Burgess COMMENTARY

Peter Burgess

INTRODUCTION Economic inefficiencies (including those responsible for the recent global financial crisis) can be avoided if corporations could deliberately pursue measurable, non-monetary value. These fundamentally different corporations would be more successful in every way by being better able to capture what consumers and investors really value. The next stage of sensible capitalism is deliberate business: our full proposal on the matter is avaible for download, and highlights of the idea are outlined below. Open PDF ... A Proposal for The Deliberate Corporation by Deliberate Economics THE DELIBERATE CORPORATION Legislative Specifics Deliberate Economics is lobbying for a new corporate form where the share capital arrangement is specified around a clearly articulated corporate purpose. This new kind of corporation – which can be called a “Specified Share Capital Corporation” or SSCC, will be like a regular share capital corporation in every way save for the following unique, essential characteristics: A. The payment of dividends to shareholders will be specified: A.1. The payment of dividends will depend upon the achievement of an extra-monetary corporate purpose determined during the formation of the corporation. This corporate purpose must be clearly outlined in the corporation’s objects, but does not have to be of any particular moral or “social” character. An example of an SSCC’s corporate purpose can be observed in Mountain Lion Agriculture SL Ltd., one of Deliberate Economics’ members, which is trying “To profit by helping smallholder farmers in Sierra Leone grow in a sustainable way.” A.2. A SSCC must also identify in its objects of incorporation and Unanimous Shareholder Agreement a set of corporate goals which constitute the necessary, quantifiable conditions of success for its corporate purpose. These corporate goals may change throughout the life of the corporation through changes to its Unanimous Shareholder Agreement, but the corporate purpose may not. A.3. If the corporation’s purpose and corporate goals are not being achieved, then the corporation will be required to re- capitalize itself in their pursuit with any profits accumulated rather than paying out as dividends. If the corporation’s purpose and corporate goals are being achieved then the SSCC can pay out dividends just as a normal share capital corporation would. B. A SSCC must publish an annual report, to be approved at its AGM, which quantifies and explains all achievements and failures relating to its purpose and associated goals. C. In order to ensure compliance with legislation, the SSCC must be required to produce audited financial statements once revenues exceed $500,000. D. Additionally, a more intensive forensic audit of operations (which can examine non-financial assets and activities of the corporation, and thereby verify accounts of the corporation’s purpose and goals will be required if dividends are to be paid out to shareholders. SNAPSHOT - DELIBERATE BUSINESS At the moment, members of our group own a company in Sierra Leone that has been built around the value of food security held by our investors, board and local community. This company has gained international attention for its efforts to pursue food security in Sierra Leone, West Africa in a way that deliberately benefits farmers and consumers. The owners could make more money in the short-term if rice produced was then exported, yet the company was founded to get more rice to local people who badly need it. Our obligation to maximize shareholders’ monetary value, as a share capital corporation, is putting pressure on the owners to consider exporting in spite of what they primarily value. For more info please visit www.mlbr.org . SNAPSHOT - DELIBERATE LIVING Some of the benefits of deliberate economics have been chronicled in The Oasis Project developed by Dr. Alex Zieba. In his own words: I had a lot of reasons for engaging in the OASIS project. I was working on my Ph.D. and found that I needed experience, rather than more arguments, to answer questions about work in terms of the relationship between what we do and what we get in return. I could not argue in favour of the Deliberate Life. I was aware of my peers settling down and I wanted roots, and in my family background that always meant a farm of my own. Like everyone, I had need for at least some cash, food, fuel, housing, exercise and friendship. I resolved to live as a homesteader in the middle of a modern economy, using cash for as few needs as possible. There is no other way to pay your taxes or insurance. But to grow food, build housing, cut fuel, carry water…satisfy my own need for exercise…these I could do. I first built a greenhouse from used windows and used wood (i.e., “garbage” other people threw away), in which I lived in for four springs, while running the farm and finally building the house. I borrowed $27, 000 for material to build the house, which left me with a $152.00/month mortgage payment, and less than $1000 a year in taxes. It meant that, even though I only generated $12,000 to $15,000 a year selling vegetables and working as a handyman (using skills and tools from the farm), my cash expenses were few enough that I could use $6000 of it on improvements or the mortgage. By contrast, if I had been working at the U of T as a professor during those same years, making a $50,000 salary, it is unlikely that I would have enjoyed home ownership, organic diet, as much free time, and still have been able to save $6000 a year (since I would have had to live in Toronto…). All-in, I invested about $85,000 in the OASIS project, most of it obtained from the project itself as sweat equity. I lived in this house for 9 years, with no electric bill or water bill or gym bill, enjoying the food produced from the local soil. When it came time to call the project over, I sold it for $130, 000 and still hold the mortgage on the property. It remains an important example of how the deliberate pursuit of value can make better economic sense – even in the context of a modern 21st century economy.