THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Thursday, July 23, 2009

On Usury and Other Dishonest Profit, Part XXXV

From the common list of "reasons" we hear why widespread direct ownership of the means of production "can't work" is because workers and other ordinary citizens can't handle the responsibility, can't handle the risk, can't handle the handle, and so on. The one thing that all of these objections have in common is that they typically come from people who are not workers or other real people, but are usually capitalists, academics, and politicians (or their hangers-on).

The answer to these and other objections can be found in an approach to corporate governance CESJ developed called "Justice-Based Management," or "JBM." This was previously called "Value-Based Management," but that term became associated with programs intended to maximize share values, a distantly-related but not entirely congruent approach that ignores the necessity of worker and citizen ownership. What follows is taken in large measure from "What is Justice-Based Management?" on the CESJ website.

Justice-Based Management (JBM) is a leadership philosophy and management system that applies universal principles of economic and social justice within business organizations. The ultimate purpose of JBM is to create and sustain ownership cultures that enhance the dignity and development of every member of the company, and to economically empower each person as an owner and worker.

JBM promotes a company's long-term profitability within the global marketplace by enabling all worker-owners to serve and provide higher value to the customer. JBM connects every worker's self-interest to the bottom-line and long-term success of the company.

The JBM process builds upon a written articulation of the philosophy and principles of the company's leader (typically the CEO or chairman of the board) and leadership core group, in terms of universal principles and core values of the company. JBM proceeds in stages to build a consensus upon these fundamental shared values and vision of the company within each work area of the company.

These articulated values provide the foundation for enhancing the productiveness of workers and company profitability, and include such structures as employee-monitored economic incentive programs, participation and governance structures, two-way communications and accountability systems, conflict management systems and future planning and renewal programs.

One of the main components of JBM is the "empowerment ESOP." While the Employee Stock Ownership Plan (ESOP) was originally invented as a means for providing working people with access to capital credit to become owners of corporate equity, most ESOPs are set up as just another employee benefit plan or tax gimmick, or as an employee share accumulation plan ("ESAP"). Most ESOPs today are not designed to treat worker-owners as first-class shareholders. The "empowerment ESOP," on the other hand, is designed to encourage workers to assume the responsibilities and risks, as well as the full rights, rewards and powers, of co-ownership.

Furthermore, all academic and government studies to date have concluded that ESOPs alone are not enough to affect individual and corporate performance. Within a JBM system, in combination with a regular gain-sharing program tied to bottom-line profits, and structured systems of participatory management, the empowerment ESOP stimulates everyone in the company to think and act like entrepreneurs and owners.

Justice-Based Management offers an ethical framework for succeeding in business. JBM balances moral values (treating people with fairness and dignity) with material value (increasing a company's productiveness and profits while enriching all members of a productive enterprise). JBM's three basic operating principles are:
1. Build the organization on shared ethical values — starting with respect for the dignity and worth of each person (employee, customer and supplier) — that promote the development and empowerment of every member of the group.

2. Succeed in the marketplace by delivering maximum value (higher quality at lower prices) to the customer.

3. Reward people commensurate with the value they contribute to the company — as individuals and as a team.
Justice-Based Management is guided by the concept of social justice, as articulated by the late social philosopher William Ferree, S.M., Ph.D., and summarized in Introduction to Social Justice. Social justice involves the structuring of social organizations or institutions (including business corporations) to promote and develop the full potential of every member.

JBM also embeds within an ownership culture the three principles of economic justice defined by the late lawyer-economist Louis Kelso and philosopher Mortimer Adler:
1) "participative justice," or the right to the means and opportunity to participate in the economic process as an owner as well as a worker;

2) "distributive justice," or the right to the full, market-determined stream of income from one's labor and capital contributions; and

3) "harmony" (or social justice), or the right and responsibility of each person to work in an organized way with others to correct the "social order" or institution when the principles of participative or distributive justice are being violated or blocked.
Within JBM the principles of social and economic justice provide a logical framework for defining "fairness" and structuring the diffusion of power within the corporation.
Structuring Ownership Participation

JBM is designed to systematize and institutionalize shared rights, responsibilities, risks and rewards within all company operational and governance structures involving:
• Corporate values and vision

• Leadership development and succession

• Corporate governance and future planning

• Operations (policies and procedures) and hardship sharing policies

• Communications and information sharing

• Training and education

• Pay and rewards

• Grievances and adjudication
A well-designed Justice-Based Management system sharpens and crystallizes the leader's philosophy around "universal" principles, providing a solid foundation for a corporate culture that enables people to internalize these guiding principles. JBM generates organizational synergy by connecting each worker-owner to the financial tools of ownership (i.e., ESOP and profit sharing), participative management systems, and a defined share of power in the governance of the organization. This in turn enables people to make better decisions, discipline their own behavior, and work together more effectively and cooperatively — because it is truly in their self-interest to do so.

Ultimately, no matter what your reasons (or lack thereof) for wanting a just economy, the only way to remove usury as a dominant force in a modern economy — or any economy, for that matter — is 1) to base economic activity solidly on the application of sound principles of the natural law, and 2) eliminate the myth that the only way to finance capital formation is through existing accumulations of savings from your thinking.