Book Review: Owning Our Future

Marjorie Kelly is the rarest of authors, discussing some of the most difficult problems we face but doing so through an easily understood narrative of her own search for answers that is bound to draw in readers from a wide variety of backgrounds. Her analysis is insightful and the recommendations contained in Owning Our Future: The Emerging Ownership Revolution should strike a chord with most, regardless of their political persuasion. We all want a better future for our children. Kelly is pointing in the right direction to make that happen.

Maximizing income for the few has become the focus of modern corporations. By 2004, financial firms took in nearly 40% of all U.S. profits, while manufacturing got just 5%. At root was debt and speculation. The top 1% came to own more than 50% of all the assets in the US and 70% of financial assets. We have built a house of cards where the financial economy is 4 times as large as the GDP and the derivatives economy is ten times GDP. These are bets on bets by “prudent persons,” or as I like to call them “lemmings,” since as long as they follow the same cliff jumping behavior of most other fiduciaries, they won’t be liable. Lower average market returns have only added to the derivatives frenzy.

In the twenty years preceding the 2008 bust, 56% of the growth in U.S. income went to the wealthiest 1%.  According to Kelly,

If you take the more radical stance of standing inside the law and ask how to change the profit maximization mandate–which we at Corporation 20/20 explored at length– you find yourself in the sunless thicket of corporate governance… Few who enter that thicket emerge with sanity intact.

She certainly makes those of us in the corporate governance industrial complex think twice. Kelly is looking for a shift in corporate purpose and organization, from seeking dominion to seeking community.

The right to make a living comes before the right to make a killing… fairness for the many is more important than maximizing by the few… sustaining the prosperity of larger living systems, both human and wild, is the root condition for the flourishing of all.

Fairness, sustainability and community are the fundamental values of a “generative economy.” Kelly’s explorations led her to the following categories or characteristics of generative ownership:

  • Commons ownership. Assets are held and governed indivisibly by a community.
  • Stakeholders. Ownership by people with a human stake in a life affirming firm.
  • Social enterprise where the primary mission is social or environmental.
  • Mission-controlled, often by a family, trust or foundation.

Extractive and Generative Ownership Structures Compared 

Extractive Ownership
Generative Ownership
Financial Purpose: maximizing profits over short-termLiving Purpose: creating a salubrious environment over the long term
Absentee Membership: ownership disconnected from life of enterpriseRooted Membership: ownership in human hands frequently interacting with company
Governance by Markets: control on autopilot control by capital marketsMission-Controlled Governance: control by those with social/environmental mission
Casino Finance: capital as master placing a betStakeholder Finance: capital as an invested friend
Commodity Networks: trading is focused solely on price and profitsEthical Networks: collective support for ecological and social norms


Companies with one or more of these characteristics could be on the way to establishing a salubrious economy. Kelly also endorses cooperative principles, which she notes include: open membership, democratic member control, cooperation among cooperatives, and concern for community.  I used to head California’s Cooperative Development Program, so I recognized immediately that Kelly left out autonomy and independence, economic participation and return, as well as member education. Of course, the list is endlessly reformed but I think those three are worth preserving and including in her future analysis.

I gradually moved more to the mainstream after I saw the collapse of the Berkeley and Palo Alto co-ops. Kelly appears to have moved in the opposite direction after the collapse of Wall Street, while acknowledging that cooperatives have a hard time raising capital from outside investors and banks. Want to get involved in the cooperative movement? One excellent source of information is the California Center for Cooperative Development.

Kelly may want to also look at Paul Bernstein’s Workplace Democratization, where he outlines six elements necessary for a democratic workplace. They appear compatible with Kelly’s tentative model of generative ownership, would add to her model, and could be modified to include stakeholders beyond employees and traditional shareowners.

  1. Participation in decision-making
  2. Economic return
  3. Sharing management level information
  4. Guaranteed Individual rights
  5. Independent Judiciary
  6. A participatory/democratic consciousness

Ethics training, corporate social responsibility (CSR), and sustainability programs too often don’t alter company purpose. For that, we need to redesign governance structures but, perhaps having seen corporate governance as a “sunless thicket,” she admonishes her readers to start with positive models, rather than emphasizing reform of existing monolithic structures. The real energies of a system can’t easily organize themselves around a negative. We are best inspired by examples and dreams of the positive.

We need a need a positive vision of generative design that is so strong, it exerts it[s] own magnetic power, drawing people in – just as the vision of democracy has magnetized people around the world.

Kelly touts benefit corporations, since their broader purpose is baked into governing legal documents.  Those with a living stake in the firm, such as employees and initial direct investors, should have more voting power than those who purchase stock on secondary markets. One of her examples of generative companies, the UK’s John Lewis Partnership (JLP),

corrects an oddity in our economy that we rarely notice: that in extractive enterprise, the people who go to a company every day and do its work, the employees, are considered outsiders. Those who never set foot in the place, the stockholders, are insiders.

(See Disconnect in The Conference Board Review, summer 2012, for additional insights concerning this irony.) JLP is rooted in a living purpose, serving a broad base of human needs, embodied in its employees. Mission-controlled governance is reflected in JLP’s constitution and employee-elected councils.

Additional examples include the New York Times, where the Ochs-Sulzberger family holds super-voting shares, and Novo Nordisk’s mission to defeat diabetes — balancing financial, social and environmental needs through a corporate structure controlled by a foundation. Equal Exchange, a fair trade employee owned coffee and chocolate company, has governing documents, which stipulate that if the company is ever sold, net proceeds must be donated to charity.

An “age wave” of ownership transfer is coming as baby boomers retire and sell their businesses. Kelly’s hope is that many will transition to employee ownership, benefit corporations or foundation control. If you are in that position, the National Center for Employee Ownership and Ownership Associates can help with that transition. Substantial tax breaks are available.

I embrace Kelly’s vision, as I think almost anyone who reads her book will do, and I acknowledge we need shining examples of corporations run with a human and ecological purpose. However, Kelly is a realist:

Ultimately, we will need to change the operating system at the heart of major corporations. But if we begin there, we will fail. The place to begin is with what’s doable, what’s enlivening – and points toward bigger wins in the future. The place to begin is with advancing generative alternatives… Social enterprise initiatives are taking root at places like Harvard, Yale and Oxford, with funding from people like Jeff Skoll, former president of eBay.

I do have a few quibbles. As one who toils daily “in the sunless thicket of corporate governance,” I feel like I’m getting it from both sides. Directors at the Silicon Valley chapter of the NACD tell me they will no longer serve on boards unless dual-class stock ownership structures insulate management from the irrational demands of proxy advisors and shareowners. (see SVNACD: Red Flags of an Ethical Collapse & Alternative Proxy Voting Advice to Stem Dual Class IPOs) Now, Kelly is telling me that we need dual class stock ownership so that companies can stay on mission.

Do we really want a model that limits participation and input in our attempt to create a more salubrious environment?  I’d bet Murdoch, who also dual-class voting shares to maintain control of Newscorp, sees his own form of tyranny as “mission-controlled governance” embodying a greater “living purpose.”  What about the Waltons? The Walton family wealth is as large as the bottom 48.8 million families in the wealth distribution (constituting 41.5 percent of all American families) combined. (Inequality, exhibit A: Walmart and the wealth of American families, Economic Policy Institute) Isn’t Walmart driven by a living purpose, “saving people money to help them live better“?

Kelly, as she pointed out brilliantly in The Divine Right of Capital: Dethroning the Corporate Aristocracy, says that 95% of what passes for investing is really trading in secondary markets and is more akin to gambling. Yes, she has a point but what about a homeowner who built their house selling to a subsequent owner? The new owner didn’t create the house but the value of their house in the future will depend, at least in part, on how well they maintain it… not only the house itself but the neighborhood around it. Yes, there is gambling involved but the new owner’s actions as an owner can have real impacts on future value. It is the same for shareowners and companies.

Organizing around the pursuit of wealth can lead people to view others as competitors, instead of feeling empathy.  After their basic needs are met we turn to more important needs, such as efficacy, connectedness, autonomy and authenticity. I hope everyone gets there… especially CEOs, who too frequently measure their worth in dollars instead of contributions to their larger community.

As a quick aside: Why “generative,” with its basis in offspring or producing power? I’d rather see a “salubrious” economy, promoting health and welfare. Aren’t we already generative enough? Isn’t our generative economy filling up the seas and skies with garbage.

Building an economy that works for all is a huge job. It will take shining examples of cooperatives, of companies like Novo Nordisk, controlled by a foundation with a noble task, and many more. Kelly’s effort to document an emerging generative economy should be hailed.  However, it will also take shareowners struggling for democratic forms of corporate governance from within. This is a battle for hearts and minds that will be fought on many fronts.

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