A longer explanation

1.) Where does profit come from, and what does it represent?

2.) What should be done with profit and who should control this value?

If we can answer the first question, then maybe we can answer the second.


There is a special case of property ownership where profit does not exist.

When the consumer of some product is the owner of the sources or the means of that production and accepts the product as the return on investment, then the price he pays as a consumer is exactly the costs he paid as an owner, and so price == costs and profit does not exist because the transaction did not occur.

This shows the origin of profit is the consumer's lack of ownership in the means of production.

And so we can create business that safely operates at zero profit without harming investors iff the consumers are the investors and owners.

Crowd funding is a baby step in this direction...


To answer the second question, imagine we sell the surplus of such a corporation to non-owners and collect a profit during that transaction.

If we treat some % of that profit as an investment from the payer, then these late consumers slowly gain the ownership needed to also receive the product at cost as a result of their property ownership in the means of production.


This flies in the face of the typical assumption that the workers must bear the costs of ownership.

But it is actually to the workers' advantage to not have that enormous cost - let the damn customers pay for all the land and tools!


So a big part of the reason we use money is to buy products.  But you do not need to buy that which you already own!  If you are part owner of a dairy, then you do not need to buy milk because you own your portion already.


Another, separate reason we usually need  money is to pay and receive wages for work that needs to be done.

Time banking comes close to solving this, but has fundamental flaw in the time-order of it's operations.

It is crucial that workers be able to issue their part of this insuring-currency *before* they do the work.

Think of it as a "promise to pay" in the form of future labor.


When combined with properly distributed property and sufficient vertical integration, we remove nearly all of usual need to pass tokens within that community.

This is a two part optimization that uses property to "pre-distribute" goods and uses promises to "predictively-schedule" services.

This forms the basis of a true insurance for any good or service we wish to guarantee.

These are 'titles' instead of 'tokens'.  They are backed by both:

1.) The property needed to create a future product.
2.) The promises needed to create a future product.

These titles can be used as a currency when the property or promises that back them was improperly allocated (maybe someone changed their mind about wanting peaches, and so wants to sell their portion of the orchard, or maybe had an accident and cannot pick peaches, and so must re-negotiate with the community to do some other work).

Predictive Production

I am uncovering a forgotten (or maybe purposely hidden) way to organize production that:

1.) Returns consumers to the helm and delivers products at the real costs of production to those who will prepare.

2.) Treats a commitment to work as a cross-investment in the means of production for which the worker needs products.

3.) Collects profit from those who did not prepare and 'reflects' it back to them as co-ownership in more physical Sources to create more future copies of that product so control automatically flows to those who are willing to add value to others beyond real costs.

4.) Allows subgroups to arbitrarily secede from a tyrannical majority.



These simplifications are confusing because they "short circuit" and eliminate some transactions causing profit and wages and even some taxes to disappear.

1.) Product is the Investor's Return

Profit is eliminated when the product is not sold.

The Product is not sold when it is already the property of the consumer.

The owner of Sources is the owner of Products in that same amount.

Middle-income Consumers can afford to pre-pay for organic Products, 

2.) A Promise to work is a kind of Investment

Wages are eliminated when work is traded for the work of others before production begins.

A worker's promise-to-pay is just as much of an investment as when any other consumer invests plain-old-money.

Workers become co-owners just like all other investors when they promise work for that group or for any other group in the VIPM that is willing to trade those skills.

This also means we must have a minimum amount of "Horizontal Diversity" to meet all the variety of (at least basic) needs for every worker.

3.) Profit is the Payer's Investment

This means late-coming Consumers will overpay for Product as usual, but we will treat (at least some % of) that value as though it were an investment.

Surplus is sold to consumers with insufficient ownership, and profit is charged against them (the market sets the price), but we treat that overpayment as an investment from that consumer toward the purchase or build of even more Means of Production needed to create more instances of that Product typein the future.  This causes all consumers to incrementally gain co-ownership in the Means of Production for the products they need, and so also have the real insurance that property provides as future product.

4.) Any subgroup can secede for any reason

This is to solve the Tyranny of the Majority.

Subgroups of co-owners can sell their shares to others consumers (probably just put them "up for sale" which will cause the late-payers to blindly buy those shares as they pay Profit) or they can actually split the Means of Production in cases where the Means can be realistically divided.

For example, you can probably split a large dairy into two small dairies, but obviously you cannot feed one-half of a cow grain and avoid feeding grain to the other half.

Imputing the Production we Need

Profit requires Scarcity.

And most Investors require Profit as Return for the risk they take.

So it would seem we *must* seek Scarcity - for how else could we repay
our Investors?

...

But a certain group can accept Product as the Return for their risk.

This special group already pays all the Costs of production anyway,
AND they also pay Profit (Price above Cost) because they buy the
Product late.

This special group are the people the Product is supposedly being made
for, and yet they must continually beg the Owners to do the right thing.

And yet those owners really *cannot* do the right thing for the
pleading Consumers because their Investors have conflicting goals.

...

So imagine a scenario where Consumers invest and become the co-owners
the Means of Production for their own, mutual benefit.

This is different from a traditional cooperative because the Product
is not sold and so there is no chance for Price to be above Cost.


Profit is *UNDEFINED* when Product is ROI because there is no sale.

The final transaction does not occur because the Product is already in
the hands of the person who will Consume it.

This short-circuit across the usual need for trade is an optimization
in that the Product is "pre allocated" to the person who needs it so
the Product is not bought or sold; it is already the user's property.

Governments cannot tax or interrogate the missing transaction. See
http://Wikipedia.org/wiki/Imputed_rent for a subset of the issue.

Use-Value Production

Production can be for the Use-Value of that Product, but ONLY if the Consumers co-own the Sources and accept Product as their Return.

In Use-Value Production, the Product is never sold* because it is already the Property of the person who will Use it. You might say it is "pre-distributed".

In Use-Value Production, scarcity is not goal, and abundance is not dangerous. For example, if you co-own a diary for your own benefit, then it does you no harm when another corporation 'dumps' milk in the area because you, as a co-owner, are not attempting to SELL the milk.

Only Consumers can Invest for Use-Value Production because only Consumers can accept Product as a Return for that risk.

(*) During Surplus, the Product can be sold to non-owners, and we should even charge Profit against those latecomers, but must treat that overpayment as an Investment from that Payer - so that each Consumer slowly gains the co-ownership needed to discontinue purchasing that Product in the future.

Property, Product and Profit

Corporations, in their current form, cannot do the "right thing" because they (and we) erroneously believe Profit to be the goal of production while somehow misplacing Product itself as the real end.

This is caused by our choosing investors who expect to be paid Profit.

This can be solved by choosing investors who expect to be paid Product.

But the only investors able to accept Product as a return are the future Users of that Product.

So we must organize Users to co-buy and co-own the Sources of Production for the purpose of receiving at-cost use-value.

Corporations organized in this way will have no reason to work against we, the people, except when selling some of that Product to non-owners.

For that we must write a Terms-of-Operation as a form of self-regulation to impose the constraint "Profit is Payer Investment" so that all Users incrementaly gain ownership in the Sources of the Products they need.

Product Maximizing Corporations

It is possible to change the goals of corporations we fund and control by compensating the investors' risk with Product instead of with Profit.

Paying investors with Product is possible if those investors are actual Users of the Product, and invest (whether Capital or Work) only as much as they intend to use for themselves.

These corporations will be Product Maximizers, while Profit will no longer be goal, and in fact will not even be present except during the sale of Surplus.

During the sale of Surplus we should charge Profit against those latecomers (allow the market to set Price), but then treat that Price above Cost as an Investment from that Payer - so that all Users gain as much ownership in the Means of Production required to create the Products they use.

This is a very different way of organizing our production. Please consider it carefully.

Overview

Our system of trade needs a self-inflicted 'governor' - a negative-feedback loop - to allow the steam-engine of production to operate without the explosive danger caused when power is concentrated.

Much like a float and valve controlling water level, we would benefit from treating Price above Cost as the Payer's Investment.

Profit measures the Payer's lack of ownership in the Sources of Production. A Consumer will pay a Price above Cost when he does not have sufficient ownership in the Means of Production because he is *dependent* upon those current owners.

This imbalance can be incrementally corrected by treating that overpayment as the payer's investment in the growth of that organization - so that Capital is no longer 'accumulated' into the hands of the few, but is transparently 'distributed' back to the very person who paid it as a deed of property co-ownership in more Physical Sources needed for that type of product. It becomes that consumer's investment in his own future.

This causes Profit to approach zero (as Price approaches Cost) and control to be move to the hands of those willing to work instead of being centralized into the hands the payees who would otherwise treat Profit as a reward for themselves.

Treating Profit as a reward for the current owners is a positive-feedback loop which concentrates property into the hands of those who already have more ownership than they can use directly (as proven by the fact they are selling the Product instead of using it for themselves). This makes the rich richer, as these established agents receive even *more* control while leaving late-comers in the cold - even though it is the Payers of Profit who funded the growth of that organization.

Treating Profit as an Investment from the Payer is a negative-feedback against over-accumulation - allowing growth that is both sufficient (according to the amount the consumer is willing to overpay) and auto-leveling (because Profit approaches zero as each consumer gains sufficient ownership in Physical Sources).

The owners of an Avocado tree must pay for all the Costs of that production, including any Wages for work they do not do themselves, but Profit does not even enter the equation because the fruit is not sold at the end of the season since it is already the property of those who will use it.

A GNU Production Model

We need to change why we Invest and how we Share Revenue.


1.) Product is Investor's Return: This is an Investment strategy that
uses Product as the ROI, and so requires the Investors be the Users
themselves.

2.) Profit is Payer Investment: This is a Revenue-Sharing strategy
that Invests some % of Profit for the User who paid it.

3.) Investments are Commitments of Sources and Skills: This is
a way to gather the Land and Capital needed (those committing
Sources would relinquish ownership to others in a group targeting
some specific Product) and also to insure the diverse work needed
would be accomplished without need to fight the "simultaneous
coincidence of wants" trouble with typical 'late' barter.

By committing Skills *before* production, we can trade Labor
between ourselves, and never need to trade oranges with apples,
since the co-owners of the Sources of those Products would
own their % of the Product *already*, even before they are
produced. I call this "Predictive Barter" - where we Swap Skills
early instead of attempting to Swap Products *late*.

Burn-Ring Funding Model

* Potential users pre-pay to fund the purchase
of land and capital to form a Vertically Integrated,
Permaculture Mosaic (VIPM).

* The VIPM is a set of carefully chosen plants, animals
and tools required to create the solutions needed by all
of those workers such as food/drugs, shelter, cloth, soap,
sanitation, health care, dental, eyes, etc.

* If a payer has skills needed by the VIPM, they can
contract to work somewhere within the VIPM in exchange
for the VIPM supplying them with Products they need.

* Those workers receive co-ownership in the VIPM in a
form we call "Use Shares" which are similar to full co-
ownership, but with some initial limitations on selling
or renting those Tools or Products.

* Use Shares are used by the holder to prove that he has the
right to use the Tools (limited by schedule) or consume some
of the Products (limited by % of holdings within that Unit)
of any restaurant, apartment, bus, hospital, etc. operating
within the VIPM.

* The workers do not buy products from the investors, but own
those products already because of their Use Shares in the
VIPM awarded for commitments to Work or from commitments
of Land or Capital.

* After some amount of time, or after some series of events
the Use Shares should vest more fully to the payer to
allow for selling and/or renting of those Sources or the
Products of those Sources.

* Initial stages of development might have some workers living
in mobile homes and eating food the VIPM bought in bulk.

* Later, after the agriculture is installed and producing, the
system will become "self hosted", being able to operate
without requiring any external inputs.

* Soon afterward, the system will be producing surplus that can
be sold to outsiders to collect Profit.

* If Venture Capitalists helped fund the operation, part of the
Profit will be used as their ROI.

* We may want to distribute part of the Profit to the Workers,
since that is a popular thing to do.

* We may we to distribute part of the Profit to random charities,
since that is a popular thing to do.

* But we MUST handle some non-zero % of the Profits as though
that overpayment were an investment from the payer.

* We should charge Profit during those sales, for if we don't
collect the Profit, a middle-man will buy all that we offer
at Cost, and then resell it for a Profit anyway...

* So we will charge Profit against the Payer, but we will also
treat (at least part of) that magic value as Payer Investment.

* This causes these late-coming users to slowly gain ownership
and therefore to eventually stop buying that product too.

* Similar to how the GNU GPL enforces Copyleft through Copyright,
we propose to create a PropertyLeft document enforced through
Property Rights used to apply this requirement to the VIPM.

* This social contract can be applied by co-owners of any
material assets to insure freedom for all users.

* Notice this is also a literal form of Insurance.

* These users must cover all the real cost of production
just as any owners do, but they do not buy the product
since they own it already - and they don't sell the
product because they need to use it directly.

* The product is not traded unless there is surplus, and
in that case the Payer must cover all the Costs of that
production so the owner of Sources can be compensated
for paying when they didn't need to...

* The Payer will usually also pay Profit, according to how
much the "market will bear". Some % of that overpayment
must be treated as an investment from that payer so the
growth of the VIPM is incrementally autodistributed
to all those willing to pay for that growth.

* At some point, and under certain constraints, and mostly
to resolve disputes, subgroups must finally be allowed to
fork from the rest while retaining property ownership.


----
Ecologically, the system must be able to operate on it's own, without
external inputs.

This is done by the VIPM owning the Physical Sources of all the
Products being used. Another term for this is "Vertical Integration".

Initially no VIPM will be strictly closed-loop because we will
just buy shovels instead of trying to mine Iron ore, etc.


Economically, the system must allow the users to create value for
themselves without paying external entities.

This is done by helping the users gain real ownership whenever they
pay for that growth (usually when paying profit), and to retain that
ownership when paying costs (usually through work).

This can be imperfect as well, just so the payer receives *some*
ownership - for it is the ownership in Sources that eliminates the
need to buy Products. In computer terminology this is similar to the
concepts of "predictive schedule", "pre-cache" or "pre-allocate"
because the Product is not moved (sold) at the last moment, but is
already the property of the entity that will use it.

Rewarding Risk with Product Eliminates Exchange

Capitalists must keep Price above Cost to collect Profit to pay their investors.

This unnatural arrangement is held in place through artificial scarcities and destruction of various kinds, and is also the reason Capitalist seek continuous Growth.

Users who co-own Sources can accept Product as their ROI, so do not sell the Product except when there is Surplus Product.

In that case, they only need to collect the Costs of Production to cover what they already committed.

But, since the latecomer is at a disadvantage, the Consumers+Owners are usually able to charge a Price above Cost (they collect Profit).

But since none of the Investors expect Profit to be treated as a reward, we are free to redirect that value as a growth vector - investing it *for* the latecoming user toward increasing production - with that ownership finally vesting back to that payer - so the control of that growth is auto-distributed to those who pay for it.

Rewarding Risk with Product eliminates exchange.

The Product is not sold because the user owns it already!

Profit is Undefined when Product is ROI.

Capitalism abhors competition because competition reduces profit.

Capitalism seeks profit to pay investors.

But investors are people too, and they need things besides tokens - like sandwiches and beer.

So we could start a business that shapes investments differently - where the purpose of ownership is solely to receive a % of the product itself as your payment for risk.

And when surplus is sold to outsiders, some % of that will be treated as an investment from that payer - so every user gains co-ownership in the sources of all that they pay to use.

When owning for product, the 'core' of the organization reaches semi-stasis and operates at-cost, while latecomers at the 'edges' pay Profit when buying surplus, causing them to gain the property co-ownership which finally eliminates their need to buy Product late, since the (co-)Owner of Sources is the (co-)Owner of the Product (in the same %) even before it is produced!

The owner of a milk-cow must pay all the Costs of Production, including any Wages for Work he does not do himself, but does not BUY the milk back from himself, but owns it *already*, even before it comes out of the cow.

The same logic, when be applied to co-ownership, eliminates the need to buy and sell Products except when the Consumer does not yet have sufficient ownership in Sources needed to insure he owns that Product now and into the future.

Titles, not Tokens

Perfect competition drives profit to zero.
Customer ownership is perfect competition.


When you finally own your house, profit is zero.

When you (co-)own a network, the price of access *IS* the cost of operation.


I wonder why we, as a species, do not apply this to all production.

I wonder how we were fooled out of being the owners of the land and
water and seeds and tools needed to supply ourselves with the raw
materials of food, drugs, cloth, soap, building materials, etc.


How could our city governments be so insanely ridiculous when it comes
to finance?

Why would a city ever go into debt when it is also collecting taxes?
What a bunch of nonsense.


All we really need to do is buy a couple hundred acres somewhere with
plenty of natural water and attract 1000 people to commit their
individual skills toward the work we will need to apply to the Sources
in order to make the Objects.

We won't need tokens because we will not buy the Olives and Milk and Honey, since we will already own them already because we own the Trees and Cattle and Bees.