for growth or to issue a special dividend to continue to provide the annual 12 to 15 percent return, it can use it as collateral to borrow capital at roughly the same interest rate it is receiving, probably from the common good investment banks in which it is invested. Then using excess profits over the cap in future years, it can repay the loan. Thus, this nearly annual commitment of capital to the development of common good capitalism remains a constant commitment for the life of the company.

In this way, the common good capitalism movement will self-finance its growth and eventual purchase all large companies. After all, for the first time in corporate history, all the common good investment banks will have the exact same priority: the common good. In the past, the highest priority of corporations has been the financial interests of their shareholders that are nearly always different. Therefore, the common good investment banks will join into an association, comfortably pool capital when appropriate, and buy very large companies. They will keep doing this until all major size firms have either been bought or, far more probable, have decided to join the common good capitalist movement to survive by becoming a Cap Club member.

Wall Street will also join the movement whether or not it freely chooses to do so. People will prefer a rather safe, steady and good return on their retirement investments; they will love supporting the enterprises that are giving priority to the common good; and to survive in the marketplace, all corporations will feel the pressure to become Cap Club common good corporations.

Common good capitalism will take other forms as well. For instance, a primary goal of common good businesses will be to cooperate with competitors to voluntarily agree to raise the level of the labor, environmental and social playing field while continuing to compete on it as a secondary priority.

For instance, in the fall of 2012, Coca Cola, Pepsi and Dr. Pepper Snapple agreed on the format for labeling calories on their products in vending machines. Although a small and defensive move regarding the public's concern about obesity, this is the kind of cooperation we will increasingly see among competitors.

This ends waiting for governments to enforce common good policies. Increasingly, competitors will freely choose to associate for the purpose of doing it themselves. This will be a free and voluntary activity that can easily be sustained and continually improved upon. Legislation will, of course, eventually follow.

Like us all, business leaders will prefer this voluntary peer-peer relationship to the demands of a paternalistic government... until we all agree it is for the common good and, therefore, the legislation is no longer experienced as paternalistic. For safety and to honor our level of maturity, it is our freely chosen common good agreements.

When companies take the lead to make the world a better place for all they will discover that their brands will be loved, their duopolies (two companies controlling a product area) will be allowed to remain in existence, and their positive financial returns will be sustainable. Frankly, I do not see any way the duopolization of the global economy will be easily stopped. So the priority has to be to change the thinking of us all so the corporations change their priority. This private sector common good capitalism movement can accomplish that.

You should know that the highest priority of companies today is to become number one or two in their product areas. A monopoly is illegal, but a duopoly is legal. Therefore, duopolies are rapidly emerging in every product and service area.

Some familiar examples in the USA are Home Depot-Lowes, CVS-Walgreens, Coca Cola-Pepsi-Dr. Pepper Snapple, Verizon-AT&T, Mastercard-Visa, Hersey-Mars, Ben & Jerry's-Haagen Dazs (I am on the board of Ben & Jerry's so I am very familiar with this trend). In 1980, there were 50 major media companies, now only six: Walt Disney, Comcast, Time Warner, CBS, News Corp and Viacom.

Therefore, reaching common good agreements between or among these duopolies or triopolies or sixopolies will be relatively easy to accomplish. Also, to escape fierce competition and harsh public judgment, the smaller firms will voluntarily join in the agreement as well. This is how a livable wage will increasingly replace the minimum wage and environmental standards will increasingly be raised before governments pass legislation to obligate all companies to use them. It is also legal. It is the opposite of collusion for self-interest. It is cooperation for the common good.

As then Senator Paul Tsongas of Massachusetts once said to me (it was in the mid-1970s, as he flopped down on the couch in his D.C. office), "I am one of a hundred people here; I am powerless without a groundswell." Politicians cannot provide the leadership here. It has to come from the private sector. Only when something becomes a groundswell, a successful movement, does quality legislation easily occur, is sustained, and built upon.

This is a good thing; we want the leadership to come from the private sector rather than primarily be the result of a war between political parties. A voluntary private sector agreement among competitors will be both more appropriately comprehensive and enthusiastically sustained.

More important, this process will build on our right to exercise individual freedom and reach freely chosen agreements rather than be the result of force. Secondly, from one of the two following directions, they will be voluntary. The wise will provide leadership to make it happen and the less wise will do so in defense as a result of the insistence of the public. There were leaders who took the lead to include women and minorities in commercials and there were those who were dragged kicking and screaming by their advertising departments into doing it. This is how it will occur and is best to occur. More mature people lead and less mature people eventually end up yielding to maturation.

Increasingly, people will become aware that cooperation, and in particular maturation, is the fundamental process in nature. Increasingly, they will become aware that currently indirect cooperation between duopolies, not competition, is the actual and quiet priority in the marketplace. This will result in their insistence that the cooperation be direct and give priority to the common good rather than a few.

Common good capitalism will be the result of maturation in our thinking and a voluntary and self-financed movement in the private sector.

In this way we will turn Earth into a global village similar to Saint Joseph's Parish in South Omaha, Nebraska and Apetlone, Austria.

Maturation can be slowed down, but it cannot be stopped. Thinking the Earth is flat was a stage in our maturation. The current form of capitalism is only a stage in our economic maturation.