Burn-Ring Funding Model
This is a copy/paste from http://ImputedProduction.BlogSpot.com/2011/09/burn-ring-funding-model.html
I am the author of that piece, but wanted to move it here to work-it-over and simplify it.
Please take a shot at it, I can always put back anything you change. :)
Let's fight a little and see if we can get this right! Come on, take a chance, make a change.
Maybe chop it up and rearrange things, put it in an order that makes sense to you.
Rewrite sections that sound weird to you - that you think would be better phrased another way.
Once this model is close enough to correct, we can buy the Land and Tools to begin!
In some places we won't even pay property taxes if we qualify as a non-profit.
- Potential users pre-pay to fund the purchase
of land and capital to form a Vertically Integrated, Permaculture Mosaic (VIPM).
- The VIPM is a set of carefully chosen plants, animals
and tools required to create the solutions needed by all of those workers such as food/drugs, shelter, cloth, soap, sanitation, health care, dental, eyes, etc.
- If a payer has skills needed by the VIPM, they can
contract to work somewhere within the VIPM in exchange for the VIPM supplying them with Products they need.
- Those workers receive co-Ownership in the VIPM in a
form we call "Use Shares" which are similar to full co- Ownership, but with some initial limitations on selling or renting those Tools or Products.
- Use Shares are used by the holder to prove that he has the
right to use the Tools (limited by schedule) or consume some of the Products (limited by % of holdings within that Unit) of any restaurant, apartment, bus, hospital, etc. operating within the VIPM.
- The workers do not buy products from the investors, but Own
those products already because of their Use Shares in the VIPM awarded for commitments to Work or from commitments of Land or Capital.
- After some amount of time, or after some series of events
the Use Shares should vest more fully to the payer to allow for selling and/or renting of those Sources or the Products of those Sources.
- Initial stages of development might have some workers living
in mobile homes and eating food the VIPM bought in bulk.
- Later, after the agriculture is installed and producing, the
system will become "self hosted", being able to operate without requiring any external inputs.
- Soon afterward, the system will be producing surplus that can
be sold to outsiders to collect Profit.
- If Venture Capitalists helped fund the operation, part of the
Profit will be used as their ROI.
- We may want to distribute part of the Profit to the Workers,
since that is a popular thing to do.
- We may we to distribute part of the Profit to random charities,
since that is a popular thing to do.
- But we MUST handle some non-zero % of the Profits as though
that overpayment were an investment from the payer.
- We should charge Profit during those sales, for if we don't
collect the Profit, a middle-man will buy all that we offer at Cost, and then resell it for a Profit anyway...
- So we will charge Profit against the Payer, but we will also
treat (at least part of) that magic value as Payer Investment.
- This causes these late-coming users to slowly gain Ownership
and therefore to eventually stop buying that product too.
- Similar to how the GNU GPL enforces Copyleft through Copyright,
we propose to create a PropertyLeft document enforced through Property Rights used to apply this requirement to the VIPM.
- This social contract can be applied by co-Owners of any
material assets to insure freedom for all users.
- Notice this is also a literal form of Insurance.
- These users must cover all the real cost of production
just as any Owners do, but they do not buy the product since they Own it already - and they don't sell the product because they need to use it directly.
- The product is not traded unless there is surplus, and
in that case the Payer must cover all the Costs of that production so the Owner of Sources can be compensated for paying when they didn't need to...
- The Payer will usually also pay Profit, according to how
much the "market will bear". Some % of that overpayment must be treated as an investment from that payer so the growth of the VIPM is incrementally autodistributed to all those willing to pay for that growth.
- At some point, and under certain constraints, and mostly
to resolve disputes, subgroups must finally be allowed to fork from the rest while retaining property Ownership.
Ecologically, the system must be able to operate on it's Own, without external inputs.
This is done by the VIPM Owning the Physical Sources of all the Products being used. Another term for this is "Vertical Integration".
Initially no VIPM will be strictly closed-loop because we will just buy shovels instead of trying to mine Iron ore, etc.
Economically, the system must allow the users to create value for themselves without paying external entities.
This is done by helping the users gain real Ownership whenever they pay for that growth (usually when paying profit), and to retain that Ownership when paying costs (usually through work).
This can be imperfect as well, just so the payer receives *some* Ownership - for it is the Ownership in Sources that eliminates the need to buy Products. In computer terminology this is similar to the concepts of "predictive schedule", "pre-cache" or "pre-allocate" because the Product is not moved (sold) at the last moment, but is already the property of the entity that will use it.
Imagine a crowd-funded corporation where the only shareholders are the very Consumers of that product.
Their ROI for taking risk would be to avoid paying profit – since the Owner of an Apple tree does not *buy* the Apples from himself, but Owns those Objectives already, as a side-effect of his Owning the Sources.
There would no longer be “Vendor/Consumer” relations to worry about since the Vendor and Consumer would be one and the same!
The product would not be sold back to each investor-Consumer-Owner, but it is already their property according to the amount they invested – whether they invested with money or with labor.
The Owner of a milk cow does not buy the milk from himself, but Owns it already as a result of his Owning the cow.
A cooperative SELLS the product back to the Consumer-Owners – thereby collecting !profit! and coming under the scrutiny of government restrictions (for example it is illegal to sell raw milk in some part of the US).
In cases where an agent has invested more than he can use directly, he can sell that product to agents who do not yet have sufficient Ownership, but under the strict condition (enforced by a Terms of Operation over that organization) that any profit collected during that sale be treated as an investment from that payer – so the organization can grow in size while avoiding the troubles of centralization and overaccumulation that plague nearly every other endeavor that even begins to succeed.
There is no reason to worry about the workers – for that is who I am protecting, but am protecting their ability to consume instead of trying to prop-up wages and avoid automation.
Wishing the machines would just stop (as John Henry) will become less and less of an option as the robots are coming to take the work away – and we can be *happy* about that if we are working on the right side of the equation!
Furthermore, even without robots, wages and profit will approach zero as the Means of Production become cheaper, since there will be no way to stop willing workers from accessing those tools and thereby providing the solutions Consumers seek.
Workers can invest more than they are able to consume, but it won’t do them any good when the Consumers already have sufficient Ownership needed to protect themselves from workers who try to stop other peers from doing that work by blocking access to the Sources of Production.
Workers cannot protect wages through Ownership if other Consumers already have sufficient Ownership because propping wages requires the worker be able to STOP other potential workers from accessing the Sources of Production, and why would a group stop a peer from bidding to do a job – in some cases even for free (gratis).
Workers who invest and co-Own more of the Apple orchard than they are able to consume will not be able to prop-up wages because the other co-Owners will always have the option to do the work for themselves or to hire the lowest bidder.
When the Consumers around those workers have sufficient Ownership, they will not be buying the product from anyone, but will Own it already as a side-effect of their Owning the Sources of those Objectives.
You may be tempted to dismiss this as simply a Consumer Cooperative, but this is absolutely NOT a Consumer Cooperative.
1,) Consumer Cooperatives *sell* the product back to the co-Owners and collect a profit during that transaction that a committee then doles out in a Tyranny of the Majority fashion.
1a.) Imputed Production only sells product to non-Owners, and only when there is surplus, and treats that profit as an investment from that payer – causing Ownership and control to be automatically distributed at the point of sale back to the actor who was willing to pay for it. This system minimizes and nearly eliminates the trading of goods since the Owner of Sources does not buy the Objective, but Owns it already as a result of his Owning the Sources. The trading of goods will tend toward zero but does not reach stasis because of newcomers into the system (even just babies being born), and because people’s interests change across time.
2.) Consumer Cooperatives are “Democratically Controlled” with one-member/one-vote.
2a.) Imputed Production is far more autarchic- where any member can ‘fork’ his portion of the Sources and secede from the union or sell those shares if a split is attempted that is finer than reasonable divisibility (you can’t both feed a single milk-cow grain and NOT feed that cow grain, but can divide a herd).
2b.) Each member has exactly as much vote power as he has Ownership. If you Own 11% of a roto-tiller and your neighbor Owns 22%, then you have only half as much vote power in decisions such as “how often should we change the oil”.
3.) Every Consumer Cooperative I know of is only concerned with buying products that were made by Capitalists.
3a.) Imputed Production is primarily about Ownership and control of the entire tree of production – recursively, and works toward a Vertically Integrated Commons where we, the people, Own the farms and factories and land and water rights and all the other Sources and supporting Sources required to reproduce those things.
We don’t need to transform politicians, and do not have enough money to buy such changes anyway.
All we need to do is start businesses that are funded and Owned by Consumers and that treat Profit as payer investment.
Consumers *already* pay all the Costs of production. We, the Consumers, foot the entire bill. And we *also* pay Profit because we choose to pay late.
But if we could organize to pay early – to collectively purchase the Physical Sources of products and services we need – then, we would still need to pay all costs.
But since we would Own the objective as a side-effect of our Owning the Sources, we would not BUY from ourselves, and so COULD NOT pay Profit, for that final transaction would not even occur!
Profit is UNDEFINED when the Consumers are the Owners of the Means of Production.
Instead of taking a stance through property Ownership, we beg and plead the current Owners to "please do the right thing" – even though the current Owners have NO POSSIBLE CHANCE of doing the right thing, for they owe Investors who expect Price be kept above Cost.
And Price can only be kept above Cost (Profit only occurs) during Scarcity.
So we see the drive for Scarcity is caused by choosing investors who expect Profit as a return.
The drive for Scarcity can be eliminated by choosing investors who expect Product as a return.
But only Consumers can use Product as a return.
So the answer is to attract Consumers to pre-pay for Product – while using those pre-payments as actual investments which are then property co-Owned by those Consumers who benefit from the use-value of that production, and never need strive for Scarcity, for the product will usually never be sold.
In the case where a Consumer-Owner has too much product: the solution is to sell that product to non-Owners, and even to charge Price above Cost (Profit) against those late comers *BUT* – here is the trick – the Profit received must be treated as though that Consumer had just made an investment toward even more Physical Sources.
Treating Profit as that payer’s investment will allow the collective to include others while simultaneously avoiding the typical problems of overaccumulation and excessive concentration of control that cause even the most well-intentioned organizations to finally fail to meet the needs of those they were initially formed to serve (the Consumers of course!).
This is somewhat like a “short circuit” across the typical market.
Where the Consumers do not buy the finished goods, but Own them already – even before they are completed – as a side-effect of their Ownership in the Physical Sources of those goods.
If you Own an Apple tree, you do not *buy* the apples from yourself.
If you and your neighbor co-Own an Apple, you need not *buy* the apples from your collective ‘self’.
If you 999 other people co-Own an Apple orchard, you need not *buy* the apples from your collective ‘self’.
This has other benefits such as:
1.) Since the product is not sold, there is no chance for the government to collect sales tax.
2.) Since the product is not sold, there is no chance for the government to disallow that production (buying raw milk is illegal in many parts of the US).