- The Architecture of Enterprise:Redesigning Ownership for a Great Transition
The dominant institutional designs of modernity have relied upon an uneasy balance, built around a structural compromise. The institutions of government are seen as serving the public good, while the institutions of the economy—most prominently corporations and capital markets—are seen as serving the private good. The definition of private good, moreover, has been captured by a financial elite, which has managed to equate it with serving their interests. Today this social order is reaching its viable limits. In the multiplying crises we face, ecological and financial, we can read signals that the old system design is breaking down. As Alperovitz and Dubb emphasize, leaving the existing corporate economic system essentially intact, and hedging it around with further regulations, seems less and less to represent a successful path to a vibrant and sustainable future. The critique and remedy must become more radical. While this seems to suggest a path of revolution, that too is unlikely to occur, and even less likely to succeed. We may well, as Alperovitz and Dubb write, confront a "potentially decades-long period" in which the system "neither 'reforms' nor collapses in 'crisis.'" This does indeed represent an opening for previously unprecedented strategic options—most promisingly, as they suggest, a step-by-step, evolutionary reconstruction of the fundamental social architecture of the economy.1 In short, it means redesigning the architecture of ownership. As progressives begin contemplating such a strategy, we can be guided by the accumulating experiences of the alternative ownership designs that already exist—such as cooperatives, employee-owned firms, social enterprises, and [End Page 61] commons ownership designs—for with wordless wisdom, these structures point to a fundamentally different kind of economic system. They help us imagine, in practical detail, how a profoundly different kind of economy might be designed. At their best, these institutions are self-organized not around maximizing returns to capital, but around serving the needs of life. They are designed to support life, not to extract from it.
The Systemic Crisis and Conventional Capitalist Ownership
If the root social construct of government is sovereignty (the question of who legitimately controls the state), the root social construct of an economy is property (the question of who legitimately controls the infrastructure of wealth creation). Another word for property is ownership. Since the dawn of the industrial age, the global economy has increasingly come to be dominated by a single form of ownership: the publicly traded corporation, in which ownership shares trade in public stock markets. These companies produce 25 percent of the world's gross product. And the thousand largest of them account for 80 percent of global industrial output.2 The systemic crisis we face today is entwined at the root with this design of ownership.
While it is easy to think of ownership as a fact, it is more accurately a historically constituted design. The dominant form of ownership of our age serves the needs of capital markets by generating endlessly growing financial wealth. Yet because financial wealth is a claim against real wealth—a claim on future wages, housing values, or company profits—capital-centered ownership works by extraction. In my book Owning Our Future, I call it extractive ownership.
If today we are encountering the hidden dangers of unchecked industrial growth, we are similarly witnessing the dangers of limitless capital growth. We're hitting twin limits of ecological overshoot and financial overshoot. If ecological limits are something many of us understand, we are just beginning to find language to talk about financial limits. These limits are hit when normally benign financial activity—such as making loans and managing investments—goes beyond the bounds of the reasonable to become extractive. Activity veers into the extractive at those points where debt [End Page 62] loads become too large, where credit card interest rates are onerously high, where the demands of venture capital are too great, and in general where gains for the wealthy start to come out of the wages, checkbooks, and taxes that sustain the rest of us.3
When deregulation let loose the institutionalized drive for financial extraction at a global scale, the...