Investing in the Future with SlowMoney

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[quote=Mark_BC]If the money supply is set by how much gold we have and every bill corresponds to a piece of that gold then there will be a limit to how much profit can be made.[/quote]That would only limit the total profit, of all companies combined. Actually, I’m not sure it would even do that, as, presumably, in that situation, it is just the money supply which is limited. So companies can only accumulate more of that limited supply of money by extracting it from other companies or customers. Total combined profits would be zero, if the money supply is not increasing. Wouldn’t it?

[quote=Mark_BC]Companies will grow to serve their market and no more, not like the current mega corporation mess. Much like in the wild, businesses will grow to fill a void and excess profit (energy) will be spread around just like a top predator does.[/quote]How does that new business arise? If there is a void, then a new business that arises and grows to fill that void will lead to economic growth. Growth is unsustainable, and damages the environment.

[quote=Mark_BC]That company will reach a limit to its growth because there won’t be a large enough market to serve.[/quote]That implies that companies will necessarily be single product/service entities. Otherwise, the company could grow by diversifying or consuming or displacing other companies.

[quote=Mark_BC]My gut feeling is that since the seccond law of thermodynamics says that energy only flows downhill, and money is basically a claim on biological energy (via human labour) then the profits will simply get radiated out to outer space as infrared radiation.[/quote]Maybe, but I’m concerned about companies operating in a sustainable way, today (since Slow Money exists in today’s world). Can a company making profits be sustainable? If profits lead to a growing economy (in some way), then the company is contributing to growth and is not sustainable.

 

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sofistek,
I’ve really been bending my mind to wrap my head around this issue lately. It’s a tough one.

Regarding the idea that profits necessarily lead to growth, and therefore environmental destruction, I don’t think this is necessarily the case, but merely the way our current corporate and financial structure is set up. Profit does not necessarily need to be anything more than excess biological energy being distributed to other people via the currency medium. This is like getting dividend returns off your stock investment. This is different than getting returns from seeing the value of the stock in your company going up. Those are two different investment returns. One is necessarily based on growth, and one isn’t.

In a hypothetical society of 100 people, with a ton of farmland such that they are easily able to produce way more food than they need, that excess profit could be eternally distributed to people and still be sustainable.

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sofistek, Mark_BC, guys,
Can we get some definitions straight first? What do you mean by “profit” exactly? According to my dictionary ( http://m-w.com/ ):

1 : a valuable return : gain
2 : the excess of returns over expenditure in a transaction or series of transactions; especially : the excess of the selling price of goods over their cost

The first definition is pretty large, and even if I am the last human alive on the planet, I could grow food, and call it “profit” I suppose…

But I think you have been talking about the second definition there, and it is also my opinion that a “profit” in that case only exists between two or more parties. Asking “Can companies make a profit without growing?” is like asking “Can companies get an excess of stuff without growing?”, and the answer is obviously no. But if some dude decides to give bread away instead of selling it, his profit drops to zero, or less. At some point, people decide if they want to make a profit or not. They decide if they want to have buying power over others or not. Such a profit does NOT exist in and by itself. It’s just an abstract concept that people agree upon for business, it’s not a concrete object.

Samuel

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guardia,
Yes, I’ve been talking about the second defintion. I’ve mentioned, several times, that I’m referring to business profits. That is the crux of the Slow Money principle that allows for company profits.

But I wasn’t referring to the growth of the company making the profit, necessarily, rather the growth of the economy as a result of (though I realise this is only one factor in growth) companies making profits. “Giving away” half of the profits (as Slow Money envisages) doesn’t stop the profit being generated and being spent. Giving away <b>all</b> of the profit doesn’t stop that profit being spent to fuel economic growth. Profit is often given away, anyway, in dividends.

Is it possible for a sustainable society to support companies making profits, without profits simply being a continuous redistribution of the same wealth (i.e. losers equals winners)?

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sofistek,
In my opinion, as long as the said companies give away all their profits to do something constructive, then yes. But this “something constructive” is rather hard to define… as James noted “in a world gone haywire he sees a lot of merit in being good and succeeding rather than trying to be perfect”. For example, it’s pretty safe to assume that some things like planting trees are “good”, but even there we can never be 100% sure. What trees? Where? How? (I can already hear the “no pine trees in my backyard” campaign, ugh) and that’s the problem. I don’t see everyone on ever agreeing on “what must be done”, so people will keep pulling their own end of the rope, and we know the rest…

Samuel

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Hi.
Woody Tasch, the founder of Slow Money, recently read this thread and provided this reply which he asked me to post.

Best,

Chris

 

I am extremely honored to have Chris’ hat thrown into the Slow Money ring. And very happy to see all the conversation it elicited.

As that conversation indicated, the idea of slow money sparks a deep discussion about the nature not just of food systems, but of the economy, corporations, fiat currency, profits, growth.

That’s why my book is called Inquiries in to the Nature of Slow Money. As in: if we don’t ask the right questions, we will only find ourselves manipulating the wrong data and formulating the wrong answers. Slow Money is, first, a new inquiry into the nature of money, looked at through the lens of the soil and principles of fertility and diversity–economic, cultural and biological diversity. In a culture that is all about the deal, all about the transaction and the portfolio, all about ready, fire, aim, nothing is more important than taking the time to think differently. Most of what passes for social investing today is trapped in the old benchmarks, the old measures of success, so structural change remains elusive. We must dare to think differently, in fundamentally different terms, about money and the soil, or we risk doing the same thing over and over again, hoping for a different outcome.

So, as someone who has been working in venture capital, social investing and philanthropy for 30 years, I do not see the Slow Money Principles as just “a petition.” Or as “words” that do not equal “action.” They are the beginning of a fundamental shift in economic thinking, underpinning a whole generation of action in the decades to come. This is a generational shift we are about and “well begun” depends upon a new set of values that will inform a qualitatively different kind of investing.

Over the last 18 months, I’ve interacted with thousands of folks in scores of places, and it is wonderful to see so many people eager to: 1) acknowledge how broken our current system is; and, 2) start doing something about it. Which in our case means: investing in small food enterprises.

As to the “what are they actually doing” questions that a few of you asked, here’s an overview.

First, we are building national and regional networks of people who want to put their money into local food systems. In the lingo of triple bottom line, we can call this “building social capital.” Real relationships between folks who share values and are committed to investing directly in the place in which they live. This process is well underway. We’ve got Slow Money networks emerging in more than a dozen locales, including Austin, Boston, Madison, Santa Fe, Seattle, the Bay Area and the Research Triangle. Reports from folks in these regions can be read in our first newsletter, which came out in March.

Second, we are convening national and regional gatherings at which small food enterprises connect with funders. At our first national gathering last fall, 450 people came together from 34 states and six countries. From the group of 25 presenting small food enterprises, four raised a total of $260,000–a small but important beginning. Last year, we also hosted three regional Slow Money Institutes, in Bellingham, WA, Hudson, NY and Madison, WI.

Third, we are building our website over time–it’s still in its infancy–into a robust portal that offers options for folks who want to find places to put their money into small food enterprises and local food systems.

Fourth, we are launching, at our upcoming Vermont gathering, the Soil Trust. The first “grassroots, philanthropic nurture capital fund.” Say what??? A pool of donations, of any size, that will be used as seed capital to build local food investing intermediaries around the country. Will one million Americans contribute $25 per annum to the Soil Trust? We shall see. . .If this begins to scale, it will mark a major innovation in philanthropy and social investing. We will use this as guarantees, seed capital or co-investment capital, to help build local intermediaries and prime the pump of local investment around the country.

(Now, the Soil Trust is sufficiently new, and sufficiently “integral” along the boundaries of investing and philanthropy that you have to pause to think about it. If we are about “putting back into the soil more than we take out,” what could be more natural than a pool of philanthropic dollars that is INVESTED in small food enterprises? That is, all returns stay in the fund to be reinvested. I believe this is the future of philanthropy: philanthropy as investing, rather than as grantmaking. This is a big topic, too big to be explored further here. Stay tuned.)

Fifth, we are developing new investment products and funds, on the for-profit investment side. Think: Slow Munis, municipal bonds dedicated to local food systems. We are early in this process, but indications are promising. Think: Calvert Foundation Slow Money Notes. They don’t exist yet, but we are exploring such possibilities with our friends at Calvert.

All of this points us in the direction of our long-term goal: a million investors putting 1% of their assets into local food systems within a decade. It’s funny how some people view this goal as insufficiently audacious. Only a million folks? Only 1%? Well, that would be billions of dollars per annum, and if we can get this ball rolling, no one will be happier than I to see it go further or. . .faster. . .

In the meantime, let’s get a lot us facing in the same direction. We’ve got around 11,000 signatories for the Principles. We’ve got around 1,100 members of the Slow Money Alliance. And we’re just announcing the Soil Trust.

Join us.

And let’s begin fixing the economy from the ground up.

In friendship,

Woody Tasch

Founder, Slow Money

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pdf read online book. Click this link: -
Inquiries Into the Nature of Slow Money: Investing as if Food, Farms and Fertility Mattered 

by Woody Tasch

[quote=]

Back Cover

Could there ever be an alternative stock exchange dedicated to slow, small, and local? Could a million American families get their food from CSAs? What if you had to invest 50 percent of your assets within 50 miles of where you live? Such questions - at the heart of slow money -represent the first steps on our path to a new economy.

Inquiries into the Nature of Slow Money presents an essential new strategy for investing in local food systems, and introduces a group of fiduciary activists who are exploring what should come after industrial finance and industrial agriculture. Theirs is a vision for investing that puts soil fertility into return-on-investment calculations, and serves people and place as much at it serves industry sectors and markets.

Leading the charge is Woody Tasch, whose decades of work as a venture capitalist, foundation treasurer, and entrepreneur now shed new light on a truer, more beautiful, more prudent kind of fiduciary responsibility. He offers an alternative vision to the dusty old industrial concepts of the nineteenth and twentieth centuries, when dollars, and the businesses they financed, lost their connection to place; slow money, on the other hand, is firmly rooted in the new economic, social and environmental realities of the 21st century.

Inquiries into the Nature of Slow Money is a call to action for designing capital markets built around, not extraction and consumption, but preservation and restoration. Is it a movement, or is it an investment strategy? Yes.

[/quote] 

Opening Prologue

Principles

[quote=]

In order to enhance food security, food safety and food access; improve nutrition and health; promote cultural, ecological and economic diversity; and accelerate the transition from an economy based on extraction and consumption to an economy based on preservation and restoration, we do hereby affirm the following Principles:

I. We must bring money back down to earth. II. There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down -- not all of it, of course, but enough to matter. III. The 20th Century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later—what one venture capitalist called “the largest legal accumulation of wealth in history.” The 21st Century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place and non-violence. IV. We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises. V. Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from Making A Killing to Making a Living. VI. Paul Newman said, "I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out." Recognizing the wisdom of these words, let us begin rebuilding our economy from the ground up, asking: * What would the world be like if we invested 50% of our assets within 50 miles of where we live? * What if there were a new generation of companies that gave away 50% of their profits? * What if there were 50% more organic matter in our soil 50 years from now?

[/quote] 


http://www.slowmoneyalliance.org./

~ VF ~