Corporate Socialism Model

James Rogers (
Sun, 22 Feb 1998 17:02:12 -0800

I was recently introduced to a very interesting variation of socialism that
many people on this list may find interesting. From what I have been able
to determine, this model fixes several of the most disagreeable aspects of
the traditional socialist model. As an extra bonus, this model has been
very successfully implemented in the United States (though not under the
auspices of the US govt) for the better part of a century.

The model is essentially the application of commercial corporate entities
as social welfare agents. The history of the specific example I was
introduced to is as follows (regretfully I can not remember the specific
names of many of the entities involved):

Earlier this century, a community received a large windfall from the
federal government. But rather than spending the money, the community used
the money to form a commercial corporation with the intent of doing
business. Every member of the community was given a single share in the
corporation. Every child born to a member of the community was also given
a share, but the share was not vested until the child became an adult,
iirc. Additionally, since new shares are issued to every generation, when
a person dies, their share is voided. The community made a conscious
decision not to start issuing dividends for 10 or 15 years after the
initial formation of the corporation.

Anyway, the bottom line is the corporation in question (the name escapes
me) is currently a large multi-national and issues dividends of $20-30k
(and growing) annually to every adult shareholder. The corporation is for
all intents and purposes the local government for this community. The
corporation "donates" a significant amount of resources to its community
(which doubles as a benefit and a tax write-off), but only so far as it
doesn't damage the bottom line of the corporation. However, unlike most
governments, the corporation does not give preferential treatment or
employment to members of the community (it *is* a commercial business),
regularly employing qualified outsiders.

There are a number of interesting ramifications and aspects of this as a
model of government.

First, because payouts to the community are based on the profitability of
the corporation/government (not on tax distributions), it is in the
interest of the community to minimize plundering as this leads to
short-term and long-term cuts in payouts to the individual shareholders.
This is especially effective because every member of the community has an
equal vote; any special minority interests are strongly out-weighed by the
community at large because there is no real means under corporate law by
which any small interest could gain any significant advantage in this
scenario. Additionally, because payouts are not linked to taxes, there is
far more interest in minimizing the expenses of the corporation rather than
trying to recover taxes already payed.

Second, because government/corporate payouts are issued as dividends rather
than "programs", this allows members of the community to take customize
their benefits to their wishes. Any public benefits given by the
corporation are only done when optimal i.e. allowing the community to use
resources of the corporation at no significant loss to the corporation, or
as a long-term investment in future profitability of the corporation (like
making useful donations to the local schools to build a better employment

Additionally there is the obvious benefit of government without
politicians. If a employee of the corporation or board of directors
doesn't do their job, it shows up in the profitability (something the
community feels directly) and incompetent individuals can be replaced
readily at any time. The only way an individual can make a career at this
is if they do a good job (people are not hired based on ideology).

The key points here are that there is more accountability in this type of
government, although there isn't a whole lot of governing going on;
everything is driven by the economic self-interest of the community. Also,
with a profit-based government there appears to be something of a virtuous
cycle that develops as opposed to the vicious cycle of a taxation-based
government. And while this model looks similar to socialism in many ways,
it leaves a lot more to the choice of the individual rather than the
"government knows best" attitude of traditional socialism and distributes
resources much more equally without leaving anyone out or taxing the wealthy.

I thought this might be an interesting topic of discussion. As I mentioned
at the top, this model has been applied very successfully on at least one
occassion (I actually learned about this from my father, who knows a couple
people who are shareholders of this corporation).


-James Rogers