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Social Capital

FREEDO
Posts: 21,057
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3/7/2013 4:30:52 AM
Posted: 3 years ago
This thread is a continuation in a series of threads I've been making in the political section. I've decided to reassign it to the society section for clarification. I think a lot of people have been confused about what I'm trying to say precisely because they're thinking about it in political terms. And that's largely my fault for introducing it that way.

I come to you, not as a political thinker, but as an innovation theorist. This is often lost in translation because the sort of resources to be innovated upon that I'm talking about are less simple to think about in concrete terms.

My agenda here has nothing to do with what sort of actions government should or should not take or what sort of role it should play at all. The issue here is one of social psychology and the degree of rationality in decisions made by individuals. It talks about social institutions but it addresses the individuals place in forming and designing those institutions rather than generalizing those people and addressing the collective unit itself. It attempts to bring your attention to the collective irrationality that has arisen out of individual decisions and urges that these decisions be rethought. The degree and way in which government affects how these decisions are made is of no consequence. That's a different subject for a different day. It simply wishes to expose the problem-choices and offer an alternative.

- - - - -

There are three types of capital. Physical capital, such as a hammer. Human capitol, such as education. And social capitol, such as a contract. This thread concerns the last.

In economics, the innovation of capitol is extremely important to the growth of society as a whole. Technology is modified to accomplish it's job with more efficiency and effectiveness. Similarly, a human will train to become more efficient and effective at their own job. Yet, all too often the progress of social capitol is ignored. Even though it is just as necessary as the others to the health of an economy. The economy has no definition without social constructs and the mechanism of these constructs is critical to how an economy performs, in much the way that a nail gun performs it's job differently than a hammer. It is, therefor, necessary to routinely modify these constructs to better accomplish their job.

But what is an example of social capitol?

Lets look at business models. Business models are a form of social capitol and they are a key point in what I'm proposing. I have a book on my shelf called "The Principles of Scientific Management". Most people haven't heard of it, yet it revolutionized America. It put forward an innovative new way for businesses to perform tasks more efficiently to obtain higher profits. It suggested that workers be hyper-specialized and set to focus on very simple repetitive tasks. This ended up being very unfortunate for the workers, as they performed the same monotonous tasks for hours on end. But it achieved exactly what it set out to do and rapidly increased production in a rising industrial marketplace.

Now, I have my own business model to put forward. The cooperative. It's nothing new. But most people have still never heard of it. It's a model that's been on the rise for a long time and which I think has proven it's ability to out-perform. The traditional business model necessitates the existence of management. This management keeps the business under their strict control and usually takes the majority of the profit over the workforce. Cooperatives present the possibility of operating without unnecessary management and retaining the ability to re-institute it if it does actually find it necessary. Cooperatives take advantage of group decision making processes which leading social psychologists suggest is more efficient at developing creative solutions that narrow-minded bureaucracies miss. This method of decisions making also presents the possibility for the work experience to become much more enjoyable for everyone involved, thereby creating higher work enthusiasm. Cooperatives are also easier to start, as a group of individuals can pool their wealth together. There are many different forms of cooperatives. There are worker-cooperatives where the people running the business constitute it's shared ownership. There are consumer-cooperatives where, instead, the people who use the product have ownership. You could even say that corporations, in a sense, are a kind of cooperative, with the owners being bidders who don't necessarily have anything else to do with the business.

But don't think that cooperatives are my full proposal. That's just one example. My proposal, on whole, is actually this: That we need more social capital innovators to create new ways to organize society and go through with testing them. My observation is that we have a terrible deficit in modernized social capital. My theory is that, one day, social capital can be advanced to a point which renders government--as well as any institutions which can be observed to have anti-social effects--obsolete.
GRAND POOBAH OF DDO

fnord
darkkermit
Posts: 11,204
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3/7/2013 5:23:15 PM
Posted: 3 years ago
Business model towards hyper-specialization is used less and cooperative used more often in high-tech industries like Google.
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FREEDO
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3/7/2013 5:30:58 PM
Posted: 3 years ago
At 3/7/2013 5:23:15 PM, darkkermit wrote:
Business model towards hyper-specialization is used less and cooperative used more often in high-tech industries like Google.

That's correct. Because that industry requires more creative solutions than repetitive tasks.
GRAND POOBAH OF DDO

fnord
darkkermit
Posts: 11,204
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3/7/2013 5:56:58 PM
Posted: 3 years ago
At 3/7/2013 5:30:58 PM, FREEDO wrote:
At 3/7/2013 5:23:15 PM, darkkermit wrote:
Business model towards hyper-specialization is used less and cooperative used more often in high-tech industries like Google.

That's correct. Because that industry requires more creative solutions than repetitive tasks.

although i'd argue that cooperative's really can't expand. How many people are willing to put down their own money to work? Most wouldn't, especially if they have no physical capital themselves. Furthermore, if they hire people without them putting down money, then its really no different from them being workers and there just being multiple owners (which occurs in almost any company).
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BigRat
Posts: 465
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3/9/2013 3:05:19 AM
Posted: 3 years ago
I believe there was a study somewhere that showed simple financial incentives do increase production with regards to repetitive, manual type tasks but that financial incentives actually decreased output of creative ideas.

The lesson being that simple financial incentives don't work totally normally in jobs that involve more creativity. The rise of, for example, the internet has led to a lot more jobs that involve creativity. This could lead to a more cooperative model (that is more suited for these types of businesses) to begin to replace the more traditional incentive, competitive model (that works better in assembly lines and such).

Interesting stuff and could lead to some interesting developments in business models of the 21st century.

The biggest policy conclusion here is that the government needs to drastically reduce barriers to entry through copyright and patent reform, reduction in regulations on start ups, and reduction (and simplification) of taxation on business and capital.

The easier and cheaper we make it to start businesses, the more we will see the rise of these alternative business models that can lead us to a more advanced and, perhaps, less alienated society.
malcolmxy
Posts: 2,855
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3/10/2013 3:10:29 AM
Posted: 3 years ago
At 3/9/2013 3:05:19 AM, BigRat wrote:
I believe there was a study somewhere that showed simple financial incentives do increase production with regards to repetitive, manual type tasks but that financial incentives actually decreased output of creative ideas.

It's not that they didn't work. They simply offered no incentive. People will engage in activities that they find entertaining for free (I can't believe they felt the need to do a study to prove this, but whatever...)

The lesson being that simple financial incentives don't work totally normally in jobs that involve more creativity. The rise of, for example, the internet has led to a lot more jobs that involve creativity. This could lead to a more cooperative model (that is more suited for these types of businesses) to begin to replace the more traditional incentive, competitive model (that works better in assembly lines and such).

The point, actually (and, one expects a self-proclaimed economics major to get this point and hammer it home), is that there are diminishing returns to financial incentives (which work against the laborer and somewhat to the advantage of the creative thinker).

In the case of the laborer, the effort they will put forth is maximized when they are just on the precipice of starvation. We've all heard the term, "young and hungry". This is one of those cliche's which exists for a reason. It is also why so many businesses fail.

Now, most young people are stupid and so are their ideas. Some, however, are quite smart, and should an older, intelligent person care enough to listen, that young person can push the hypothetical company forward, past its competition.

People become intellectually lazy when they reach a certain point in life, which is a function of both age and income. They shut down to new ideas because they don't want new ideas. For them, if it ain't broke, don't fix it.

On the intellectual, creative job side, productivity is maximized when the person is not bored. Feeding these people (to contrast them to laborers) challenges pushes them to continue to work harder.

They remain hungry to stay occupied their whole lives, which is why the sole, non-resource extraction company which has stood the test of time is IBM (perhaps Boeing, but Boeing has needed help at several points along the way).

Basically, money can't buy you love, but it will put a roof over your head and food in your belly...

Once everyone has those things, THEN you can go after the Mazeratti or whatever else you need to compensate for your tiny wiener.

Interesting stuff and could lead to some interesting developments in business models of the 21st century.

The biggest policy conclusion here is that the government needs to drastically reduce barriers to entry through copyright and patent reform, reduction in regulations on start ups, and reduction (and simplification) of taxation on business and capital.

HUH?

You find conclusions where they do not exist simply to set them forth. How on God's green f*cking earth did you get from your improper conclusion to your even MORE IMPROPER conclusion?

The easier and cheaper we make it to start businesses, the more we will see the rise of these alternative business models that can lead us to a more advanced and, perhaps, less alienated society.

And there will never be another laborer in the whole, wide world...and God bless timmy and amy and mary and colin joseph. Amen.
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Buddamoose
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3/10/2013 3:13:34 AM
Posted: 3 years ago
Once everyone has those things, THEN you can go after the Mazeratti or whatever else you need to compensate for your tiny wiener.

Sig'd
"Reality is an illusion created due to a lack of alcohol"
-Airmax1227

"You were the moon all this time, and he was always there to make you shine."

"Was he the sun?"

"No honey, he was the darkness"

-Kazekirion
malcolmxy
Posts: 2,855
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3/10/2013 5:30:02 AM
Posted: 3 years ago
At 3/10/2013 3:13:34 AM, Buddamoose wrote:
Once everyone has those things, THEN you can go after the Mazeratti or whatever else you need to compensate for your tiny wiener.

Sig'd

Seems obvious enough, right - let's make sure everyone has air, water and food (the original essentials), then let's work on shelter, transportation and communications (the modern essentials), and THEN build some disposable wealth which is squandered via conspicuous consumption of goods these idiots are just gonna replace with the same thing (shinier casing) 2 months down the road.

What's efficient about buying 12 sets of end tables in one's lifetime when 3 sets of more durable end tables would more than stylistic shifts and changes in taste, but not be cheap, pieces of sh!t which fall apart when an overweight person so much as glances at them?

'Cause, where I'm from, that is called wasteful, not efficient. I'm real old school like that, though...feed the world and call a spade a spade.

It's a much easier way to get through life...there a lot less to try and remember to keep up with the latest hypocrisy of my clan, anyway.

It's why I'm almost never caught in a hypocritical paradox...I don't ever have to go back and look at what I said.

Does it make sense (from my perspective), was it honest (to the best of my knowledge) and is it kind (kind of)?

If yes to all three above, then I said it. If not, then I didn't.

(NOTE - kind in this context is meant to express an overall kind of generosity to my fellow man. At DDO, that's the kind of generosity with the expletives I like to show the fellas, man...)

If everyone here would agree to give people what they need, I'd agree to go along with this magical free market in the pursuit of obtaining those things which one wants.

Seems fair (and humane, in case these things mean anything to anyone), but I can't seem to get anyone to go along with it.

They're heavy into philosophy, though. I figured out philosophy when I was 6 years old with the help of one of the world's most famous philosophy major.
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suttichart.denpruektham
Posts: 1,115
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3/10/2013 8:08:03 AM
Posted: 3 years ago
I tried to conceptualized the business model you are proposing (correct me if I am wrong): so basically you want to transform every employees in the company in to some sort of collective ownership (like shareholder) and gave them freedom to work in a way the they felt most efficient, am I right?

Again correct me if I am wrong, but if that is what you are proposing, there is one major obstacle that you need to consider:

1. Most of the company did not make profit the first time they started a business, and if your employees are the shareholders they will be obliged to share this losses too. For example the company might not be able to generate any income at all for years, including salary. It can't pay dividend because there is no profit, it can't pay salary because you acted according to your own initiative and no once can take responsibility of your (and of course, you are not 100 percent free if you are taking salary from anybody because that guy will control your activity).

That is the reason most of the people spend sometime working before started their own business. So that they will have certain amount of capital (money) to running their company to the point of break-even and eventual profit. If the company is already successful and making stable profit, the ownership is 100 percent rightful to the entrepreneurs who started that business. They had endure the losses and pay for everything the employee had demand for work accomplished. It is really their right to decide what to become of the share. Some small share may be offered to the employees as an incentive but in general if the business is prosperous and stable, there is just no incentive to spend anything to increase productivity (Cash Cow Market, if you heard of the term).

2. There is also the matter of opportunity cost. I am an entrepreneur myself, so I can tell you this: you can start business anywhere, anytime, by yourself alone. If you have the willingness to withstand the lack of income for certain period of time. Want to sell something? Find a supplier you like and say, hey I want to be your agent, they will accept you with open arm.

So if I am not going to have salary, have no boss to back me up in case I screwed, why should I work collectively with the rest of the company? Why shouldn't I just take my customer and offered them my own product or service.

I think that is the point you should think about before proposing that idea.