Distributing Our Technological Inheritance
by Gar Alperovitz
Copyright 1994, Massachusetts Institute of Technology Alumni Association.
Technology Review (October 1994) Vol. 97, No. 7: 30-36.

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Ensuring a "Social Wage"

Though the efforts are clearly very limited, some countries and communities are beginning to experiment with mechanisms for ensuring a more sound foundation fo democracy by awarding citizens a "social wage" simply because they are part of the community. In 1976, for instance, voters established the Alaska Permanent Fund Corp., which calls itself "a public trust for investing in Alaska's future." Created from leasing fees paid by oil companies and other mining companies drilling on state-owned lands, the fund is designed to enable all Alaskans to reap "permanent benefits from its great oil bonanza." The trust, which collected 18 percent of the state's oil revenues between 1977 and 1993, operates independently of the normal state budget and invests in real estate, stocks, and similar vehicles that add further value to the pool.

The Alaska Permanent Fund has awarded some 41 percent of its earnings--over $ 4. billion--directly to Alaskan citizens since 1977. In 1992, half a million residents received $ 916 each from a principal of over $ 12.3 billion, and the fund is expected to pay out more than $ 16 billion in dividends by 2010. A famil of four that invests these dividends until the year 2005 at an 8 percent rate o return will accumulate an asset worth $ 67,752 in today's dollars.

Other states are finding additional ways to ensure public control of capital. North Dakota's 75-year-old state bank and Wisconsin's state-owned insurance company earn money for the public treasury, for example. And many states are experimenting with entrepreneurial programs. Connecticut has established a program that provides start-up capital and grants to promising small businesses developing new products; the state receives royalty income in return. Minnesota and Wisconsin also supply venture capital to private investors. Public-employee pension funds have similarly become powerful economic actors while gaining income for state workers: Retirement Systems of Alabama, for example, earns an average of over 9 percent on its investments, which include local lumber, chemical, steel, and aircraft industries. This growing trend toward "entrepreneurial government" is demonstrating practical mechanisms for using fundamentally different principles to distribute the benefits of accumulated capital and our technological inheritance.

Even more interesting, and perhaps more important, are activities at the local level: cities that have in some way communitized capital ownership.

David Osborne and Ted Gaebler, in Reinventing Government, have cataloged community-owned cable systems, hotels, fertilizer-manufacturing companies, towing services, real-estate development efforts, and professional sports teams from the Green Bay Packers in the National Football League to the Toledo Mud Hens in minor-league baseball. Supplementing this list are thousands of efficiently run city-owned electric utilities.

Another strategy for broadly distributing technological gains taps into increases in the value of land. Ebenezer Howard, Britain's turn-of-the-century father of modern city planning, proposed that planned communities along the lines of his famous Garden City vision buy up cheap agricultural land, which would be "vested in trustees, who hold it in trust for the whole community, so that the entire increment of value gradually created becomes the property of th municipality." Like the private developer who builds a shopping center, the community would obtain its returns by renting property at rates appropriate to the value of the site and its supporting infrastructure. This mechanism would allow social control over local enterprises, since citizens would decide who to lease land to and on what terms. According to Peter Hall, professor of city and regional planning at the University of California at Berkeley, Howard believed "he had found a third socio-economic system superior both to pure capitalism and to socialism. Local communal ownership of land would supply abundant resources for generous public services, creating a local welfare state, directly responsible to the citizenry."

Dozens of communities--urban, small-town, and rural alike--have established lan trusts based on this general principle, often using revenues to help build affordable housing. According to a recent study by the Urban Land Institute, 84 projects between 1982 and 1985 combined public ownership of land with economic development. In 1984, for example, the city of Santa Clara paid $ 88.5 million for 200 acres owned by the Marriott Corp., which had operated a "Great America" theme park on the land. Santa Clara sold the amusement park--but not the land--to Kings Entertainment Corp., which agreed to pay $ 5.3 million a year for the next 50 years for the lease, enough to cover the initial costs of the acreage within 15 years. Santa Clara thus took part of its future out of the hands of developers and put it into the hands of the community while making money for public use. Similarly, to maximize revenue, the Washington (D.C.) Metropolitan Area Transit Authority has promoted development of office and othe commercial buildings on Metro-owned real estate at seven rail stations since th mid-1970s. And the Port of San Diego, a public agency, manages the area's harbo and airport as well as other commercial development on publicly owned land.

If owning capital permits greater access to the flow of technology's benefits, then another obvious possibility is democratizing the ownership of capital directly--the goal of worker-owned enterprises. As Yale political scientist Robert Dahl puts it, "By dispersing income from ownership more broadly and by bringing executive salaries and bonuses into line typical of the better worker-owned firms , a system of self-governing enterprises would produce a mor equitable distribution of wealth and income."

Experimentation in this direction is also far more widespread than commonly recognized. The number of U.S. firms with some form of companywide stock ownership approaches 10,000 and encompasses over 10 million people--more than the membership in private-sector labor unions. United Airlines is the latest example. Some of these companies engage all employees in decision making while others retain a traditional management structure. They range from tiny shops to large manufacturing enterprises, among them plywood firms in the Pacific Northwest, Avis Rent-a-Car, and Weirton Steel.

In a similar vein, 4,000 consumer-goods co-ops, 13,000 credit unions, nearly 10 cooperative banks, more than 100 cooperative insurance companies, 1,200 rural cooperative utilities, nearly 5,000 housing co-ops, and 115 telecommunication and cable co-ops enable members to share in income.

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