Talk:Creating Sustainable Societies

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* Book: Creating Sustainable Societies. The Rebirth of Democracy and Local Economies. John Boik. CreateSpace, 2012.

URL = http://www.CreatingSustainableSocieties.com

Description

"the Principled Societies concept outlined in the book offers a new "operating system" for society. It is a blueprint for sustainable financial, economic, and governance systems, intended for local implementation. Among the many characteristics, it offers a new funding approach to raise donations for nonprofits, schools, and even local governments. And it offers a funding system to raise capital for a new generation of socially responsible corporations."

Wolfgang HoescheleL

"If we are to attain social and environmental sustainability, and an economy that fosters trust and cooperation, we need new approaches. This book provides reasoned proposals that synthesize aspects of social entrepreneurship, peer-to-peer practices, participatory governance, and solidarity economics. Its models for building new institutions for sustainability deserve to be read and widely discussed."

Excerpts

Foreword by Bernard Lietaer:

"In a now-famous letter to James Madison in 1787, Thomas Jefferson mused on various types of societies and concluded that a government “wherein the will of everyone has a just influence” provides the greatest liberty and happiness.1 But, he warned, like societies with no governance and those under tyrants, “It has its evils, too: the principal of which is the turbulence to which it is subject.”

Jefferson was alluding to a rebellion in Massachusetts in support of RevolutionaryWar veterans who had not yet received military pay but were being sent to debtors’ prisons for unpaid taxes. Such rebellions, he claimed, were the price of freedom. “Even this evil is productive of good. It prevents the degeneracy of government, and nourishes a general attention to the public affairs. I hold that a little rebellion now and then is a good thing and as necessary to the political world as storms in the physical,” he wrote. “It is a medicine necessary for the sound health of government.”

Creating Sustainable Societies proposes a blueprint, not for rebellion, but for revolution—a revolution of ideas that could result in sound governance and financial and ecological sustainability. The book describes a systemic “medicine” and offers a plan for organizing and coordinating action to bring about improvement in our communities. This is compassion in action, not violence, and the entire legal framework for undertaking this “revolution” already exists. It does not rely on or even call for the passage of new laws.

I have spent the past 30 years studying monetary systems, both conventional and innovative. During this time, I have written more than a dozen books, have spoken to thousands of audiences around the world, and have taught in half a dozen universities in the United States and Europe. Everywhere, I find dissatisfaction and hunger for a breakthrough to another way of working, of cooperating, of contributing. People are eager for change and are awake to the need for change, even if most public officials, constrained by politics or timidity, appear incapable of rising to the challenges of our time.

In distilling the results of my investigations, I arrived at the sad conclusion that the missing piece in all our monetary arrangements is appropriate governance. This is true for both the official money system (the Federal Reserve and all other central banks in the world) and innovative systems of complementary currencies. This missing piece is what John Boik brings to the table. At first glance, his proposal might appear to center on a complementary currency system, but more accurately it centers on appropriate governance. On the one hand, it proposes a means for collaborative direct democracy as applied to finance, corporate behavior, and social organization: the “Principled Society.” On the other, the very mechanics of the proposed monetary and corporate model, including its transparency, are a manifestation of democratic ideals.

Money is what most economists call a common good, i.e., a good that people cannot be excluded from using. It falls into the same category as clean air and fresh water. The modern world hasn’t been very good at dealing with common goods. They have tended either to be privatized or left to take care of themselves.

Both approaches leave common goods vulnerable to exploitation. In the case of money, how the dollar is managed, whether well or poorly, affects all Americans. And because the dollar is used as a global currency reserve, its management affects nearly all the world.

Boik’s proposal for applying democratic decision making to a well-designed complementary currency system and innovative corporate model is therefore an important and useful contribution. His proposal distributes decision-making power, as well as responsibility, to all individuals who participate. It strives to demonstrate a financial system that is not only transparent and well managed, but managed in such a way as to consciously celebrate money as the “common good” that it is.

One beauty of this proposal is that the complementary currency system could strengthen the larger U.S. dollar economy on which we all depend. As just one example, it provides an investment system that rewards businesses for respecting basic human, ecological, and community values. Although such respect is necessary for social and financial stability, our current investment system all too often rewards the opposite.

The token currency Boik proposes would be an excellent fit for the kind of “monetary ecology” I describe in Money and Sustainability: The Missing Link.2 A monetary ecology can help us meet the challenges converging upon us in this first half of the 21st century. Just as a natural forest contains a diversity of fauna and flora adapted to specific niches and scales, a monetary ecology contains currencies adapted to different needs, locations, and scales.

Diversity within an ecosystem makes it more robust, more resilient to shocks and changes in environmental conditions. Diversity within monetary systems could do the same. In fact, in any complex flow network, a minimum of diversity is needed to make it sustainable over time. The theories and facts of our recurrent monetary and financial crises compel us to leave behind the paradigm of an artificially enforced national currency monopoly and promote instead a diverse monetary ecology. This is not a threat to national currencies; it is their savior.

I dare to compare parts of this book with Plato’s Republic, updated for the age of the Internet. It inspires us to use modern technology as a tool for examining the meaning and value of justice, as we engage in decision-making tasks and bring a more sustainable world to life. Its significant achievement already is the portrayal of a plausible positive breakthrough from the crisis of hope in which we are now immersed. I am wishing the book great success, if only for the better world that implementation of its solutions would create.

I am convinced that the ideas in this book are implementable. But whether or not these proposals will actually be developed further and made manifest is an open question. If you, the reader, get involved, offer support, provide skills, and spread the word, implementation is all the more likely. It is my belief that once this project gains traction, it could unleash unprecedented creativity in multiple communities and domains."

Creating a locally-driven Principled Society

John Boik:

"The central strategy examined in this book is to implement new financial, economic, and governance systems at the local level, managed through an online software application. The application would facilitate, for example, business and financial transactions, and rule-making and other aspects of self-governance.

It would be the world’s first comprehensive Internet project aimed at a fundamental transformation of society. Think of it as components of Facebook, Kiva, Quicken, RocketHub, Kick- Starter, LendingClub, MindTools, Groupon, LinkedIn, and more, all integrated into a single application developed and managed by users. Its purpose is to stimulate local economies, demonstrate direct democracy, and maximize the common good. In short, it is the maturing of social media into a powerful, usercreated, agent of change.

The code for this application would be developed by the opensource community, and as such would be a publicly shared resource. Programmers, writers, graphic designers, and other volunteers nationwide and beyond would be invited to partici- pate in its development. Although the development project itself would occur nationally, the actual implementations would occur at the local level. Once the code is available and thoroughly tested, perhaps via large game simulations, people in each metro region would be encouraged to form a Principled Society—a special type of corporation that would demonstrate the new systems and manage the local software application.

As envisioned, a Principled Society is a membership organization. Other well-known membership organizations include AARP, the National Organization for Women, and your local Chamber of Commerce. Unlike these, however, a Principled Society is not a nonprofit. Nor is it a profit-maximizing corporation. It is a socially responsible corporation that is a blend of both. Like a nonprofit, it seeks to maximize the public good. Like a for-profit, it does not rely on charity for funding its ongoing operations and expansion. A Principled Society is managed by its members through collaborative direct democracy. As such, a Principled Society is its members. It is an association of people who choose to cooperate.

Quite likely, only a small percentage of the population in a given metro area will decide to become members of a Society, but that is not a problem. In fact, it is an advantage. Demonstrating new financial, economic, and governance systems would be easier in a small subset of the population. The target is to achieve a participation rate of 10 percent. This would be enough to produce substantial economic impacts and provide a solid test of the new systems.

While successful demonstration of new systems in a small subset is not by itself sufficient to transform society as a whole, it is a crucial and dramatic first step. Thus, this book is concerned with Phase I—getting Principled Societies up and running. If all goes well, over time Phase I will naturally turn into Phase II— wider implementation of the new systems and a more complete transformation."

Framework of a Principled Society

"A Principled Society is envisioned as a local entity, but its core elements would be designed to overcome several major weaknesses seen at the national level. In this way, Principled Societies would be extensible to wider implementation in the future. The proposed framework consists of three core elements:

1. A new type of local currency system, called a Token Exchange System. Tokens are an electronic form of currency that circulates within a Society, in conjunction with the dollar. They are used by businesses and individuals to purchase goods and services, as well as fund local development and community services.

2. A new type of socially responsible corporation, called a Principled Business. A Principled Business is a cross between a nonprofit and a for-profit corporation. Like a nonprofit, it fulfills a social mission. Like a for-profit, it is self-sustaining and does not rely on donations. Principled Businesses compete with one another for interestfree loans offered by a Society. They coexist alongside standard businesses.

3. A new type of governance system based on collaborative direct democracy, called a Collaborative Governance System. Members collaborate in the creative problem-solving process of developing new rules. In a Principled Society, members are the legislature. For efficiency, councils would execute day-to-day operations and make minor decisions. Major issues would be decided by the entire membership in a user-friendly, efficient, online process.

The Internet application that would act as the infrastructure for a Principled Society is both practical and technologically achievable. It could be developed as a no-frills initial version perhaps with three to ten years of effort, given adequate funding and community interest. Each year thereafter, further enhancements could follow. From the beginning, the effort will be organic, and hopefully involve many thousands as momentum grows. Each interested person can contribute in small or large ways to move the project forward.

Although this book proposes a blueprint for new financial, economic, and governance systems, that blueprint is only a rough draft. Many questions are left unanswered. It is intended as a basis for further discussion and refinement. The bulk of development will fall to the wider community. Especially it will fall to potential users, including interested lay persons, programmers, and business and community leaders. Academic experts from fields as diverse as computer science, political science, statistics, sociology, law, ecology, business, psychology, and linguistics will be encouraged to play a central role. As the software is tested and Principled Societies are developed, academics will be encouraged to play a continuing role."

Principles

John Boik, in: Creating Sustainable Societies:

Principle 1: A Principled Society seeks to increase the shared wealth of its members, as well as the shared wealth of the greater community.

Principle 2: A Principled Society’s financial and governance systems are radically transparent.

Principle 3: A Principled Society effectively distributes political power among all its members.

Principle 4: A Principled Society does not create its complementary currency through bank debt.

Principle 5: In a Principled Society, interest is not charged on complementary currency loans, and investment occurs in a profit-neutral fashion.

Principle 6: A Principled Society manages its complementary currency system so as to attain a democratically determined wealth distribution target.

The Token Exchange System

John Boik:

"the Token Exchange System, the first core element of the Principled Societies framework. This finance system has its own currency, called tokens, which circulate within a metro region. Tokens are used as a complement to the dollar, not as an alternative. The token system provides a structured means to stimulate local business investment, fund social services, and give a community more control over its destiny. The new currency is, in a real sense, a manifestation of a community’s faith in itself and its desires for a better world.

...

The Token Exchange System is different from other existing or historical complementary currency systems. It is electronic (unlike BerkShares or Ithaca HOURS); it is centrally managed (unlike bitcoin); it employs demurrage (unlike all of the above); and it is not based on labor hours (like Time Bank). And unlike all others, it is fully integrated into the economic and governance systems of a Society. For example, distribution of wealth, funding of community nonprofits, promotion of business investment, and democratic decision making are all integrated into the currency system itself. As well, it employs a wide spectrum of motivational factors to achieve cooperation and other types of pro-social behavior among users. Lastly, it is designed for scalability; there is no limit to the size of community that a token system could serve."

The Principled Business Model

John Boik:

"The second core element in the Principled Societies framework is the Principled Businesses model. A Principled Business is a type of socially responsible entity that members of a Principled Society create and fund. Not every business that a Society creates or funds will be a Principled Business; many will be standard corporations, partnerships, and sole proprietorships. The Principled Business model is designed to appeal to those entrepreneurs and groups who might otherwise desire to start a nonprofit, but who also want to own their business and compete in the marketplace for self-sustaining revenues. The Principled Business model is a cross between, and offers the best of, the nonprofit and for-profit models.

A true partnership exists between members of a Society, who benefit from the activity of Principled Businesses, and the businesses themselves, which rely on member support and loyalty.

It is an ongoing interaction that requires communication and goodwill. The task is to design the model so that expectations are clear, activities can be verified, goals are shared, penalties are understood, and healthy relationships are fostered."

...

As with the term “Principled Society”, the term “Principled Business” is not intended to imply that other forms of organization are unprincipled. Rather, it refers to a specific type of business that meets the following criteria:

1. The actions of a Principled Business are consistent with its social mission.

2. A Principled Business is designed to attain financial and economic sustainability.

3. Investors do not profit from a Principled Business.

4. Revenues are used in accordance with the submitted business plan.

5. The firm adheres to basic environmental stewardship practices, as demonstrated through certification with an approved third party.

6. The firm operates in a transparent fashion. Financial data that 501(c)3 nonprofits and publicly traded corporations must disclose are made public. In addition, funding sources and statistics on the distribution of compensation are revealed. Measurements of externalized costs and social and environmental impact are disclosed, where these can be practically and economically obtained.

7. The firm adheres to a conflict-of-interest policy. Board members having financial or familial conflicts of interest must recuse themselves from decisions where such a conflict exists.

8. Upon dissolution and after payment of creditors, the firm must transfer any remaining assets to nonprofit charities or to Principled Businesses in which no board member has a conflict of interest. Determinations made by a bankruptcy court take precedence. Further, Principled Businesses cannot be sold or given to an entity that is not a Principled Business.

9. The firm cannot fund other businesses that are not Principled Businesses. It can wholly purchase other business, as long as the combined entity continues to act as a Principled Business."

The Collaborative Governance System

John Boik:

"The third and last core element in the Principled Societies framework is the Collaborative Governance System. Its purpose is to foster a form of democratic self-governance that involves all members of a Society in the creative, collaborative problemsolving process. The proposal is bold. It is among the first to incorporate online mass collaboration into a self-governance process.

There are two primary reasons why a Principled Society would want to engage its full membership in decision making. First, the strength and vitality of a Society derives from its cohesiveness— the degree to which members want to be members. A Society is a corporation that sells a product. That product is a better community, greater economic security, heightened political empowerment, and other aspects of increased shared wealth. If it delivers these, it will achieve a loyal and spirited following. But it can’t do this if it limits decision-making power to a small minority.

The second reason to engage the full membership is that every individual can be a source of creativity and wisdom. A Society can tap the experience, skills, and ideas of all its members when it tries to solve a problem. The modern term for this is crowdsolving. Netflix famously used crowdsolving in 2009 to improve the algorithm by which it predicts the movies a particular customer might enjoy. Rather than hire engineers and statisticians, the company set up a website, posted a huge data set of movie and subscriber information, and offered $1 million to anyone who could improve its algorithm by 10 percent. Groups from around the world entered. For Netflix, the price of the prize was small compared to the value of the product it received.

Of course, a group of people can also act as a destructive, shortsighted, and even irrational mob. But that alone is not a valid reason to limit direct democracy. Political representatives too can act in these ways. And so can business leaders. Our world would be a different place if this were not true. The task of a Principled Society is to create transparent, intelligent, sustainable, stable, and fair systems for self-governance and economic and financial activity, and to combine these with healthy cultural norms, an embrace of science, and an educated membership. Under these conditions, we can expect humans to be at their best."

More Information

• Wealthiness
• Local Currencies