People-Centered Economic Development, P-CED, derived from a paper for the steering committee to reelect the [US] President in 1996. Following is a synopsis of that paper.
At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn’t the purpose of economics, as well as business, people? Aren’t people automatically the central focus of business and economic activities? Yes and no.
People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a “people-centered” economics system comes in.
The P-CED concept is to create new businesses that do things differently from their inception, and perhaps modify existing businesses that want to do it. This business model entails doing exactly the same things by which any business is set up and conducted in the free-market system of economics. The only difference is this: that at least fifty percent of profits go to stimulate a given local economy, instead of going to private hands. In effect, the business would operate in much the same manner as a charitable, non-profit organization whose proceeds go to local, national, and international charities. Non-profits, however, are typically very restricted in the type of business they can conduct. In the United States, all non-profits must constantly pay heed that they are not violating those restrictions, lest they suffer the wrath of the Internal Revenue Service. For-profits, on the other hand, have a relatively free hand when it comes to doing business. The only restrictions are the normal terms and conditions of free-enterprise. If a corporation wants to donate to its local community, it can do so, be it one percent, five percent, fifty or even seventy percent. There is no one to protest or dictate otherwise, except a board of directors and stockholders. This is not a small consideration, since most boards and stockholders would object. But, if an a priori arrangement has been made with said stockholders and directors such that this direction of profits is entirely the point, then no objection can emerge. Indeed, the corporate charter can require that these monies be directed into community development funds, such as a permanent, irrevocable trust fund. The trust fund, in turn, would be under the oversight of a board of directors made up of corporate employees and community leaders.
How can such a thing work? Where would the initial venture capital come from? This capital in each case can come from each community if available, or from sponsoring communities or funding organizations. In Chapel Hill, North Carolina, for example — where P-CED was born in 1997 — multi-millions of dollars are donated each year to charities, after which the money is typically given away, spent, and gone. Two churches adjacent to the university campus recently raised in excess of four million dollars to improve their buildings. (As a counterbalance, a third church chose to forego its own plans for a building and donated its entire building fund to a badly-needed support program for the elderly.) If twenty percent were set aside to fund a “P-CED enterprise”, that money would never go away, but would instead grow as it should in business. Once the seed capital is available and the business plan implemented, everything after that goes the normal way of business. Employees are paid according to the local pay scales, receive benefits, and so on. They would also enjoy profit-sharing directly for themselves from a total pool of ten percent of profits. Forty percent of profits would be rolled back over into the company for growth. The remaining fifty percent would go to the trust fund. Thus, aside from the final direction of profits, everything is exactly the same as with any other business enterprise.
We are at the very beginning of a new type of society and civilization, the Information Age. Historically, this is only the third distinct age of civilization. We lived in an agricultural age for thousands of years, which gave way to the Industrial Revolution and Industrial Age during the last three hundred years. The Industrial Age is now giving way to the Information Revolution, which is giving rise to the Information Age. Understanding this, it is appropriate to be concerned with the impact this transition is having and will continue to have on the lives of all of us. In that it is a fundamental predicate of “people-centered” economic development that no person is disposable, it follows that close attention be paid to those in the waning Industrial Age who are not equipped and prepared to take active and productive roles in an Information Age. Many, in fact, are scared, angry, and deeply resentful that they are being left out, ignored, effectively disenfranchised, discarded, thrown away as human flotsam in the name of human and social progress. We have only to ask ourselves individually whether or not this is the sort of progress we want, where we accept consciously and intentionally that human progress allows for disposing of other human beings.
This is a tricky question. Except in the case of self-defense, if for any reason we answer “Yes”, regardless of what that reason is, we are in effect agreeing with the proposition of disposing of human beings. Whether disposal be from deprivation or execution, the result is the same for the victim. If we agree that sometimes, for some reasons, it is acceptable and permissible to dispose of human beings, actively or passively, the next question is “Which people?” Of course I will never argue that one of them should be me, though perhaps it should be you. You respond in kind, it cannot be you, but maybe it should be me. Not only can it not be you, it also cannot be your spouse, your children, your mother or father, your friends, your neighbors, but, maybe someone else. Naturally I feel the same way. Maybe we come to an agreement that it shouldn’t be either you or me, or our families and friends, that can be disposed of, but perhaps someone else. While we are debating this — passionately and sincerely, no doubt — a third party comes along and without warning disposes of the both of us, or our families, or our friends. And there is the trap we have fallen into, because whether or not we approve of our or our families’ and friends’ demise is irrelevant. It is fair because we accepted the principle of human disposability. We just didn’t intend that it be us who are tossed, but if we or our families and friends die, it is in accordance with principles that we ourselves have accepted and so must live — and die — by.
We can actually engineer, very precisely and intentionally, a social system whereby human beings are not disposable, and then go about setting forward our social machinery with this requirement built-in as a part of our “social software”, as it were. Or, we can decide not to do it. Either way, a decision is made as to the fate of those who would be dispossessed, unwanted, and in the way.
Listen: these people are not going to go quietly into the night. Once a person is intentionally cast aside, all prevailing social contracts which might pertain no longer apply and all previous bets are off. It becomes self-defense for the intended victim.
Once a nation or government puts people in the position of defending their own lives, or that of family and friends, and they all will die if they do nothing about it, at that point all laws, social contracts and covenants end. Laws, social contracts and covenants define civilization. Without them, there is no civilization at all, there is only the law of the jungle: kill, or be killed. This is where we started, tens of thousands of years ago.
By leaving people in poverty, at risk of their lives due to lack of basic living essentials, we have stepped across the boundary of civilization. We have conceded that these people do not matter, are not important. Allowing them to starve to death, freeze to death, die from deprivation, or simply shooting them, is in the end exactly the same thing. Inflicting or allowing poverty on a group of people or an entire country is a formula for disaster.
The greatest initial social and economic risk of the Information Age is in creating two distinctly different classes of people: the technological haves and have-nots. Those who have access to information and information technology have a reasonable expectation to survive and prosper. Those with limited or no access will be left out. This holds true for individuals as well as nations. The key to the future is access to free flow of information. To the extent that the free flow of information is restricted or diminished, people will be left to endure diminished prospects of prosperity and even survival.
In order for economic development to take place in any given location, the very first thing required, before anything else can possibly happen, is information. This information includes first and foremost where to look for the necessary resources to do anything. If new businesses are needed, knowing they are needed and finding funding for them are two very different things. The first step is to locate possible capital resources in order to move forward, and this step is no more and no less than information. Once resources are located, the next step is what terms and conditions are involved in obtaining those resources — more information. Once this is known, paperwork must be completed, business plans made, market research and due diligence conducted, and all of this compiled and forwarded to the appropriate parties. Again, nothing more than information. In fact, most of the work involved between identifying a need and solving the problem is information acquisition and management: getting and developing information.
As Alvin Toffler predicted in Power Shift, where once violence and then wealth were dominant forms of power, information is now becoming the dominant power. Those nations with the greatest freedom of information and means of transmitting it have now become the most powerful and influential, and the strongest economically. Toffler also predicted the collapse of the Soviet Union would come about due primarily to its authoritarian control and limiting of information. Unfortunately for Russian citizens, this old habit has continued for them beyond the collapse of the former Soviet Union and will at the least make an interesting case study on the survivability of a once strong nation which still remains committed to limiting and controlling information.
By going with the normal flow of free-market enterprise and the emerging replacement of monetary capital with intellectual capital as the dominant form of basic enterprise capitalization, it becomes easier to set up new companies primarily on the basis of invested intellectual capital. (See Post-Capitalist Society, by Peter Drucker). In plain English, socially responsible and forward-thinking companies can be set up quickly and cheaply–and these companies have indefinite potential for earnings and localized, targeted economic development. The initial objective is to develop model enterprises and communities, then implement successful strategies from those models into surrounding communities regionwide or nationwide, as needed.
With an initial P-CED business enterprise set up in a given community, it becomes possible to bring people into the fold, so to speak, of the Information Age. No existing company need change anything whatsoever about how it does business. New web development, software development and information management enterprises, for example, can be set up quickly for extremely low seed capital outlays. Existing businesses who need web/software development and management services can have their business readily enhanced for costs that are relatively insignificant compared to increased viability and long-term profitability of entering into a much broader marketplace–without a brick being laid. The design firm wins, the existing business wins. Most importantly, the community-at-large wins by way of decreased poverty and unemployment, since the design firm’s profits for the most part go back into the community–for adult education or retraining, high-tech head start programs for underprivileged children, seeding new small businesses, and social relief. Along the way, the design firm’s employees benefit from good wages, profit sharing, and normal benefit packages. Well paid employees in effect produce, inevitably, highly desirable social and community outcomes. In short, everyone benefits. In that this new enterprise effectively becomes a primary node and locus of much-needed information for the community, it is appropriate to seek seed capital to start the enterprise from traditional development and aid funding sources. The result is a self-sustaining and self-perpetuating enterprise that feeds on the very need, or demand, for resources that hampered the community and its people to begin with.
With globally dispersed web sites deployed, the global resource base becomes available as a means for each community to best determine resource locations to meet its needs. Such a localized determination of needs, and connection into a global resource network that provides a means to actually address those needs, has not been possible prior to the onset of the Information Revolution and the emergence of the Internet and Web.
The direction and character of our new age of civilization can, for the first time in human history, be proactively determined, planned and managed for the global public good.
A primary impetus for the P-CED project was the opportunity to pitch the idea at the very top–i.e.., to the White House. President Clinton invited me in 1995 to an honorary appointment to his re-election steering committee. Quite frankly, I wasn’t sure how to take the idea of an honorary appointment: did it mean an active, passive, or invisible (just send money) role in the re-election campaign? I suspected the latter and opted for the former. After a great deal of reflection and consideration, I accepted the appointment by way of a cover letter and an accompanying position paper which was the outline and foundation for P-CED. This document is a synopsis of that paper.
The initial business model included in the paper was to set up a high-tech marketing company which would operate along the same lines as the web site design firm mentioned above. The marketing firm would focus on marketing hardware and software components needed to build the global information infrastructure, or GII — a project being heavily promoted by the US Department of Commerce. The thinking was that this is going to happen anyway, so why not set up a firm to participate in the process which would guarantee economic benefit to at-risk US as well as global citizens? Similar enterprises could be implemented in widely dispersed local areas, even areas as small as rural third world villages, as the GII is extended. It is now possible to connect most remote areas to the GII. A key ingredient in the deployment would be wireless Internet connectivity, simply because it is faster and cheaper to set up and offers maximum usage flexibility for network users.
Additionally, the proposed firm would follow in behind the physical deployment of the information infrastructure by making it practical and useful by setting up web and software development activities and following with information management.
The benefit to the initial marketing firm is perhaps fairly obvious. How much money will be made in the construction of the GII? How much in the way of total global annual revenues will it support once deployed? Will deployment ever be “finished”, or will it be an ongoing process yielding ongoing construction/maintenance profits? In my view, we are facing not just the emergence of the next age of human civilization, but also the mushrooming of the most powerful economic force ever to appear on the face of the earth. By its very nature of decentralized information and education, it invites participation, involvement, and potential benefit for essentially every locale on the planet. During 1997, the University of North Carolina-Chapel Hill and IBM teamed together to make UNC’s curriculum and degree programs available by way of distance learning on the Internet to the far reaches of the globe. Duke University has implemented an MBA program available online, requiring only a half-dozen or so meetings during the course–each in different parts of the world.
Top-notch education is leaving the confines of physical campus and four walls. A student in remote Zaire, given an Internet connection, can become a Duke-educated Master of Business Administration, while remaining mostly in his or her home village to the village’s benefit. The prospect of such decentralized localization of education and economic activity allows a great deal of autonomy, freedom and self-determinism in the village’s own character and identity. It need not be a risk to cultural heritage and integrity to benefit economically; the means by which such benefit will occur, how local citizens can have food, shelter, health care, and a basic sustaining human standard of existence can be determined at the local village level and then communicated at the regional, national, and global level simultaneously at virtually no cost via the Internet and a web site. It is this basic level of human sustenance, coupled with self-sustaining enterprise to provide this basic level of support, that I refer to as sustainable development — which is just another way of saying “people-centered” economic development.
The P-CED “type” of firm demonstrates how a for-profit enterprise can be created and operated for the benefit of those who need the profits, and who will not have access to financial markets otherwise. In effect, those in poverty would benefit much as if they were actual stockholders in the enterprise. Networking with business development organizations enables the poor to develop their own business enterprises. Microcredit, or microfinance, organizations have proven to be very effective tools in fostering small business development in cash-starved locations. A very successful loan program in the US, Good Work, Inc., has operated in Durham, North Carolina since 1992, with the aim of providing loans and microloans in amounts from $500 to $10,000 to people who would not be able to find money otherwise. Business planning and management training are provided to applicants to ensure loan viability and business success. Good Work reports a business survival rate of more than ninety percent.
Clearly, profits can be used very effectively in ways other than traditional investment and profit outcomes. Moreover, this is not charity, it is business–good business. One P-CED firm could be expected to spin off dozens of new firms and businesses, all of which create new jobs and all of which operate under traditional free-enterprise practices. That is, if a spin-off business were to profit a million dollars a year, the owners can bank the money for themselves and their stockholders as is the normal practice. There is nothing wrong with individuals becoming wealthy. It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.
Chapel Hill, NC
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P-CED. ‘A New Way of Doing Business’ since 1997