Difference between CO-OP’s and 100% ESOP’s

One critique of ESOP’s is that they are the same as CO-OP’s, especially 100% ESOP’s. Let’s look at terminology first. A CO-OP is a form of partnership in which each partner has equal membership in a specific kind of corporation on a ‘one-man one vote’-basis. In fact variations have been introduced in which voting rights vary according to input. But let’s stick to the basics: CO-OP’s consist of equal members (or partners).

CO-OP’s are not averse to the profit motive, although in practice they were often introduced in an attempt to empower workers within the ‘class struggle paradigm’ of workers versus employers, or socialists versus capitalists. The latter won the battle, which has resulted in a truce, not peace. Socialists are still the mortal enemies of capitalists, but for the time being they have been cornered and are therefore relatively quiet at the moment.

The war will flare up again as soon as workers’ rights and wages have decreased to the point that they begin to go hungry again. Given some more time this will inevitably happen. Internationally this is the case already. So the war flared up again internationally on 9/11. But it will happen nationally also, for the wealth gap has been steadily growing during the past 3 decades, both internationally and nationally. Unless a new thinking is introduced, there will be perpetual war.

Enter ESOP’s and binary economics

ESOP’s are much more than CO-OP’s. ESOP’s can only be fully comprehended against the backdrop of binary economic theory, laying down the foundation of a complete new thinking affecting all aspects of society and daily life. First of all, ESOP’s are not necessarily 100% worker-owned companies. They can be anything between 1% - 100% worker-owned.

Secondly, the socialist term ‘worker’ is inappropriate within ESOP thinking. Managers and bosses are just as much ‘workers’ in ESOP terms as all other employees. There is no worker/capitalist dichotomy in binary thinking. In ESOP’s there are only owners. ‘ESOP’ means ‘Employee Stock Ownership Plan’. Instead of membership as in CO-OP’s, the key word in ESOP’s is ownership. The employees own the company 100%, or they own it together with non-employee owners (investors and/or consumers) if the ESOP is not 100% employee owned. There is no universal model ESOP. Each one is unique and although based on certain general concepts, each ESOP has to be tailored to the specific needs of the individual ESOP owners concerned. And even while functioning they constantly change and evolve.

From this first distinction (ownership instead of membership) it will be clear that ESOP employees mostly do not have equal stakes in the company where they work. The differences in ownership stakes may relate to seniority, merit or extra financial input provided voluntarily by individual employees. ESOP’s function within the rules and regulations of ordinary common stock corporations as contrasted to CO-OP corporations, which are ruled by specific CO-OP legislation. But these differences only scratch the surface. ESOP’s are the product of binary economics, which provides the economic basis of a completely new and different philosophy of life and ownership culture. In short, a new paradigm.

For simplicity’s sake, let’s stick to economics

ESOP’s should not be understood in isolation. Just as CO-OP’s obtained popularity within the socialist paradigm, ESOP’s should be seen within the context of the binary economic paradigm. This paradigm is often referred to as the ‘Just Third Way’. We prefer the term ‘Realism’ to denote the general thinking, just as Socialism and Capitalism describe a whole body of thinking centered around the socialist vs. capitalist economic paradigms.

In binary economic theory the Central Bank plays a key role in binary financing to ESOP’s at low or 0% interest rates. Binary financing makes it possible to link economic expansion (both in individual companies as well as on the national and international level) to employee co-ownership (ESOP’s), without prejudicing existing owners. Binary economic theory favors small government and lower taxation. It is based on the recognition of property as well as free and private enterprise. The political bloodline of the binary paradigm is democracy.

So it is immediately clear, that whatever the binary paradigm may or may not be, it differs fundamentally from socialism. But it also differs fundamentally from capitalism, as it recognizes that maximum economic growth cannot be achieved without a broad diffusion of capital ownership (stocks and shares in companies, nationally and internationally). Binary financing and ESOP’s were invented to bring about this diffusion in a totally democratic, voluntary (non- coercive) and mutually beneficial way, ‘mutual’ meaning here ‘beneficial to both existing capital owners as well as future binary owners’ .

Share the growth, close the gap

To bring about a broad diffusion of ownership, the economic growth potential is fired up by the Central Bank by making funds available for binary financing to ESOP’s (and in other ways) at low or 0% interest rates, coupled to tax breaks for both ESOP companies and individual binary stock owners. Diffusion of ownership coupled to tax incentives will tend to reduce profits retention and thereby increase reliance on binary financing. Broad distribution of dividends to a large body of binary owners will increase, providing binary owners with income to increase their consumptive spending. This will trigger massive economic growth and at the same time close the wealth gap instead of for ever widening it until the next war breaks out.

By no means have we exhausted the various binary tools to stimulate growth and boost consumption on a permanent basis, while closing the gap. We just mention in passing that binary theory stimulates diffusion of stock ownership not only by means of ESOP’s, but also by CSOP’s (Consumer Stock Ownership Plan) and various other related instruments. We mention two other binary ownership diffusion plans, i.e. ‘Capital Homesteading’ and ‘Community Investment Centers’. We will get back to these in future.

Binary thinking comes at a crucial time in history

It is no coincidence that binary thinking is gaining momentum at this period in history. Every thinking person can see how critical and precarious the international situation is. If reading this article you think that the binary solution is not feasible, then ask yourself if socialism has proved to be feasible? If your answer is ‘No!’, then ask yourself if capitalism by its very nature is not aggressive, unfeeling and non-sharing? Has it not always led to war? And isn’t war costly?

There will be no peace without justice. At least consider carefully the ‘Just Third Way’, or the ‘Way of Realism’ as we prefer to call it. We are aware of the great difficulty in explaining a multi-faceted theory within the confines of a short article. We know also that binary theory, although not more complex than conventional economics, does require the interested person to read at least one book. But is the present situation in the world not sufficient reason to read at least one book? You can find more info (and free e-books) at www.cesj.org and www.binaryeconomics.net. Also in our own ‘Caribbean Knowledge Center’ on this website we have posted a number of key texts on binary theory, written by Norm Kurland, Robert Ashford and others. On our main page you can find a few books on binary economics (a.o. by Rodney Shakespeare), which can be ordered via Amazon or direct from the authors.

Our video today is an interview between Paula Gloria and Robert Ashford. Binary economics has grabbed Paula’s attention, but she is still struggling to see the whole picture. This could be especially helpful for a new-comer. Take at least the time to listen to the whole interview. This is definitely worth your while.