New Economy Ownership and Wealth Management Transition Strategies

New Economy Ownership and Wealth Management Transition Strategies
 
Monday, February 10, 3:00-5:00pm ET (12-2pm PT)
At the Institute for Policy Studies
1112 16th St NW, Suite 600 (at 16th and L St NW)
(See below for instructions on how to RSVP)

This New Economy Transition session will explore practical strategies for advancing a transition from a system of ownership that concentrates wealth and uses the powers of ownership to expropriate community wealth to a system of distributed ownership democratically accountable to people who have a direct stack in the wellbeing of their communities and the creation of real community wealth. We will give particular attention to strategies by which labor unions, pension funds, or others might organize, fund, and execute leveraged corporate buy-outs using the methods of private equity and convert the purchased companies to community rooted worker cooperative ownership.

A recent Oxfam study reports that the total assets owned by the world’s richest 85 people equal the assets owned by the world’s poorest 3.5 billion people. This unconscionable and untenable gap continues to grow. Furthermore, much of this concentrated wealth is managed by or through institutions that by their design strip decisions relating to the use of these assets of any semblance of conscience and long-term perspective. So long as this system remains in place, there is no possibility that humanity will achieve the ecological balance, shared prosperity, and deep democracy essential to future human viability and prosperity.
A dramatic redistribution of ownership and a restructuring of the institutions of wealth management to align resource allocation decisions with the interests of living people, communities, and nature is essential to a healthy and prosperous human future. Sorting out how to accomplish a transition from the system we have to the system we need is a defining—and so far largely unaddressed—question for our time.
We hope during this session to identify and explore a number of potential mechanisms/strategies to achieve a redistribution of ownership appropriate to a democratic middle class society.
We note that the market economy that Adam Smith idealized was comprised of one-person enterprises in which the owner is also both worker and manager. Modern economies require larger-scale enterprises then Smith envisioned as his ideal. The closest practical equivalent for our time would likely involve some form of employee or cooperative ownership that meld together owner, worker, and manager roles.
One suggestion we will consider is the possibility that labor unions might work with or through appropriate financial institutions to organize leveraged corporate buyouts of selected publicly traded corporations to convert them to cooperative worker ownership. The Mondragon Cooperatives offer one attractive model.
Labor unions stand out as natural candidates to provide leadership in advancing the transition to a more democratic system of wealth distribution and management. They have a well-organized constituency with a compelling interest in advancing this conversion. Furthermore, the conversion is most likely to succeed in corporations in which workers are already organized. Unions also have potential access to their own pension funds that are in most instances invested in corporations dedicated to serving purely financial interests at odds with the interests of workers, communities, and the environment. Unions also have experience managing large health insurance and retirement programs that worker owners will need.
Conventional private equity funds have demonstrated successful strategies to buy out corporations to make a quick unearned financial profit by stripping assets, outsourcing jobs, and raiding pension funds—all in direct violation of worker interests. We will explore the premise that working people might use these tools of the master to achieve their own self-liberation.
The following are among the questions that will be on the table for discussion:
  1. What forms of ownership best support a transition to ecological balance, shared prosperity, and deep democracy?
  2. To what extent is there interest among unions, pension funds, responsible investment funds, and other relevant groups in such issues?
  3. How do worker cooperative ownership and ESOP models differ and what are relevant lessons from experience with both?
  4. How might a union create or ally with a private equity fund with a mission to purchase and convert major publicly traded corporations to worker cooperative ownership?
  5. How might such leveraged buyouts be structured and funded? What sources of funding might be available—including pension funds, responsible investment funds, cooperative banks, and others?
  6. Would success require the cooperation of the management of the target corporation and is such cooperation a realistic possibility?
  7. Once an acquisition is completed, by what process might ownership shares transfer to workers?
  8. What would be the most critical risks and barriers? How might these be addressed?
  9. What are relevant lessons from Mondragon and other successful large-scale worker cooperative ownership models?
  10. What are other potential approaches to implementing a system of ownership consistent with a viable human future?
  11. What might be avenues for engaging broader public discussion of these issues, their implications, and potential initiatives?
 

The session will be chaired by John Cavanagh, Institute for Policy Studies director and New Economy Working Group co-chair.

Conversation starter panelists (5-7 minutes each) will be:
David Korten, New Economy Working Group co-chair: A quick overview frame of the topic and key issues. (3 Minutes)
Michael Peck, U.S. representative of the Mondragon Cooperatives: The possibilities and relevant lessons from Mondragon and related initiatives.
Leo Gerard, president, United Steel Workers: A union perspective on the vision, possibilities and lessons from previous initiatives.
Steve Sleigh, CEO of the International Association of Machinists and Aerospace Workers $9.2 billion pension fund: Discussion of the possibilities from a union pension fund perspective.
Tom Croft, CEO, Heartland Capital Strategies [Depending on the resolution of a scheduling conflict] or another experienced representative from the responsible investment community. Relevant experience and potential funding sources, risks, and strategies.
 
How to RSVP for the Meeting
We are providing three (3) options for joining the meeting: 1) in person, 2) teleconference, and 3) webinar. Please follow the instructions below if you are participating:
  • In Person please RSVP to Noel Ortega at noel@ips-dc.org by writing an email with the subject line “RSVP for Feb 10 in person” Event location: Institute for Policy Studies, 1112 16th St. NW, Suite 600, Washington D.C. (16th and L)
  • Teleconference please RSVP to Noel Ortega at noel@ips-dc.org by writing an email with the subject line “RSVP for Feb 10 via phone.” Then dial:
    • Dial +1 (510) 443-0605
    • Access Code: 601-115-813
    • Audio PIN: Shown after joining the meeting
    • Meeting ID: 601-115-813
  • Webinar please RSVP to Noel Ortega at noel@ips-dc.org by writing an email with the subject line “RSVP for Feb 10 via webinar.” Then follow these instructions:

Sincerely,
Gar Alperovitz, Sarah Anderson, John Cavanagh, Nicola Chin, Chuck Collins, Kat Gjovik, David and Fran Korten, Bob Massie, Stacy Mitchell, Noel Ortega, Gus Speth and Sara van Gelder

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