NOTES

Prologue

1. Gar Alperovitz, Thad Williamson, and Ted Howard, “The Cleveland Model,” Nation, March 1, 2010, www.thenation.com/article/cleveland-model.

2. David MacLeod, “Blowing in the wind,” Alternatives Journal, Winter 2004, http://findarticles.com/p/articles/mi_hb6685/is_1_30/ai_n29093635/.

3. Conventional homeowners were ten times more likely to be in foreclosure than CLT homeowners at the end of 2010 (4.63 percent in the conventional market versus 0.46 percent among CLT homeowners). Emily Thaden, “Stable Home Ownership in a Turbulent Economy,” the Housing Fund and Vanderbilt University, www.lincolninst.edu/pubs/1936_Stable-Home-Ownership-in-a-Turbulent-Economy.

4. B Lab, “B Corp Legislation,” www.bcorporation.net/publicpolicy.

5. Matthew Brown, Associated Press, “Climate Activists Target States With Lawsuits,” May 4, 2011, http://abcnews.go.com/Business/wireStory?id=13524147.

6. Medard Gabel and Henry Bruner, Global Inc.: An Atlas of the Multinational Corporation (New York: New Press, 2003), 2–8, 31. The overwhelming majority of those companies are publicly traded.

7. Jeffrey Birnbaum, “The Road to Riches Is Called K Street,” Washington Post, June 22, 2005.

8. Corporation 20/20, www.Corporation2020.org.

9. See Marjorie Kelly and Shanna Ratner, Keeping Wealth Local: Shared Ownership and Wealth Control for Rural Communities, Tellus Institute and Yellow Wood Associates, November 2009, supported by the Ford Foundation’s Wealth Creation in Rural Communities—Building Sustainable Livelihoods Initiative, www.yellowwood.org/Keeping%20Wealth%20Local.pdf. For more on this project, see www.CreatingRuralWealth.org.

10. John Tozzi, “America’s Most Promising Social Entrepreneurs 2011,” Business Week, June 22, 2011, www.businessweek.com/smallbiz/content/jun2011/sb20110621_158462.htm.

11. Social Investment Forum Foundation 2010 study, Center for Social Philanthropy, http://socialphilanthropy.org/knowledge.php. The US government operates a grant-making CDFI Fund; read more at www.cdfifund.gov/who_we_are/about_us.asp.

12. “Catch shares: New hope for fisheries,” Environmental Defense Fund, www.edf.org/oceans/catch-shares.

13. “Conserving Land, Water, and a Way of Life,” Nature Conservancy, www.nature.org/aboutus/privatelandsconservation/conservationeasements/index.htm.

14. Community Interest Companies, www.bis.gov.uk/cicregulator/.

15. Americans for Community Development, http://americansforcommunity development.org/.

16. “Bank of North Dakota,” New Rules Project, www.newrules.org/banking/rules/bank-north-dakota. Gar Alperovitz, “Worker-Owners of America, Unite!” New York Times, December 15, 2011.

17. “Chantie de l’economie sociale” (Quebec), http://fiducieduchantier.qc.ca/?module=document&uid=56.

18. Mission-driven family businesses are catalogued in Managing for the Long Run: Lessons in Competitive Advantage from Great Family Businesses, by Danny Miller and Isabelle Le Breton-Miller (Boston: Harvard Business School Publishing, 2005). The term “mission-controlled corporation” first appeared in Marjorie Kelly, “Not Just for Profit,” Strategy+Business, Spring 2009, www.strategy-business.com/media/file/enews-02-26-09.pdf.

19. Marjorie Kelly, “Not Just for Profit,” Strategy+Business, Spring 2009, www.strategy-business.com/media/file/enews-02-26-09.pdf.

20. “Ostrom Wins Nobel Prize in Economics,” Indiana University, http://elinorostrom.indiana.edu/.

21. One of the earliest people to use the term “living economy” was Paul Ekins, who wrote The Living Economy: A New Economics in the Making (London: Routledge & Kegan Paul, 1986).

22. The phrases “living wealth” and “phantom wealth” were first used by David Korten.

23. United Nations International Year of Cooperatives, http://social.un.org/coopsyear/.

24. Community Wealth, www.community-wealth.org/strategies/panel/coops/index.html. Stacy Mitchell, “Credit Unions Hang Tough, See Surge in Deposits,” NewRules.org, July 5, 2011. “Safe Havens: Credit Unions Earn Some Interest,” Wall Street Journal, March 15, 2009, http://online.wsj.com/article/SB123708535764231521.html.

25. Johnston Birchall, Rediscovering the Cooperative Advantage (Geneva: International Labor Organization, 2003), 48–51; cited in Johnston Birchall and Lou Hammond Ketilson, Resilience of the Cooperative Business Model in Times of Crisis (Geneva: ILO, 2009), 7.

26. “Fortress World” is one among a group of possible future scenarios created in a Tellus Institute modeling exercise. Another scenario is the “Great Transition” to a just and sustainable world. See Paul Raskin et al., Great Transition: The Promise and Lure of the Times Ahead (Boston: Stockholm Environment Institute, 2002), http://tellus.org/documents/Great_Transition.pdf.

27. Marjorie Kelly, “Redesigning private ownership to create a truly generative economy,” Memo to the Left (London: Policy Network, 2011), www.policy-network.net/publications_detail.aspx?ID=4002.

28. Margaret Wheatley and Deborah Frieze, “Using Emergence to Take Social Innovation to Scale,” Berkana Institute, http://margaretwheatley.com/articles/using-emergence.pdf.

29. Christopher Alexander, The Timeless Way of Building (New York: Oxford University Press, 1979), 267.

30. “Physical and social technologies” is the terminology of evolutionary economist Richard Nelson. See his 2003 paper, “Physical and Social Technologies and Their Evolution,” Columbia University, working paper, available from the author, cited in Eric D. Beinhocker, The Origin of Wealth (Boston: Harvard Business School Press, 2007), 15.

Chapter 1: Debt, Inc.

1. Alexandra Andrews, ProPublica, “Freddie Mac loan contractor, Ocwen Financial, has spotty record,” Palm Beach Post, March 29, 2009, www.palm beachpost.com/opinion/content/business/epaper/2009/03/29/sunbiz_ocwen_0329.html. Knight Ridder/Tribune Business News, “Florida-based firm Ocwen Financial Solutions to hire 5,000 in India,” December 9, 2004.

2. Peter S. Goodman, “Late-Fee Profits May Trump Plan to Modify Loans,” New York Times, July 30, 2009.

3. New York Times, Business, “Ocwen Financial Corporation, Company Information,” http://topics.nytimes.com/topics/news/business/companies/ocwen-financial-corporation/index.html (accessed July 30, 2009). In the 52-week period leading up to July 30, 2009, the stock climbed 139.97 percent.

4. Donella H. Meadows, Thinking in Systems: A Primer, ed. Diana Wright (White River Junction, VT: Chelsea Green Publishing, 2008), 80. Fritjof Capra, The Hidden Connections: A Science for Sustainable Living (New York: Anchor Books/Random House, 2002), xviii.

5. Meadows, Thinking in Systems, 81.

6. In systems thinking, the term “archetypes” generally refers to particular patterns of feedback loops. See, for example, “Appendix 2: System Archetypes” in Peter Senge, The Fifth Discipline (New York: Currency Doubleday, 1990, 378–90). I use the term here in a related but broader sense, to refer to two schools of design for ownership: extractive design is characterized by the reinforcing feedback loops of maximizing profits; generative design is characterized by the balancing feedback loops of Rooted Membership, Living Purpose, and other patterns.

7. Meadows, Thinking in Systems, 5.

Chapter 2: The Community Bank

1. The Haroldsons dealt with Community First Bank Loan Services, the mortgage-origination division of Community First Bank, headquartered in Baltimore County, Maryland.

2. AllMortgageDetail.com, www.AllMortgageDetail.com.

3. The Haroldsons dealt with Community First Bank Loan Services, the mortgage-origination division of Community First Bank in Baltimore, Maryland. In late 2009, it reported 11 locations in seven states. In late 2011, the FDIC reported that one branch remained, in Maryland. In late 2009, the bank reported assets of $70 million. According to the FDIC, its total assets as of June 30, 2010, were $58 million, and a year later they had declined to under $50 million. www2.fdic.gov/IDASP/main_bankfind.asp.

4. CDFI Fund, www.cdfifund.gov/what_we_do/programs_id.asp?programID=9#certified.

5. Jim Wise, “Prudent lender prevails amid crisis,” Durham News, August 16, 2008. Robert Kropp, “CDFIs Offer Responsible Alternative to Predatory Lending,” SocialFunds, September 26, 2008, www.socialfunds.com.

6. Self-Help, www.self-help.org.

7. “Newsweek’s Daniel Gross Calls Subprime Loans ‘Risks Worth Taking,’” MicroCapital.org, December 5, 2008, www.microcapital.org/news-wire-united-states-newsweeks-daniel-gross-calls-subprime-loans-risks-worth-taking/#more-2793.

8. For first quarter 2010, the annualized net charge-off rate for the CDFI industry was 1.23 percent, compared with 2.84 percent for all FDIC-insured banking institutions. “Opportunity Finance Network Market Conditions Report, First Quarter 2010,” Opportunity Finance Network, www.opportunityfinance.net/store/downloads/CDFI_Market_Conditions_Q110.pdf.

9. There are various kinds of CDFIs, including banks, credit unions, loan funds, and venture capital funds. The membership of Opportunity Finance Network includes all kinds of CDFIs, but the vast majority are community development loan funds; thus their survey largely covers loan fund performance. Making a cross-sectoral comparison—looking at the performance of these loan funds (which have no disclosure requirements) versus the performance of banks—is not a strict apples-to-apples comparison. Thus the figures offered here should be considered suggestive rather than definitive.

10. Connie Bruck, “Angelo’s Ashes,” New Yorker, June 29, 2009.

11. “The CDFI Banking Sector: 2009 Annual Report on Financial and Social Performance,” National Community Investment Fund, Chicago, Illinois, www.ncif.org/images/uploads/20100519_2009_NCIFAnnual_Report_FINAL.pdf.

12. Saurabh Nairan, e-mail message to author, July 17, 2010.

13. Mark Maremont, “U.S. Moves to Bail Out Credit Union Network,” New York Times, January 29, 2009. Ralph Nader, “How Credit Unions Survived the Crash,” CounterPunch, February 23, 2009, http://counterpunch.org/nader02232009.html.

14. David Segal, “We’re Dull, Small Banks Say, and Have Profit to Show for It,” New York Times, May 12, 2009. “Small Banks’ Failure Rate Grows, Straining FDIC,” Wall Street Journal, October 11, 2009. FDIC study about small banks remaining best capitalized reported by Zachery Kouwe in “Small Banks Move In As Giants Falter,” New York Times, November 2, 2009.

15. Eric Bellman, “State Bank of India—Has Cash, Will Lend,” Wall Street Journal, March 30, 2009, C1.

16. The Ecology of Finance: An Alternative White Paper on Banking and Financial Sector Reform (London: New Economics Foundation, November 2009).

17. Statement by ICBA President Jean-Louis Bancel, International Co-operative Banking Association, www.icba.coop/news/more-than-ever-appropriate-and-relevant-icba-chairman-bancel-on-coops-and-the-crisis.html.

18. “Globalisation and Banking Regulation: Challenges and Impacts for Co-operative Banks,” speech by Bancel to Organization for Economic Development and Cooperation, March 17, 2010, www.icba.coop/images/stories/pdf/mondialisation%20et%20regulation%20bancaire%20colloque%20ocde%20march%202010%20english.pdf.

19. Ibid.

20. Herman E. Daly and John B. Cobb Jr., For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future (Boston: Beacon Press, 1989).

21. Interview with the author, 2009.

22. Bill Howard explained that Beverly Cooperative Bank had a few years earlier converted to holding company ownership, which meant that technically it was no longer owned by depositors. But it still had a mutual bank charter. Its mission was still to serve depositors’ interests, and it had no shareholders whose demands it had to satisfy. Depositors also retained rights in liquidation, a traditional ownership right.

23. The website BankInvestor.com (www.bankinvestor.com/) tracks the conversion of mutual banks into publicly traded companies. In September 2009 there were 788 mutual banks; 316 mutual banks went public between 1996 and 2008.

24. Beverly Cooperative Bank had a Community Reinvestment Act rating of satisfactory in November 2011, www.ffiec.gov/craratings/default.aspx.

25. Meadows, Thinking in Systems, 25–34.

26. Dalton Conley, “Safe at Home,” New York Times, August 3, 2009. Adam Serwer, “Banks as Heroes,” American Prospect, August 10, 2009, www.prospect.org/cs/articles?article=banks_as_heroes.

27. See Move Your Money Project, http://moveyourmoneyproject.org.

Chapter 3: Wall Street

1. In late 2011, the New York Stock Exchange was on the verge of being sold again to Deutsche Boerse, until European regulators killed the deal in February 2012.

2. Eric J. Weiner, What Goes Up: The Uncensored History of Modern Wall Street (New York: Back Bay Books, 2005).

3. Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York: Basic Books, 2000), 6–8.

4. Homer, Hymn to Hermes.

5. Joel Covity, “Myth and Money,” in James Hillman et al., Soul and Money (Dallas, TX: Spring Publications, 1982).

6. In 2007, JPMorgan Chase made a net income of 21.5 percent; in 2006, net income was 23.5 percent, according to Morningstar, http://quote.morning-star.com/Stock/s.aspx?t=JPM&culture=en-US&region=USA&r=600634&byrefresh=yes.

7. Between 2000 and 2009, the P/E ratio of JPMorgan Chase varied between 10 and 45. In 2007, it averaged 10. On January 4, 2010, its P/E ratio was 21, according to Morningstar.

8. Samuelson findings cited by John C. Edmunds, “Securities: The New World Wealth Machine,” Foreign Policy (Fall 1996), 126.

9. The 10-year P/E ratio of the S&P 500 was 20.3 at the end of 2009, up from 13.3 in March 2009. The average for the last 130 years was 16.4, according to Yale economist Robert J. Shiller. Vikas Bajaj, “Heart-Stopping Fall, Breathtaking Rally,” New York Times, December 31, 2009.

10. Lawrence E. Mitchell, The Speculation Economy: How Finance Triumphed Over Industry (San Francisco: Berrett-Koehler Publishers, 2007), 1–7.

11. Liz Moyer and Emily Lambert, “Wall Street’s New Masters,” Forbes, September 21, 2009, 41. Market share of daily trading going through the New York Stock Exchange ultimately declined; Graham Bowley, “Stock Exchange Shrinks as Rivals Take Over Trades,” New York Times, October 15, 2009.

12. Moyer and Lambert, “Wall Street’s New Masters,” 44.

13. Michael Mackenzie, “SEC Runs Eye Over High-Speed Trading,” Financial Times, July 9, 2009.

14. The Tabb Group estimated that high-frequency trading accounted for 73 percent of US daily equity volume in 2009; Michael Mackenzie, “SEC Runs Eye Over High-Speed Trading,” Financial Times, July 29, 2009. Also interview with John Katovich, former attorney with Nasdaq.

15. The study was by Mercer and IRRC Institute, cited by Jason Zweig, “Buy-and-hold hasn’t looked too good lately, but churn-and-burn is no better,” Wall Street Journal, February 13, 2010.

16. Rainer Maria Rilke, Duino Elegies, second elegy. From Duino Elegies and the Sonnets to Orpheus, translated by A. Poulin Jr. (Boston: Houghton Mifflin Co., 1977), 17.

17. Robert G. Wilmers, “Small Banks, Big Banks, Giant Differences,” Bloomberg. com, June 13, 2011, www.bloomberg.com/news/2011-06-13/small-banks-big-banks-giant-differences-robert-g-wilmers.html.

Chapter 4: Overload

1. Richard D. Freedman and Jill Vohr, “Goldman Sachs/Lehman Brothers,” Case Series in Finance and Economics, New York University Salomon Center, 1991 (revised 1999).

2. Michael Lewis, The Big Short: Inside the Doomsday Machine (New York: W.W. Norton & Co., 2010), 257–64.

3. Fernand Braudel, Civilization and Capitalism, 15th–18th Century, vol. 1, The Structures of Everyday Life (Berkeley, CA: University of California Press, 1992), 23–24; vol. 3, The Wheels of Commerce, 22–23.

4. The notion of real wealth in the real economy, or true wealth, has been articulated by theorists such as David Korten and Juliet Schor.

5. Charles R. Morris, The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash (New York: PublicAffairs/Perseus Books Group, 2008), 134. An International Monetary Fund analysis found global financial assets 3.7 times as high as global GDP at the end of 2005. By 2007, the number had no doubt “ratcheted up much higher still,” he wrote.

6. Kevin Phillips, American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century (New York: Viking Penguin, 2006), 268. John Bellamy Foster, “The Financialization of Capitalism,” Monthly Review 58, no. 11 (April 2007), 1–12, http://monthlyreview.org/2007/04/01/the-financialization-of-capitalism.

7. Phillips, American Theocracy, 265–68.

8. Nouriel Roubini, Foreign Policy, early 2009, quoted in the New Yorker, June 29, 2009, 54.

9. In the dot-com crash, the Nasdaq composite declined 78 percent, from a high of 5,047 in 2000 to 1,114 in 2002. On September 29, 2010, it stood at 2,369. “Historical Prices,” Nasdaq, www.nasdaq.com/quotes/historical-quotes.aspx.

10. Phyllis S. Pierce, ed., The Dow Jones Averages, 1885–1995 (Chicago: Irwin Professional Publishing, 1996). The Dow Jones ended 2010 at 11,577.

11. Ben Levisohn in “The Decline of the P/E Ratio,” Wall Street Journal, August 30, 2010. The average P/E ratio approached 30 in several peaks in the late 1990s and early 2000s. By end of August 2010, it was below 15. Source of data: Standard & Poor’s.

12. James Gleick, Chaos: Making a New Science (New York: Viking, 1987), 23–24.

13. Ibid.

14. Meadows, Thinking in Systems, 90–92, 190–91.

15. Richard Riordan, Alexander Rubalcava, “How Pensions Can Get Out of the Red,” New York Times, September 16, 2010, www.nytimes.com/2010/09/16/opinion/16riordan.html. “Investor, heal thyself,” Economist, September 16, 2010, www.economist.com/node/17046748.

16. Phillips, American Theocracy, 288–97.

17. Robert Freeman, “Why Obama’s Economic Plan Will Not Work—And a Better Plan,” Common Dreams, January 17, 2010, www.commondreams.org/view/2010/01/17.

18. Phillips, American Theocracy, 328.

19. Charles R. Morris, The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash (New York: Public Affairs/Perseus Books Group, 2008), 134. The figure of ten times GDP represents the notional value of derivatives, which refers to the value of the underlying contracts if they were to be exercised in full. When I hold an option to sell $1,000 worth of Google in November, the notional value of that derivative is $1,000.

20. Floyd Norris, “Naked Truth on Default Swaps,” New York Times, May 20, 2010, www.nytimes.com/2010/05/21/business/economy/21norris.html.

21. Quoted in Louise Story and Edmund Andrews, “Life After Lehman Brothers,” New York Times, September 16, 2008, www.nytimes.com/2008/09/16/business/16lehman.html?scp=1&sq=“Life%20After%20Lehman%20Brothers”&st=cse.

Chapter 5: Collapse

1. Morris, The Trillion Dollar Meltdown, 70. Testimony by Julia Gordon, Center for Responsible Lending, before the US House of Representatives’ Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit, March 11, 2009.

2. Morris, The Trillion-Dollar Meltdown, 146–47.

3. “The Rich and the Rest,” Economist, January 20, 2011, www.economist.com/node/17959590.

4. Robert Buchele et al., “Show Me the Money: Does Shared Capitalism Share the Wealth?” in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-Based Stock Options, ed. Douglas L. Kruse, Richard B. Freeman, and Joseph R. Blasi (Chicago: University of Chicago Press, 2010), 351.

5. Leslie Parrish, “Overdraft Explosion,” report from Center for Responsible Lending, October 6, 2009, www.responsiblelending.org/overdraft-loans/research-analysis/crl-overdraft-explosion.pdf.

6. Jessica Fargen, “Spike in Hub Burglaries,” Boston Herald, March 14, 2011.

7. According to the US Bureau of Labor Statistics, in February 2010, “underemployment” stood at 16.8 percent.

8. Bob Herbert, “An Uneasy Feeling,” New York Times, January 5, 2010, www.nytimes.com/2010/01/05/opinion/05herbert.html.

9. Robert Reich, Aftershock: The Next Economy and America’s Future (New York: Alfred A. Knopf, 2010), 19.

10. Lawrence Mishel and Heidi Shierholz, “The sad but true story of wages in America,” Economic Policy Institute, March 15, 2011, www.epi.org/publication/the_sad_but_true_story_of_wages_in_america/.

11. Reich, Aftershock, 3–4, 7–8.

12. Andrew Sum and Joseph McLaughlin of Northeastern University’s Center for Labor Market Studies looked at the second quarter of 2009 and the first quarter of 2010, finding that pretax corporate profits rose $388 billion while wages increased $68 billion. Harold Meyerson, “Business Is Booming,” American Prospect, March 2011, 14.

13. C. S. Holling, Lance H. Gunderson, and Donald Ludwig, “In Quest of a Theory of Adaptive Change,” in Panarchy: Understanding Transformations in Human and Natural Systems, eds. Lance H. Gunderson and C. S. Holling (Washington, DC: Island Press, 2002), 3–22. Fikret Berkes, “Understanding uncertainty and reducing vulnerability: Lessons from resilience thinking,” Natural Hazards 41 (2007), 283–95.

14. Herman Daly, Beyond Growth (Boston: Beacon Press, 1996), 37.

Chapter 6: Waking Up

1. Kelly and Ratner, Keeping Wealth Local.

2. Luis Ubiñas, president of the Ford Foundation, “At Global Climate Change Talks, an Answer Grows Right Outside,” Huffington Post, November 29, 2010, www.huffingtonpost.com/luis-ubi/at-global-climate-change-_b_788256.html. Elisabeth Malkin, “Growing a Forest, and Harvesting Jobs,” New York Times, November 22, 2010, www.nytimes.com/2010/11/23/world/americas/23mexico.html.

3. The Nature Conservancy, “Conserving Easements: Conserving Land, Water and a Way of Life,” www.nature.org/aboutus/privatelandsconservation/conservationeasements/
conserving_a_way_of_life.pdf.

4. “Catch shares: New hope for fisheries,” www.edf.org/page.cfm?tagID=69. “How catch shares work: A promising solution,” www.edf.org/oceans/how-catch-shares-work-promising-solution.

5. Kelly and Ratner, Keeping Wealth Local, 15–16.

6. Paul Gipe, Wind-Works.org, www.wind-works.org. Bertrand d’Armagnac, “Lesson in wind power,” Guardian Weekly (UK), August 13, 2010, 31. “Cooperatives—a local and democratic ownership to wind turbines,” Danish Wind Turbine Owners’ Association, www.dkvind.dk/eng/faq/cooperatives.pdf.

7. Others in the United States working for community wind include Lisa Daniels of Windustry, www.windustry.org; and David Morris of the New Rules Project at the Institute for Local Self-Reliance, www.newrules.org/.

8. In 2007, Dominion spent $5.8 billion buying back its own stock. www.dom.com/investors/annual2010/domannual.pdf.

9. Stock buybacks are paper maneuvers that remove shares from circulation, so as to increase the value of remaining shares. I’ll return to this transaction in the next chapter.

10. Jim Motavalli, “Hull Wind: A Renewable Energy ‘Cash Cow,’” E magazine, February 28, 2005, www.emagazine.com/archive/2345. Also see Hull Wind, “History of Hull’s wind project,” www.hullwind.org/history.php.

11. He was quoting loosely from Aldo Leopold’s A Sand County Almanac: “A thing is right when it tends to preserve the integrity, stability, and beauty of the biotic community. It is wrong when it tends otherwise.” Aldo Leopold, A Sand County Almanac (New York: Oxford University Press, 1966).

12. Fritjof Capra, The Web of Life: A New Scientific Understanding of Living Systems (New York: Anchor Books/Doubleday, 1996), 5.

13. Ervin Laszlo, The Systems View of the World: A Holistic Vision for Our Time (Cresskill, NJ: Hampton Press, 1996), 61–63.

14. Capra, The Web of Life, 6.

15. Ibid.

16. “Sole and despotic dominion” from William Blackstone’s Commentaries on the Laws of England. See chapter 3 of Kelly, The Divine Right of Capital: Dethroning the Corporate Aristocracy (Berrett-Koehler Publishers, 2001).

17. Quoted in Fritjof Capra, The Hidden Connections: A Science for Sustainable Living (New York: Anchor Books/Random House, 2002), 5–7.

18. American Farmland Trust, www.farmland.org.

Chapter 7: The Island

1. LEED standards are a set of design criteria for environmentally responsible buildings. Platinum is the highest level of excellence.

2. John Abrams, Companies We Keep: Employee Ownership and the Business of Community and Place (White River Junction, VT: Chelsea Green Publishing Co., 2008); revised edition of The Company We Keep, 2005. Quotations from both editions.

3. Thomas Princen, The Logic of Sufficiency (Cambridge, MA: MIT Press, 2005), 6.

4. Fritjof Capra remark in class he and I cotaught at Schumacher College in England, July 2004, “Business and Sustainability: From Complexity to Responsibility.”

5. Angus Maddison, The World Economy: A Millennial Perspective (Paris: Organization for Economic Co-operation and Development [OECD], 2001); Maddison, The World Economy: Historical Statistics (Paris: Development Centre of the OECD, 2003); Maddison, Contours of the World Economy, 1–2030 AD (New York: Oxford University Press, 2007), 379. Output is real (inflation-adjusted) gross domestic product, measured in purchasing-power-parity-adjusted 1990 dollars.

6. John Stutz, The Tellus Scenarios in Historical Perspective (Boston: Tellus Institute, 2007).

7. Maddison figures reworked by Andrew Mold, head of finance, development unit, OECD, “What Will the World Look Like in 2030? Maddison’s Forecasts Revisited,” October 24, 2010, www.voxeu.org/index.php?q=node/5708. Mold revised downward the growth estimates for rich countries in the aftermath of the financial crisis, and revised estimates for Asia, Latin America, and Africa as well. Calculations by Kelly performed with assistance of John Stutz.

8. Island Cohousing, Guiding Principles, http://islandcohousing.org/about#tabs-panels-tabs-About-2.

9. Jewish National Fund, “Our History,” www.jnf.org/about-jnf/history/.

10. Robert Swann et al., The Community Land Trust: A Guide to a New Model for Land Tenure in America (Cambridge, MA: Center for Community Economic Development, 1972), xiii, http://neweconomicsinstitute.org/publications/essays/swann/robert/the-community-land-trust-a-guide-to-a-new-model-for-land-tenure-in-america.

11. Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 1960; originally published 1944).

12. Capra, The Web of Life, 31–33.

Chapter 8: Bringing Forth a World

1. Author communications via e-mail and telephone with Hugh Cowperthwaite of Coastal Enterprises, Inc. Also www.ceimaine.org/Fisheries.

2. Coastal Enterprises, Inc., “Fishtag Program,” www.ceimaine.org/Resources/Documents/FISHTAG.pdf.

3. Coastal Enterprises, Inc., www.ceimaine.org/.

4. Ted Ames, interview with the author at Bowdoin College, March 30, 2011.

5. James Acheson, Capturing the Commons: Devising Institutions to Manage the Maine Lobster Industry (Lebanon, NH: University Press of New England, 2003), 8. Acheson also wrote The Lobster Gangs of Maine (Hanover, NH: University Press of New England, 1988).

6. Garrett Hardin, “The Tragedy of the Commons,” Science 162 (1968), 1243–48, www.sciencemag.org/site/feature/misc/webfeat/sotp/commons.xhtml.

7. Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (New York: Cambridge University Press, 1990), 14; Ostrom, “Beyond Markets and States,” Nobel Prize lecture, December 9, 2009.

8. For this notion of an “ecosystem” of supportive institutions, I am indebted to Heerad Sabeti. See the paper “The Emerging Fourth Sector,” Fourth Sector, www.FourthSector.net/learn/fourth-sector/.

9. Acheson, Capturing the Commons, 105.

10. Ibid., 119.

11. Ibid., 105.

12. Ibid., 24.

13. Ibid., 41, 221, 224.

14. Fritjof Capra, The Hidden Connections: A Science for Sustainable Living (New York: Anchor Books/Random House, 2002), 14.

15. Marjorie Kelly, “Not Just for Profit,” Strategy+Business, issue 54 (Spring 2009), 48–57.

16. Margaret Wheatley and Deborah Frieze, “Lifecycle of Emergence: Using Emergence to Take Social Innovation to Scale,” Berkana Institute, 2006, www.berkana.org/articles/lifecycle.htm.

17. Amy R. Poteete, Marco A. Janssen, Elinor Ostrom, Working Together: Collective Action, the Commons, and Multiple Methods in Practice (Princeton, NJ: Princeton University Press, 2010), 48.

18. Muhammad Yunus, “Sacrificing Microcredit for Megaprofits,” New York Times, January 14, 2011, www.nytimes.com/2011/01/15/opinion/15yunus.html.

19. Community Wealth, Democracy Collaborative, www.community-wealth.org/strategies/panel/coops/index.html.

20. John Restakis, Humanizing the Economy: Co-operatives in the Age of Capital (Gabriola Island, BC, Canada: New Society Publishers, 2010).

21. United Nations, International Year of Cooperatives 2012, http://social.un.org/coopsyear/. Some data from International Labour Organization Fact Sheet Cooperatives and Rural Employment, and from International Co-operative Alliance, www.ica.coop.

22. European Federation of Share Ownership, Economic Survey of Employee Ownership in European Countries in 2010, May 4, 2011, www.efesonline.org/Annual%20Economic%20Survey/2010/Presentation.htm.

23. Corey Rosen, National Center for Employee Ownership, letter to editor in Wall Street Journal, September 11–12, 2010.

24. Erik Olsen, University of Missouri–Kansas City, “Majority Employee Owned Enterprises in the U.S.: A Profile,” draft paper, February 22, 2011.

25. Capra, The Hidden Connections, 33–54.

26. Penobscot East Research Center, www.penobscoteast.org/research_ted_ames.asp (accessed July 13, 2011).

27. Ted Ames, “Multispecies Coastal Shelf Recovery Plan: A Collaborative, Ecosystem-Based Approach,” Marine and Coastal Fisheries: Dynamics, Management, and Ecosystem Science 2 (2010), 217–31, www.penobscoteast.org/documents/C09-052.1GOMplan_000.pdf.

Part III: Creating Living Companies

1. With deep gratitude to architect Christopher Alexander for his root insights about design and pattern language in The Timeless Way of Building, from which I paraphrase.

Chapter 9: Living Purpose

1. Christopher Alexander, The Timeless Way of Building (New York: Oxford University Press, 1979), ix–x.

2. Ibid., 25–27.

3. Ibid., 38–39.

4. Meadows, Thinking in Systems, 1–15, 188.

5. Alexander, The Timeless Way of Building, 51, 36.

6. Lynn Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (San Francisco: Berrett-Koehler Publishers, 2012). Quotations from draft manuscript.

7. B Lab, www.bcorporation.net/.

8. Upstream 21, “How We’re Different,” www.upstream21.com/?page_id=64.

9. Fourth Sector, “For-Benefit Corporations,” www.fourthsector.net/learn/for-benefit-corporations.

10. B Lab, “Benefit Corp Legislation,” www.bcorporation.net/publicpolicy.

11. Business Ethics hosted a meeting on “The Legacy Problem” in October 2003. The Summer 2003 issue of Business Ethics carried a special section on “The Legacy Problem.”

12. Spheres of Influence, 2007 Seventh Generation Corporate Consciousness Report, www.seventhgeneration.com/files/assets/pdf/2007_SevGen_Corporate-Consciousness.pdf.

13. B Lab, “About Seventh Generation,” www.bcorporation.net/seventhgeneration.

14. Inc. magazine created a list of the “100 Fastest Growing Companies in America,” and I met a CEO once who made that list and attended the gathering of winning CEOs. He told me, “I’ve never been in a room of 100 more miserable people in my life.”

15. Telephone and e-mail conversations with Jeffrey Hollender. Also Marc Gunther, “Seventh Generation sweeps out its founder,” November 1, 2010, www.marcgunther.com/2010/11/01/seventh-generation-sweeps-out-its-founder/.

16. Jen Boynton, “Jeffrey Hollender Shares Four Reasons He Got Fired from Seventh Generation,” TriplePundit, June 9, 2011, www.triplepundit.com/2011/06/jeffrey-hollender-seventh-generation-fired/.

17. This evolutionary approach is happening with employee stock ownership plans (ESOPs), for which Congress initially set the bar deliberately low, with no requirement for employee voice in governance; but there is now a movement to see that step as a best practice. As Chris Mackin of Ownership Associates told me, had ESOPs started with more rigorous standards, there would be far fewer ESOPs today. Governance standards may be part of what’s next for benefit corporations. With B Corporation legislation, some states already require a public interest director on the board.

18. Meadows, Thinking in Systems, 76.

19. B Lab, “Why B Corps Matter,” www.bcorporation.net/why.

20. Alexander, The Timeless Way of Building, 246.

Chapter 10: Rooted Membership

1. John Lewis Partnership, “Financials,” www.johnlewispartnership.co.uk/financials.html. Fortune 500 list of America’s Largest Corporations in 2011 by revenue.

2. Alexander, The Timeless Way of Building, 288–92.

3. “John Lewis Chief Hits the Pay Jackpot,” This is Money, April 21, 2011, www.thisismoney.co.uk/money/markets/article-1720836/John-Lewis-chief-hits-the-pay-jackpot.html. AFL-CIO Executive PayWatch, 2011, www.aflcio.org/corporatewatch/paywatch/.

4. Study data covered the period 1970–1989, comparing JLP with firms like Sainsbury, Tesco, and Marks and Spencer. Keith Bradley and Simon Taylor, Business Performance in the Retail Sector: The Experience of the John Lewis Partnership (Oxford: Clarendon Press, 1992).

5. Francis Green, Demanding Work—The Paradox of Job Quality in the Affluent Economy (Princeton, NJ: Princeton University Press, 2007).

6. Art Kleiner, “The Thought Leader Interview: Meg Wheatley,” Strategy+Business, issue 65 (Winter 2011), 80–90.

7. “Registrars” at JLP aim to keep its democratic spirit in focus; more on this management structure is found in chapter 11.

8. John Lewis Partnership, “Our history,” www.johnlewispartnership.co.uk/about/our-history/our-history-text-version.html. Also interviews with Ken Temple from JLP by the author.

9. John Spedan Lewis, Fairer Shares: A Possible Advance in Civilization and Perhaps the Only Alternative to Communism (London: Staples Press Limited, 1954), 1–5.

10. Martha Nussbaum, Frontiers of Justice: Disability, Nationality, Species Membership (Cambridge, MA: Belknap Press of Harvard University Press, 2006), 9–95.

11. Lewis, Fairer Shares, 12–13.

12. Quotations from Marjorie Kelly, The Divine Right of Capital: Dethroning the Corporate Aristocracy (San Francisco: Berrett-Koehler Publishers, 2001), 110.

13. Barbara Taylor, “Are Baby-Boomers Ready to Exit Their Businesses?” New York Times, February 10, 2011. White Horse Advisors, Exit Planning Research & Resource Center, “2008 Survey of Closely Held Business Owners,” http://exitplanningresearch.com/.

14. Loren Rodgers, “The Employee Ownership Update,” National Center for Employee Ownership (NCEO), May 16, 2011, www.nceo.org/main/column.php/id/393.

Chapter 11: Mission-Controlled Governance

1. Lewis, Fairer Shares, 10.

2. VIVA Trust, www.vivatrust.com/creation/. Tatiana Serafin, “The Bill Gates of Switzerland,” Forbes, September 16, 2009.

3. John Lewis Partnership Corporate Social Responsibility Report 2011, www.johnlewispartnership.co.uk/csr/our-progress-and-reports/csr-reports/latest-reports.html.

4. Novo Nordisk Annual Report 2010, “Environmental,” http://annualreport2010.novonordisk.com/environmental/environmental.aspx.

Chapter 12: Stakeholder Finance

1. John Maynard Keynes, “National Self-Sufficiency,” Yale Review 22, no. 4 (June 1933), 755–69.

2. Quoted in Nicholas Shaxson, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens (New York: Vintage, 2011), 53.

3. John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt, Brace & World, 1965).

4. Meadows, Thinking in Systems, 85.

5. Study by the World Institute for Development Economics Research of the United Nations, reported by James Randerson, “World’s Richest 1% Own 40% of All Wealth, UN Report Discovers,” Guardian, December 6, 2006, www.guardian.co.uk/money/2006/dec/06/business.internationalnews.

6. Tim Kasser, The High Price of Materialism (Cambridge, MA: MIT Press, 2002).

7. Alexander, The Timeless Way of Building, 136.

8. Simon Lambert, “John Lewis 6.5% bond: Should you invest?” March 7, 2011, www.thisismoney.co.uk/money/investing/article-1714414/John-Lewis-65-bond-should-you-invest.html.

9. Kelly and Ratner, Keeping Wealth Local, 8–9.

10. Government Accountability Office 2004 study, Wind Power’s Contribution to Electric Power Generation and Impact on Farms and Rural Communities, cited by Lisa Daniels of Windustry, www.windustry.org/.

11. Slow Money, “Local Groups,” www.slowmoney.org/local-groups.

12. Slow Money, www.slowmoney.org.

Chapter 13: Ethical Networks

1. “Take Stock,” CROPP Cooperative newsletter, first quarter 2011, www.organicvalley.coop/fileadmin/pdf/TAKE_STOCK_Q1-11.pdf.

2. JLP is not legally chartered as a cooperative. Some employee-owned firms are cooperatives; others are not.

Epilogue: Next

1. Pierre Cahuc and André Zylberberg, The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy (Cambridge, MA: MIT Press, 2006).

2. Robert Heilbroner, The Limits of American Capitalism (New York: Harper & Row, 1965).

3. Charles Goodrich et al., eds., In the Blast Zone: Catastrophe and Renewal on Mount St. Helens (Corvallis: Oregon State University Press, 2008). Richard Lovett, “Mount St. Helens, Revisited,” Science 288 (June 2, 2000), 1578–79.