Alternative Network for International Asset Management
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This note attempts to identify possibilities for an innovative solution to some asset-related problems of individuals, families and private organizations:
The note first identifies the different kinds of asset-related problems, since the persons who are laced with them are those to which this proposal would have to appeal for it to have any financial basis for successful implementation. The note then identifies other persons or groups who might be associated with the project to the benefit of all concerned. The possibilities for linking all these parties into an economically viable, coherent network are then discussed.
Some individuals, families or private groups are faced in their own estimation with one or more of the following situations:
1 . Ownership
1.1 Ownership of houses, villas, chalets, possibly with associated land (whether farmed or not), in excess of their basic requirements (and tax position) or in distant locations or in countries in which they cannot or do not wish to reside permanently.
1.2 Ownership of property (as in 1.1) which is rented to third parties under conditions which result in inadequate maintenance and care of the property
1 3 Ownership of property (as in 1.1) which cannot be rented because of the high probability of improper care (as in 1.2) and therefore remains inadequately used.
1 .4 Ownership of property (as in 1.1) which is only required by the owners for part of the year and is unused or poorly used for the remainder of the year.
1.5 Ownership of property (as in 1 .1) of which only a portion is used (e.g. one wing of a large house) under conditions which make the owners reluctant to rent any of the remaining portion of the property either because of rental problems (as in 1.3) or because of possible Inconvenience associated with interaction with other occupants.
1 6 Ownership of fixed assets in excess of basic requirements which the owner would be willing to have used in support of a positive programme provided
(a) he retained ownership and (b) the value of the assets increased (under some improvement contract) or was at least not diminished by the use made of them.
1.7 Ownership of financial assets (shares,bonds, etc.) in excess Of basic requirements which the owner would be willing to have used in support of a positive programme (under condition analogous to those in 1.6).
2.1 Individuals or families, possibly of relatively modest means, who are obliged to Invest and manage their assets through conventional banking and other corporations but who would be willing to divert some (or all) of their assets into an alternative asset management system under appropriate conditions.
2.2 Rental of property with excess space (as in 1 .5) under conditions which make the occupants reluctant to sub-lease any of the remaining portion of the property either because of sub-leasing problems (as in 1.3) or because of possible inconveniences associated with interaction with other occupants.
3.1 Private corporations, cooperatives, foundations and similar bodies who are obliged to invest and manage their assets through conventional banking and other corporations (as under 2) but who would be willing to divert some (or all) of their assets into an alternative asset management system under appropriate conditions.
3.2 Public corporations (in some special cases and possibly only as an exercise in public relations) which would be willing to invest some portion of their assets in an alternative system under appropriate conditions.
1. The situations identified in the previous section Imply not only
(a) the opportunity for alternative use of some assets currently "blocked" by conventional practices and attitudes, but also (b) the existence of Individuals who (although owners in their own right of some of the assets) could well be willing to make use of some of the other assets if they were available under some innovative arrangement.
The asset-owners could therefore well prove to be asset-users, if they had access to assets located elsewhere or under different conditions than their own. This is particularly true if the availability of assets located at different points within a country or around the globe could constitute, to the extent desired, an attractive framework to support some measure of an alternative lifestyle.
2. In addition to the asset owners, there are other individuals and groups who could beneficially be associated with any alternative approach to asset management if suitable arrangements could be made to ensure that the net result was economically viable and did not result in devaluation or misuse of the assets from the owners point of view.
Rather than identify the individuals or groups who could be users of the assets, it is more useful to identify the kinds of activity in which such individuals or groups could engage.
2.1 Health and well-being: Centers, courses, and related initiatives are an increasingly common response to a variety of developing needs, for example
2.2 Intensive care: Centers are increasingly more conscientious care in a higher quality environment for following:
A special case is the telephone-based service for those in a state of stress (e.g. suicide, anxiety, etc.)
2.3 Knowledge and culture related: It has been recognized that the post- industrial society will be highly dependent on the "knowledge industry". Much knowledge-related activity can be based on alternative environments particularly with the progressive decentralization of communications (telephone, telex, computer links). Examples are: design, programming, consultancy, education, etc.
Such environments are also very supportive of cultural and artistic activity: theatre, music, crafts, etc.
2.4 Conferences: Because of the Increasing dependence of society on meetings, and the increasing inadequacy of existing meeting environments, much could be achieved by developing high quality communication environments - facilitated by the kinds of people who would be attracted by such alternative settings (rather than by the equipment which might be used).
Financial and organizational basis
This section outlines how the different elements noted in the earlier sections may be linked together to the satisfaction of those concerned. It should be stressed that the objective is not to put forward a single rigid formula but rather a panoply of complementary organizational and financial devices which can be knitted together or used according to circumstances and particular cases.
1. Use of conventional corporate forms
The challenge is to be able to offer participation in financially sound, but specially constituted, corporate forms through one or more of the following:
1.1 Contract: This could be used where commitment is low or a trial period is desired. The contract could be designed to suit the participant by giving him access to some services in exchange for whatever use of whatever portion of his assets he was willing to associate with this project.
For example, he might simply be prepared to use one corporation in the network to supervise the rental of one of his estates on the open market and ensure that the property was appropriately maintained. The corporation in question could then be very similar to a normal real estate corporation. However, he might permit innovative rental conditions if suitable tenants could be found to use the property in some alternative manner (of which he might wish to approve and in which he night wish to participate personally). Contracts could be adapted to cover a wide variety of opportunities as they rose.
1.2 Incorporation: This could be used to cover the case of a particular set of assets belonging to one individual. It could also be used to link several individuals with similar or complementary assets. The owners could "loan" these assets to the corporation in exchange farad shareholding, for example. On dissolution of the corporation, the assets would be returned to the Individual owners.
1.3 Holding company: This device could be used to link together various corporations if such a linkage was considered desirable for tax or other reasons. The shareholders of the holding company could be Identical with the shareholders of the component corporations.
1.4 "Cross-linking directorships". This device could be used to link two or more corporations under certain conditions. The directors (or shareholders) of one corporation are also directors (or shareholders) of the others. In this way there is no legal link between the corporations, although from an operational point of view their policies would be harmonized.
1.5 Other devices: Where appropriate any of the following forms could be used: bank,insurance company, building society, etc.
The lack of originality in the possibilities noted above is a guarantee of their feasibility but not of their interest as an alternative approach to asset management. But as is implied in some of the points, there is no obstacle to linking together such Initiatives in a mutually supportive manner. The key to economic viability is firstly to ensure that complementary economic units are linked into the network in such a way as to avoid having to transfer funds out of it in exchange for services which could be supplied by an appropriately conceived addition to the corporate network. Secondly, if the services available from the corporations the network are sufficiently attractive and competitive, they will attract funds into the network.
2. Other fund-oriented organizational forms
As Is often the case, there is every advantage in linking such forms as foundations, trusts or similar bodies into the network. Again (and as is the case with corporate foundations in practice), the linkage could be achieved by having the same people as participants to the extent necessary.
3. Complementary function of other organizational forms
As outlined, the project is feasible but without special interest. In fact such projects could well be considered to have been Implemented already between individuals or groups with suitable assets (e.g. the extended families of the hyper-rich which use a complex mix of profit and non-profit forms to manage their assets). At the other extreme, Individuals without considerable assets can participate effectively in different cooperatives linked within the cooperative movement. (It is in the interest of cooperatives to transact certain business with each other rather than in the open market.)
But all the organizational forms and examples cited, although providing a viable economic base, do not supply any alternative element which would make the project both more interesting and more attractive. In fact, what is missing is the associative function whereby individuals are linked in terms of non-economic concerns which they share. As has been noted many times, economic and bureaucratic organizations necessarily deny any associative relationships amongst their staff or shareholders (although attempts may be made by their public relations departments to re-generate such relationships through staff dances, sporting activities, newsletters, etc.).
A whole range of non-economic activities may be developed amongst
(a) those linked within the essentially economic network noted above, and with (b) others who could be usefully associated with the network so that the economic aspects are appropriately counter-balanced.
Having provided an economic base through the first group, the mix of Individuals and activities included in the second should ensure the magnetic quality of the alternate network which is the justification for its continued existence.
4. Overall policy and control
The characteristics of a network preclude the emergence of any centralized control. The overall policy would consequently be the resultant of the interactions between the policies of different parts of the network - some of which might wish to be subject to centralized control or policies for some purposes or for specific periods of time.
The attitude toward overall policy might change in times of crisis for example or if efforts were made to take over or disrupt the network.
Policy guidelines might therefore be formulated in an association of all the people involved in the different units of the network. Those concerned could respond to them within particular more formalized units to the extent they considered appropriate in each case.
5. Externally-oriented policies
It is to be expected that any such network would be perceived as a protective device for elites and as such against the Interest of the underprivileged. Those maintaining this point of view would simply advocate that the assets of owners in any such network should be redistributed to the underprivileged. This well-known political issue will continue to be debated whether any such project is implemented or not The question Is whether the manner in which the assets are used within the network can attract non-owners, and whether the services t can perform both for participants and outsiders would be such as to counter much of the criticism that would otherwise be raised. As such the network could we'll constitute an asset protecting device in a hostile political climate (cf. the monastery network in the early Middle Ayes). Clearly different parts of the network could be more or less "open" or oriented specifically toward alleviating the conditions of the underprivileged - whether in the same area or in developing countries.
6. Management and operational support
The management of any particular unit within the network would clearly be the sole concern of that unit - except to the extent that it was deliberately constituted with the obligation to relate to other units on specific matters. However any unit could seek management and operational support in the form of advice or services from other units.
For example, it would clearly be in the network's interest to have mobile teams moving from one location to another providing specialized services. These might Include: building maintenance, garden/estate maintenance, accounting, crafts, group dynamics, medical care, etc. Such services could be funded from a specially constituted foundation within the network, under contract, or in any other manner agreeable to those providing the services. It is in fact the movement of people from location to location which would knit the network together, to the extent necessary, and ensure the necessary diffusion of skills and information.
7. Individual access policies
Given the basic flexibility and diversity, there are many ways in which Individuals could become Involved in the network, other than in their possible capacity as asset owners.
7.1 Club: One obvious conventional parallel is the club system or the country club. This gives individuals the right to use certain facilities for certain time periods depending on their commitment. The link to a club in one location may give reciprocal membership rights with clubs in other locations, possibly under specified conditions or for a defined period. Some clubs have residential facilities, again under certain conditions.
There is of course no need to make conditions explicit if those involved, or who might be Involved, have no difficulty in sensing the bounds which need to be respected to avoid abuse and disagreeable incidents.
Again, clubs may in practice be very exclusive or very open, depending on the environment which the membership core is attempting to maintain. Clearly care must be taken with any trend towards an environment where there is a high turnover of membership, little sense of permanence, and inadequate complementarity between the interests of participants.
7.2 Association: In addition to the club formula and its variations, of which there are many examples in practice, there is also the example of the association with a weekly or monthly meeting and related activities. Where the association's aims and members were in sympathy with those of the network, some of the network's facilities could be used by the association on whatever basis proved mutually satisfactory. It might even be of interest to explore the possibility of a reciprocal arrangement between the network and some existing transnational association with many local groups (e.g. Rotary, Scouts, etc.) if there was some basis for contact.
7.3 Innovative formulas: The above possibilities have the advantage and disadvantage of having been well explored. Other possibilities could also be envisaged with a stronger accent on the alternative style, for example:
Such different conditions for participation would result in a variety of sub-networks more or less loosely linked together and into the larger network.
1. This approach has the advantage that it could be developed into a loose organizational and financial framework which would I. attractive both as a means of managing assets and as a sound economic basis for promoting many alternative activities.
2. It has the merit of appealing to individuals who are unable to organize or finance an alternative use of their resources in a satisfactory manner - either because of lack of experience, skills or simply their Isolation from others with similar preoccupations. By linking such isolated initiatives or potential initiatives a much more powerful resource basis is created which is a guarantee of their continuing success. The argument of this paper is that the problems of many isolated initiatives are only really soluble within some larger organizational and financial context -- however loose this may be. The larger context can provide a pool of experience and skills to overcome the peculiar problems of each isolated project.
3. It is the creation of a larger context which is the present challenge, for it is such a context which would provide many of the essential multiplier, synergetic and catalytic effects and opportunities which are absent from isolated projects. If such a project could be appropriately promoted it could result in a very powerful (although minimally organized) network which would be an appropriate channel and focus for many initiatives, which cannot be linked to the alternative formulae currently advocated (and which are therefore locked into some inadequate linkage to the conventional system - despite the desire of those concerned to act otherwise).
4. The proposal does not represent an effort to organize and bureaucratize alternative initiatives. Rather it is an attempt to make available a range of organizational and financial packages such that, to the extent that they are found appropriate and are used for whatever period, they will provide an organic interlinkage between initiatives - thus enhancing the viability of the whole.
Whilst the proposal is directed to a group which has not yet been able to switch resources in support of alternative initiatives, clearly many of the organizational and financial packages could well appeal to existing alternative initiatives.
5. For those who consider that the general economic and socio-political situation will continue to deteriorate, the existence of such a network constitutes a useful form of insurance and a safeguard in the event .f economic collapse. Under such circumstances the ability to participate in networks with a non-economic component could be essential to well-being. Such a network could be the basis for a viable form of self-reliance.
6. Many features of this proposal stress a degree of de-structuring and flexibility which could be interpreted either as leading to a lack of operational coherence in the network as a whole or as blurring into the existing range of overlapping and interlinking initiatives. It is the strength of the project, however, that it can build flexibly from an existing position towards whatever degree of operational coherence is desired by different parts of the network.
It would be important for the network to ensure that creative thought was continually given to the identification of more suitable organizational and financial devices
(a) to respond to people who would otherwise be unable to link their activities to those of the network (b) to ensure that the network uses appropriate forms to avoid being blocked by legal or bureaucratic restrictions in particular countries.
In fact, the network might well be characterized more by the new kinds of organizational or other form being introduced at any time rather than by its dependence on well-tried forms.
7. Clearly in its present form this proposal merely outlines a number of lines of Investigations which could be pursued and developed into a coherent proposal based on a range of formulae for participation and with an indication of the range of services and opportunities which would emerge as the network grew.
Examples of some existing organizational/financial special forms possibly relevant to this proposal
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