[This posting was rescheduled from November 30. Sorry. The refugee crisis seemed more important, and then the whole panic over falling prices by people who think we need to pay more for less to be better off.] In the early twentieth century, Judge Peter S. Grosscup of
the United States Seventh Circuit Court published a series of articles on what
to do about the problem of rapidly concentrating ownership of the nation’s
productive capacity. With such titles as
“Who Shall Own America?” and “How to Save the Corporation,” Judge Grosscup
outlined a plan for expanded ownership of corporate equity that, while it
relied on past savings and was therefore not universally applicable, at least
attempted to address the increasing wealth and income gap that was a growing
problem even a century ago.
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| Judge Peter S. Grosscup |
What His Honor did not address, however, was the problem of
“corporate governance.” This is key,
because “property” is not the thing owned, but the right to be an owner in the
first place (the right to property),
and the bundle of rights that define how an owner may use what he or she owns
(the rights of property).
“Governance” means “control,” and the rights of property
determine who controls the use and the income from what is owned. As Louis Kelso once said, “Property in everyday life, is
the right of control.”
That
is why an important aspect of the Just Third Way is not only that capital is
broadly owned, but that it is also broadly controlled. Misunderstanding this, in fact, is one of the
chief dangers in getting people to understand that many programs that they
think get capital “ownership” into people’s hands are actually socialism.
Many
proposals take away the right to the income of what is “owned” and the right to
dispose of the asset as the “owner” wills — the abolition of private property
by any name. Georgist socialism, Fabian
socialism, social credit, and many modern forms of “distributism” are thus
actually socialism, because they abolish rights to income or control . . . and
“property” is a right.
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| Transforming the Corporation |
That is why something like “Justice-Based Management” is
absolutely critical to any program or proposal to expand capital
ownership. Justice-Based ManagementSM
(JBMSM) is a leadership philosophy and management system that
applies universal principles of economic and social justice within business
organizations. The ultimate purpose of JBMSM is to create and
sustain ownership cultures that enhance the dignity and development of every
member of the company, and to economically empower each person as an owner and
worker.
JBMSM promotes a company’s long-term
profitability within the global marketplace by enabling all worker-owners to
serve and provide higher value to the customer. JBMSM connects every
worker’s self-interest to the bottom-line and long-term success of the company.
The JBMSM process builds upon a written
articulation of the philosophy and principles of the company’s leader
(typically the CEO or chairman of the board) and leadership core group, in
terms of universal principles and core values of the company. JBMSM proceeds
in stages to build a consensus upon these fundamental shared values and vision
of the company within each work area of the company.
These articulated values provide the foundation for
enhancing the productiveness of workers and company profitability, and include
such structures as employee-monitored economic incentive programs,
participation and governance structures, two-way communications and
accountability systems, conflict management systems and future planning and
renewal programs.
One of the main components of JBMSM under current
U.S. law is the “empowerment ESOP.” While the employee stock ownership plan
(ESOP) was originally invented as a means for providing working people with
access to capital credit to become owners of corporate equity, most ESOPs are
set up as just another employee benefit plan or tax gimmick, or as an employee
share accumulation plan (“ESAP”). Most ESOPs today are not designed to treat
worker-owners as first-class shareholders. The “empowerment ESOP,” on the other
hand, is designed to encourage workers to assume the responsibilities and
risks, as well as the full rights, rewards and powers, of co-ownership.
Furthermore, all academic and government studies to date
have concluded that ESOPs alone are not enough to affect individual and
corporate performance. Within a JBMSM system, in combination with a
regular gain-sharing program tied to bottom-line profits, and structured
systems of participatory management, the empowerment ESOP stimulates everyone
in the company to think and act like entrepreneurs and owners.
Justice-Based ManagementSM offers an ethical
framework for succeeding in business. JBM balances moral values (treating
people with fairness and dignity) with material value (increasing a company’s
productiveness and profits while enriching all members of a productive
enterprise). JBM’s three basic operating principles are:
·
Build
the organization on shared ethical values—starting with respect for the dignity
and worth of each person (employee, customer and supplier)—that promote the
development and empowerment of every member of the group.
·
Succeed
in the marketplace by delivering maximum value (higher quality at lower prices)
to the customer.
·
Reward
people commensurate with the value they contribute to the company—as
individuals and as a team.
Justice-Based ManagementSM is guided by the
concept of social justice, as articulated by the late social philosopher
William Ferree, S.M. Social justice involves the structuring of social
organizations or institutions (including business corporations) to promote and
develop the full potential of every member.
JBM also embeds within an ownership culture the three
principles of economic justice defined by the late lawyer-economist Louis Kelso
and philosopher Mortimer Adler: (1) “participative justice,” or the right to
the means and opportunity to participate in the economic process as an owner as
well as a worker; (2) “distributive justice,” or the right to the full,
market-determined stream of income from one’s labor and capital contributions;
and (3) “social justice,” or the right and responsibility of each person to
work in an organized way with others to correct the “social order” or
institution when the principles of participative or distributive justice are
being violated or blocked.
Within JBMSM the principles of social and
economic justice provide a logical framework for defining “fairness” and
structuring the diffusion of power within the corporation.
JBMSM is designed to systematize and
institutionalize shared rights, responsibilities, risks and rewards within all
company operational and governance structures involving:
·
Corporate
values and vision
·
Leadership
development and succession
·
Corporate
governance and future planning
·
Operations
(policies and procedures) and hardship sharing policies
·
Communications
and information sharing
·
Training
and education
·
Pay
and rewards
·
Grievances
and adjudication
A well-designed Justice-Based ManagementSM system
sharpens and crystallizes the leader’s philosophy around “universal”
principles, providing a solid foundation for a corporate culture that enables
people to internalize these guiding principles. JBMSM generates
organizational synergy by connecting each worker-owner to the financial tools
of ownership (i.e., ESOP and profit sharing), participative management
systems, and a defined share of power in the governance of the organization.
This in turn enables people to make better decisions, discipline their own
behavior, and work together more effectively and cooperatively—because it is
truly in their self-interest to do so.
#30#