CSOP is like soursop

A delicious fruit, soursop. But it needs sugar. As both are available in Cuba ‘como arroz’ (i.e. in great quantities), the soursop could be a very popular table-fruit. However, in practice it is mostly used for specific purposes, such as for making juice, adding milk and other ingredients. The financial instrument Kelso called ‘CSOP’ is a bit similar. It could theoretically be widely used, but in practice will probably be more suitable for specific purposes.

It means: ‘Consumer Stock Ownership Plan’. As is the case with the ESOP, the intention is to diffuse stock ownership as broadly as possible. However, instead of turning employees into partners, the CSOP turns its attention to customers. Any company (including ESOP-companies) could decide to turn its customers into partners by selling a percentage of its shares to them. Payment could be effected directly, of course, but would usually be effected in various indirect ways. For instance, the offer could be made that any customer who subscribes to an X-amount of annual business, will receive one share. The profit made on this business would then be considered payment. This could have the added advantage that the offering company could convince the bank that it has a guaranteed turnover, which could be helpful to secure a loan. If it was a supermarket, vouchers could be given to customers for every X-amount of groceries bought. An X-number of vouchers would then be convertible into profit-sharing stock (either with or without voting right). This could make good business-sense, for profit-sharing partners are bound to be good repeat-customers.

Privatization is not a panacea; neither is Solidarism

In practice, we believe, the CSOP to be best suited ‘to make juice’, i.e. to be used where a mix of reasons make a certain degree of collectivization and/or restriction of competition opportune. As an example let’s consider utility-companies. In large markets the privatization of utility-services (electricity and public water supply) is
technically possible, but there are clear disadvantages to this also. Private electricity-companies would be loathe to choose green production methods, if these were more expensive (as they still are). Neither would they be happy to promote the reduction of consumption, whereas the depletion of natural resources requires this. Etcetera. In smaller economies it does not really make sense to let two or more capital-intensive companies compete in a market which is not expandable beyond the limited number of its inhabitants. Moreover, if they were to really compete (and not secretly fix prices and markets), one is supposed to come out strongest and win monopoly in the end anyway. So sometimes there are good reasons to ‘collectivize’ and/or ‘socialize’ certain companies at least to a certain extent. It is here we believe the CSOP could be most effective.

Suggestions for Cuba

For Cuba we would suggest to maintain a reasonable number of relatively small regional water/electricity companies (with interconnected networks), competing with each other within the limits of set maximum prices and allowing 100% green production methods only. Each company could perhaps be set up as a 50% ESOP – 50% CSOP. If it is considered advisable to include one single large shareholder (to give competition extra impetus, or to make possible take-overs more attractive to large investors), a mix of 1/3 private, 1/3 ESOP and 1/3 CSOP may be considered. These are not rules, but hints. A proper study and analysis of the situation is required, which could lead to entirely different suggestions.

If a 50-50 ESOP/CSOP is chosen, this would mean that the workers and customers would each own half of the regional utility-companies. If any profits are made, they would be equally shared, i.e. dividends would be paid out in cash to the workers and indirectly to the customers by means of discounts granted to them on future bills. Each customer would receive his share in proportion to the aggregate amount of his usage of utilities during the previous year.

Now, it will be clear that these suggestions are indeed a ‘juice’ of mixed ingredients, combining solidarist with capitalist and socialist principles. The point is that only the best solution is best. Man was not made for the Sabbath; the Sabbath was made for man. Political systems should not be adhered to for the sake of orthodoxy. Solidarism is versatile and recognizes that where a combination of systems yields better results, this is obviously what should be done.