# Overview
An economic model for organisations, built around contribution. :exclamation: Please note, although this analysis outlines some initial suggestions it is still incomplete and in need of ongoing refinement. One of the decisions that needs to be made is the future path for Contributionism as a model. It could continue to focus on organisations and go into more detail or it could also becomes more broad and epochal like Capitalism, meaning it might be more useful to articulate principles for making broad system changes across many economic systems. Ultimately, fairly rewarding active contribution should be at the centre of any economy. # What is contributionism? Contributionism is an economic model built around contribution. The term contributionism has already been used within other books and resources and can often share somewhat similar ideas. These [other definitions and usages of the term contributionism](/contributionism/what-is-contributionism/other-definitions-and-usage-of-the-term-contributionism) have been documented separately for clarity and transparency. Contributionism is focused on the organisation. Contributions represent the beating heart of every organisation. Under contributionism, contributions should be invited, properly measured and fairly rewarded. Contributions are used to determine how an organisation is owned, governed and incentivised. Organisations could include small businesses, large corporations, community projects or even local clubs. Any person or group of people that come together around a shared purpose could benefit from adopting contributionist principles in their organisation. ## **Types of contribution** The following contributions are either essential or often highly valuable to an organisation. **Labour** Labour includes any of the work, skills and expertise that is involved with creating and operating an organisation. Labour could be creative, physical, intellectual or social. These four types of labour are covered in more detail below. **Capital** Capital investment can be highly beneficial to organisations at different stages of their development. Capital could be used to help start an organisation or it could help with its maintenance and growth. Some common types of capital that can be beneficial for organisations include: * **Financial capital** - Financial assets such as fiat currencies, gold or cryptocurrencies. * **Physical capital** - Physical assets such as buildings, machinery, vehicles or electronics. * **Intellectual capital** - Intellectual assets such as patents, trademarks, copyrights or proprietary technology. * **Social capital** - Networks, relationships and social structures that can help with facilitating cooperation and economic transactions. **Consumption** In a market economy, consumption is the purchasing of goods or services. This is a consumer based contribution. Consumer purchases that generate profit for an organisation are often required for many organisations to survive over the long term. In other economic structures, such as those that are based on gifting, needs or that are access based, consumption is still a form of contribution as the demand for a good or service will still have an influence on determining whether more labour and resources get directed towards certain organisations over others. **Donation** People might make donations to certain organisations to help them with achieving their mission and goals. Donations can be an important contribution for sustaining not-for-profit and charity based organisations. ## **Types of labour**
🖌️ **Creative labour** Involves tasks that require creativity, innovation and artistic expression, such as art, design, writing, entertainment and content creation. 🔧 **Physical labour** Involves tasks that require physical effort and skills, such as construction, manufacturing, farming, maintenance and transportation. 🧪 **Intellectual labour** Involves tasks that require mental effort, analytical thinking, problem-solving and specialised knowledge, such as research, analysis, education, professional services and technical work. ❤️ **Social labour** Involves tasks that require emotional intelligence, empathy or relationship building, such as caregiving, counselling, social work, customer service, community engagement and human interaction. # Other definitions & usage of the term Contributionism The term Contributionism has already been used a number of times across different resources. ## Ubuntu Contributionism: A Blueprint for Human Prosperity Link: [ubuntucontributionism.org](https://www.ubuntucontributionism.org/) The book “Ubuntu Contributionism”, by Michael Tellinger, explores the concept of Contributionism as an alternative to the conventional economic and social systems that dominate modern societies. The philosophy outlined in the book is rooted in the ancient African idea of "Ubuntu" which emphasises unity within the community and the belief that an individual's well-being is deeply connected to the well-being of others. The book proposes a society where money is no longer a driving force, and instead, people contribute their skills, talents, and labour to the community in exchange for access to the resources and services they need. Tellinger argues that this system would eliminate many of the inequalities and injustices caused by capitalism, such as financial slavery and the concentration of wealth in the hands of a few. Tellinger envisions a world where communities are self-sufficient, relying on collaboration and mutual support rather than competition. He describes practical steps for achieving this vision, including the establishment of small towns that operate on Contributionism principles. These communities would focus on local production, sustainable energy, and the equitable distribution of goods and services, making them independent of external economic forces. Tellinger's ideas extend beyond theory; he has also founded the Ubuntu Liberation Movement and political parties in various countries to promote this system. His approach targets local elections, aiming to implement Contributionism on a small scale as a model for larger societal change. The book suggests a radical shift in how we can think about economics, politics, and community, challenging the status quo and proposing a new way of living that prioritises collective well-being over individual profit. ## [Contributionism.info](http://Contributionism.info) Link: [contributionism.info](https://contributionism.info) This website explores the opportunity of an economic system that is rooted in human contribution over profit. Capitalism is identified as a system that facilitates the exploitation of human labor and the extraction of resources in service to corporate profits. Contributionism is defined as a framework that defines an economy in terms of contribution. It emphasises people and planet over profit. ## **Intro to the Philosophy of Contributionism** Link: [medium.com/words-of-tomorrow/intro-to-the-philosophy-of-contributionism-b0afc91330d2](https://medium.com/words-of-tomorrow/intro-to-the-philosophy-of-contributionism-b0afc91330d2) In this article Martin Renzy outlines the idea for a new social media system that would allow for productive communication. Martin identified that what needs to be encouraged in a communication platform, as well as incentivised above all within a working community, is contribution. The article explores how such a system could work and some of the issues it will face such as censorship and rewarding constructive communication before then discussing the existing usage of the term Contributionism in the book Ubuntu Contributionism. ## **Roads to the Radical Right: Understanding Different Forms of Electoral Support for Radical Right-Wing Parties in France and the Netherlands** Link: [academic.oup.com/book/31927/chapter-abstract/267629858](https://academic.oup.com/book/31927/chapter-abstract/267629858) The book “Roads to the Radical Right” by Koen Damhuis uses the term Contributionism to describe a form of support for radical right parties. # Understanding capitalism The term “capitalism” emerged in the mid 19th century. It can be described as an economic system with private ownership of assets and the means of production, profit-driven production with capital accumulation and wage labour, with resource allocation that is coordinated primarily by competitive markets and prices. This all happens under a legal framework that enforces property and contracts rights. There are a number of different parts that are relevant and associated with capitalism as an economic system. For this resource we will focus only on two key areas. Free markets and companies limited by shares. ## Free markets A free market is an economic system in which the allocation of goods, services, and resources is coordinated primarily through voluntary exchange. Prices are set by supply and demand, with minimal central planning and intervention. With free markets, you’d generally expect to see multiple buyers and sellers that compete against one another. This competition helps to encourage innovation and quality improvements in an attempt to capture more of the market. Decisions around what gets produced is decentralised across individuals and companies, these individuals and companies will decide themselves what they will produce, how they will produce it and who they are producing it for. **Advantages of free markets** Free markets are often effective for encouraging innovation and entrepreneurship.A competitive market can help with increasing variety, quality and enabling more consumer choice. Free markets can also create an environment that is capable of handling rapid changes and that could be due to things like changing consumer preferences or technology. Decentralised decision making can also be a great way to solve problems, as with a free market a number of people can solve a problem in their own different way and then the market will decide which solution is the best. **Problems with free markets** Without any regulation, free markets don’t handle the problem of externalities. A company could keep creating products that pollute the environment and this growing cost to society would keep happening, potentially at an industrial scale if there weren't any interventions. A tax might be necessary to reduce and remove these negative externalities where possible. Free markets are also not very effective for providing public goods, like national defence or funding for public spaces, parks, research or creating open standards. And free markets can also easily lead to the overuse of natural resources, like from fisheries, woodlands or groundwater as some examples. Both natural monopolies and network effect based monopolies can also emerge in a free market, things like utilities and digital platforms such as social media networks or marketplaces. In practice, markets are rarely perfectly “free”. In reality, you need to prevent and correct these different issues that can happen using regulations, intervention and public provision. ## Companies limited by shares One of the early and more famous joint-stock companies you may have heard of is the Dutch East India Company, which was established in 1602. A shared based company structure helps with enabling people to invest into companies and receive a return on investment in the future if the company succeeded. Investors receive shares of ownership, and these shares last in perpetuity. The following factors represent some of the most defining features of a company that is limited by shares. **Capital share based ownership** Shares represent a form of capital that is used to determine ownership in a capitalist organisation. Shares are commonly received for capital investments or labour contributions. Owners and investors assume any financial risks with the potential for personal gain. **Class distinction** Capitalism commonly leads to a two class structure where there are owners (capitalists) and workers (employees). Employees are not entitled to receive any shares of ownership in a capitalist organisation. It is up to the goodwill of the owners if they are to receive any shares for their contributions. If employees do receive shares, the amount of shares given does not need to reflect the full value of the contributions being made by each employee. **Shareholder rights** Shares often give owners perpetual governance and incentive rights. For governance this means they are entitled to participate in decisions about appointing directors for the board. For incentives this means that whilst they are still holding the shares they will benefit from share value appreciation and any dividend payments. Not every share has governance rights and some shares can be capped in terms of the return on investment they are able to make. **Shareholder governance** Shareholders determine who sits on the board or directors. The board then determines who will fill any executive positions. Executives will then govern the organisation and how it is operated. **Shareholder incentives** Capitalist organisations commonly have the primary goal of maximising shareholder value. Shareholders benefit from the organisation due to any share value appreciation or through dividend payments that are made by the business. **Employee incentives** Employees are paid in salaries and wages. Sometimes employees receive share options or bonuses. Employee labour can be commonly treated as a commodity that is bought and sold in the labour market based on skills, market demand and negotiation. # Critiques of companies limited by shares Critiquing companies that are limited by shares and this approach for ownership, governance and compensation within an organisation The following critiques focus on the problems with companies limited by shares and how it influences how organisations handle ownership, governance and compensation. {% content-ref url="/pages/EYTlIwrFEXUEliaIpS1K" %} [Flawed justifications for unfair contribution treatment](/contributionism/critiques-of-companies-limited-by-shares/flawed-justifications-for-unfair-contribution-treatment) {% endcontent-ref %} {% content-ref url="/pages/Z2QmtVUM2Z1ETb4yjm3K" %} [Contributions are not respected](/contributionism/critiques-of-companies-limited-by-shares/contributions-are-not-respected) {% endcontent-ref %} {% content-ref url="/pages/RL32nMIsnB6z7lrcWWnL" %} [Flawed share governance and compensation rights](/contributionism/critiques-of-companies-limited-by-shares/flawed-share-governance-and-compensation-rights) {% endcontent-ref %} {% content-ref url="/pages/cRa3CAvC1U8Q6oYzrkc4" %} [Fair compensation often requires ongoing gestures of goodwill](/contributionism/critiques-of-companies-limited-by-shares/fair-compensation-often-requires-ongoing-gestures-of-goodwill) {% endcontent-ref %} {% content-ref url="/pages/7nX9plBX2tOUUzKtLxHG" %} [Risk of stagnant ownership and leadership that isn’t collectively accepted](/contributionism/critiques-of-companies-limited-by-shares/risk-of-stagnant-ownership-and-leadership-that-isnt-collectively-accepted) {% endcontent-ref %} {% content-ref url="/pages/Uegw3pPUVQTWx75j2W40" %} [Risk of motive, priority and incentive misalignment](/contributionism/critiques-of-companies-limited-by-shares/risk-of-motive-priority-and-incentive-misalignment) {% endcontent-ref %} {% content-ref url="/pages/hSRGSsYPM690v7UZXiby" %} [Excessive competition](/contributionism/critiques-of-companies-limited-by-shares/excessive-competition) {% endcontent-ref %} {% content-ref url="/pages/rCr5Ydm0NUzfmmdZgQfR" %} [Equal opportunity and meritocratic fallacies](/contributionism/critiques-of-companies-limited-by-shares/equal-opportunity-and-meritocratic-fallacies) {% endcontent-ref %} # Flawed justifications for unfair contribution treatment Earlier contributions are excessively rewarded at the expense of future contributions. Commonly used reasons to justify an excessive reward for earlier contributions are not fairly justified. **Critique** Earlier contributions are excessively rewarded at the expense of future contributions. Commonly used reasons to justify an excessive reward for earlier contributions are not fairly justified. **“Risk of loss”** If someone contributes towards a new organisation there is a risk the organisation fails and that they never receive a fair return on investment for their contribution. These contributions deserve to be rewarded more than a contribution that doesn’t face this risk as otherwise there is less of an incentive for people to start new organisations. The problem with this truth is the risk that contributors are taking on is not infinite. There is only a finite amount of risk that is being taken on. For instance there might be a 10% chance that the organisation will succeed, meaning the contributor is taking on the 90% risk that it doesn’t. In these scenarios it could be fair to reward the contributor with 10 times the value of their contribution due to this risk. Using companies limited by shares, this contributor is instead given shares of ownership that give them perpetual governance and compensation rights. This means the risk can be excessively rewarded far beyond the 10 times multiple that would have been a more reasonable reward based on the risk they initially took on. **“Took the initiative”** Taking any initiative in an organisation should be rewarded regardless of when the contribution is made. If someone takes the initiative to contribute beyond expectations and then generates a large amount of value and impact for an organisation it would be fair and just to reward that contributor for those efforts. It would not matter when this contribution happened. Aligning the incentives within an organisation means that any contributor should be rewarded for taking initiative to provide value and improve the organisation. **“Started the organisation”** Starting an organisation by itself is not a highly complex contribution. For a limited liability company these processes are often well structured and usually require someone to fill in a number of forms and pay an initial setup fee. What is more valid and important in terms of rewarding contribution fairly is that the value of the contributions and the risk of loss when making those contributions is taken into account when evaluating what compensation is fair and reasonable. Starting the organisation is an important initial contribution. However this contribution does not justify the unfair or unequal treatment of future contributions. All contributions should be treated fairly and equally regardless of who started the organisation. **Importance of rewarding risk taking** The main factor that does justify an increase in reward for earlier contributions is the risk of loss. Under companies limited with shares, this risk of loss is rewarded in perpetuity even though the risk is not infinite. Calculating a rough percentage probability of success or failure can help with determining a more reasonable and fair reward for contributions that are taken on this risk of loss. Both capital invested and labour contributions made towards the organisation should be rewarded fairly by taking into account the risk of potential loss. However both of these contributions should not receive perpetual compensation and reward for a finite amount of risk. All contributions are important to an organisation and should be rewarded fairly. Earlier and riskier contributions should receive an increased amount of compensation to respect the risks of loss involved in making those contributions. # Contributions are not respected Contributions do not need to be respected in companies limited by shares. **Critique** Contributions do not need to be respected in companies limited by shares. **Disconnect between contributions and ownership, governance and compensation** Companies limited by shares is an ownership system where shares represent perpetual ownership of an organisation. These shares will often give holders perpetual governance rights and influence in the organisation. Shares can also give holders perpetual compensation rights, where they’ll benefit from the growth of the organisation through share value appreciation or from dividend payments. Companies limited by shares do not create a structure that necessitates that contributions are fairly rewarded. Companies limited by shares can often lead to situations where some contributors receive shares and others do not. It can commonly create situations where the distribution of shares is not based on the value and impact of the contributions that are being provided by each person. This outcome creates a disconnect between contributions and ownership, governance and compensation. This disconnect creates an environment that enables unfair compensation outcomes for certain contributions. **Rewarding earlier contributions over future contributions** Companies limited by shares most commonly reward earlier contributions with shares of ownership due to the risk they took to create the organisation. If the company breaks even or raises more investment the incentive and need for founders to issue more shares for future contributions is reduced. New shares would dilute the existing shareholders. This incentive can create an environment where future contributions can be treated differently due to a lack of incentive to fairly evaluate and reward these future contributions with shares of ownership. The two class system that emerges in companies limited by shares are owners and workers, this distinction can become increasingly exploitative as it incentivises the excessive compensation of earlier financial and labour based contributions at the expense and exploitation of future contributions that do not receive any shares of ownership to benefit from any price appreciation or dividend payments. **Labour contributions are commonly not respected** Company owners pay employees a wage or salary. Owners benefit from the surplus value that is generated by workers labour. It is up to the goodwill of the owners to determine what percentage beyond the wages or salaries, if anything, is going to be paid to the workers for the labour that has generated the available surplus. Companies limited by shares are often focussed on the importance of maximising shareholder value. This objective can translate into an effort to minimise the amount of income that workers receive so that the maximum amount of profit can be achieved for shareholders. This goal of maximising shareholder value is a fundamental reason why labour can be commonly exploited due to the priority of maximising shareholder value. **Disincentivising labour contributions** Labour is often alienated in a capitalist system as within companies that are limited by shares it is possible for workers to have little to no influence over the products and services they create or how their work is carried out. Workers may not be properly incentivised to reach their full potential as the surplus from their labour is often extracted for the benefit of the shareholders. If labour is not fairly compensated based on the value of their contributions there is a lack of incentive for the workers to perform their best. Companies limited by shares can create environments where workers become incentivised to minimise the effort they make within the organisation due to unfair compensation outcomes for their contributions. Workers would have an incentive to maximise their efforts towards creating new organisations so that their labour won’t be exploited for someone else’s benefit. **Misaligned incentives to record, measure and evaluate contributions** Companies limited by shares can create a two class system of shareholders and workers. A shareholder is incentivised to pay employees enough so that they stay at the company but not too much that it would reduce the profit margins that the shareholders benefit from. Due to this incentive, companies that are limited by shares doesn’t have a large incentive or justification to properly record, verify and evaluate contributions. This incentive results in a lack of justification for owners to create systems that effectively record, verify and evaluate contributions as this could help to empower workers with more knowledge and awareness about the full value of their contributions. Employees being able to more easily prove their value should more easily be able to find another job that would pay them for the full fair value of their contributions. Within companies limited by shares, it is instead in the interests of the shareholder that a worker's contributions are not publicly recorded and evaluated as this could enable external organisations to identify the best contributors and offer them better compensation. The time and cost involved in recording these contributions is also not in the interests of shareholders as recorded contributions could result in the need to increase the salaries of workers that are now more easily able to find higher income jobs. Shareholders and the directors they select are incentivised to suppress a worker's understanding of their contribution value wherever possible for the shareholders benefit. This can help to prevent the loss of their best performing talent and also could help with minimising the amount they need to pay their workers due to people's lack of awareness about their own value. # Flawed share governance and compensation rights Perpetual governance and compensation rights is a flawed approach that is commonly adopted by companies that are limited by shares. **Critique** Perpetual governance and compensation rights is a flawed approach that is commonly adopted with companies that are limited by shares. **Shares of ownership** Shares are used to determine who owns an organisation. These shares also represent governance and compensation rights that last in perpetuity, they will not lapse or expire. Shares give holders the right to influence how the organisation is operated by deciding who sits on the board of directors. Shares also give holders the benefit from any appreciation in the value of shares due to the growth of the organisation. Shareholders could also benefit from dividend payments that get paid out by the organisation. **Giving every contributor perpetual governance and compensation rights** If everyone receives shares that give them perpetual governance and compensation rights the amount of historical shares that get rewarded would constantly increase over time. This means that future contributions would be increasingly compensating a larger amount of historical contributions. At some point these historical contributions become over compensated and are being excessively rewarded at the expense of future contributions. The incentive to contribute to this organisation could reduce over time due to the financial burden of rewarding historical contributions. A company that is able to keep growing larger would be able to get away with this approach for longer as there would be a growing amount of compensation that is available to compensate the new contributions along with a growing amount of historical contributions. **Rewarding only some contributors with perpetual governance and compensation rights** If only some contributors receive shares of ownership this leads to an environment where some contributors are being excessively rewarded whilst other contributors are not being treated similarly. This approach can be common in companies that are limited by shares. Earlier contributions are often rewarded with most or all of the issued shares. Future contributions could then be given little to no shares. This creates an environment where future contributions are never treated in a similar way to earlier contribution. This approach of rewarding some contributions with shares and not others is inherently unfair as it means earlier contributions get the full benefit of the organisation's growth whilst future contributions get little to none of that benefit. In some cases the future contributions could be more impactful and responsible for the success of the company over the earlier contributions, this only exacerbates the unfairness of this approach. **Exacerbating inequality** Perpetual governance and compensation rights lead to situations where earlier contributions can be excessively rewarded at the expense of future contributions. These governance and compensation structures can lead to an increasing amounts of inequality due to an unfair distribution of governance and compensation rights for workers that received no shares but that helped to operate and grow the organisation. **Unfair ownership inheritance** Perpetual governance and compensation rights are also problematic due to inheritance. An owner may pass on their shares to someone else that has made no contributions to the organisation at all. The person that inherits these shares may also have no understanding or involvement in the organisation and how it operates. These individuals would inherit shares that give them perpetual influence over the organisation. Organisations are reliant on the goodwill of these new shareholders and that they are aligned with the priorities and motivations of those that operate the organisation. Individuals that inherit these shares could perpetually benefit from other people's contributions regardless of whether they make any contributions to the organisation at all. These new owners can become a deadweight loss to the company as they never need to contribute towards the organisation but they still get to perpetually extract out value from any growth or ongoing success of the organisation. # Fair compensation often requires ongoing gestures of goodwill Maximising shareholder value can lead to environments where labour is exploited. Workers are often constantly reliant on the goodwill gestures of shareholders to not exploit their contributions. **Critique** Maximising shareholder value can lead to environments where labour is exploited. Workers are often constantly reliant on the goodwill gestures of shareholders to not exploit their contributions. **Incentivised to exploit contribution** The disconnect between contribution and ownership creates an environment where the shareholders of an organisation have an incentive to try and exploit other people's contributions so they can financially benefit themselves. Some organisations might issue shares to workers for their contributions, however it is not required that they give them the amount of shares that would represent the fair value that they have provided. Any small gap between what was fair and what they receive would just mean this is a milder form of exploitation. Other organisations might decide to give workers no shares and also actively try to minimise the income that workers receive. This is a more severe form of exploitation. Companies limited by shares can create an environment where owners are incentivised to exploit other people's contributions. The ease and ability for workers to earn income elsewhere will impact the ability of shareholders from being able to exploit them. Workers with more employment options will be more difficult to exploit than workers who have fewer job opportunities that they could pursue. **Goodwill gestures are unreliable** Workers that are part of organisations that treat contributions more fairly could face an ongoing risk that the leadership changes their approach to evaluating and rewarding contribution. If the owners change there is a risk that the new leadership does not continue the gesture of goodwill that the previous owners were making. The issuance of shares to workers would help to reduce or remove the issues around requiring goodwill gestures from shareholders and leadership. This is because a wider distribution of shares across the organisation would mean that all workers become owners that can then influence how the organisation is operated. **Companies limited by shares can still compensate people fairly** Owners might not be incentivised to compensate workers fully for their value however this can still occur in numerous organisations. Workers are often reliant on the goodwill gestures of owners to be paid fairly. However some organisation owners may decide to properly reward each contributor with larger amounts of compensation or shares of ownership that reflect the value of their contributions. This could give workers more of an opportunity to influence the organisation or it could mean they are better rewarded and more fairly. # Risk of stagnant ownership and leadership that isn’t collectively accepted Companies limited by shares can result in stagnant ownership and leadership. Leadership might not be collectively accepted by contributors in the organisation. **Critique** Companies limited by shares can result in stagnant ownership and leadership. Leadership might not be collectively accepted by contributors in the organisation. **Risk of stagnant and unbalanced ownership** Capital based shares give the holder perpetual ownership rights within an organisation. These shares commonly represent perpetual governance and compensation rights. As an organisation gets closer to profitability there is an incentive for existing shareholders to minimise the distribution of any new shares as this would dilute their own ownership in the organisation. This would reduce the opportunity for maximising future profits for themselves. This incentive creates ownership structures that can become increasingly stagnant and unbalanced over time. Existing shares are less likely to be sold to other people if the organisation is profitable and growing. Future contributions, regardless of their value and impact, can become more easily exploited in this environment due to the incentive for owners to not reward these contributions with shares of ownership that reflect the proportional value of the contributions they are making. **Risk of stagnant leadership** Under companies limited by shares, those in executive positions are selected by the board of directors. The board of directors are selected by shareholders. This ownership structure means that workers will often have little say in who gets selected to lead an organisation. This can be problematic in situations where a majority of workers disagree with the leadership over certain decisions. If workers need the income more than they dislike the decisions of the leadership there is a higher probability that they will stay in the organisation even though they might not want to. Shareholders have little obligation to listen to and respond to the preferences of workers unless an existing law or regulation already exists that determines what they can or cannot do. Workers may agree with leadership and their decision making at the beginning of an organisation however this can change over time. If this does happen the workers would have little to no authority to change the leadership. Workers may have invested years of their time and effort to then experience a change in priorities from the leadership that leaves them in a situation where they feel the need to leave the organisation that they helped to build up from the beginning. Alternatively they would have to accept the leadership even though the majority of workers might disagree with their decisions. Workers are reliant on the shareholders to identify and replace poor leadership in these situations. Leadership could remain unchanged and become increasingly stagnant if the priorities of shareholders are still being addressed. Leadership that is generating a lot of profit for shareholders could result in a lower incentive for owners to change the leadership when this current arrangement is working well for them. Shareholders may decide to ignore other factors such as worker discontent and any disagreements with leadership if the leadership is generating a large profit for the shareholders. Shareholders can keep their shares over the long term, they have no obligation to sell them. New shares might not be issued due to the organisation already being profitable. Stagnation in ownership or leadership can result in the same people governing the organisation for long periods of time. There is an ongoing risk that the leadership might not be well aligned with the priorities and preferences of the workers that contribute towards the organisation. # Risk of motive, priority and incentive misalignment The motives, priorities and incentives of capitalist owners and leadership can become increasingly misaligned with workers. **Critique** The motives, priorities and incentives of capitalist owners and leadership can become increasingly misaligned with workers. **Misaligned motives and priorities** Within companies limited by shares the motives and priorities of shareholders and leadership do not need to be fully aligned with the workers. They also do not need to be fully transparent to the workers. Owners could state that they have certain priorities that are aligned with the values of the workers but their actions and decisions could provide evidence that they have other priorities and motives. For instance, a pharmaceutical company could state its most important priority is consumer safety and that their second most important priority is generating profit. If the pharmaceutical company decided to cut corners to save on costs during the trials of a new drug or vaccine, this could help with revealing an ulterior motive and the reality that the owners are actually prioritising profit over consumer safety. A lack of collective ownership and representation in decision making could lead to these situations where a minority of owners can make decisions that are not aligned with the values and interests of the majority. These misaligned motives could create a highly demotivating environment for workers. Workers could feel less confident about what the organisation is truly prioritising and what the motives of the owners actually are. Workers could also feel alienated in situations where there preferences and opinions about what should be prioritised in the organisation are ignored and not properly represented. Organisations that have hidden motives or that provide workers a lack of ability to influence organisation priorities can leave workers in a situation where it is more difficult to align their contribution efforts with their values. **Misaligned short term incentives and values** Shareholders and leadership can have incentives to adopt practices like cost-cutting, layoffs and stock buybacks to improve any financial metrics in the short term. These practices can harm the company’s long-term health and the well-being of its workers. Employees that are not sufficiently rewarded for their contribution efforts would not be incentivised to work hard for an owner that exploits their labour. Owners have the incentive to outsource labour, to cut costs by avoiding environmental regulations and to not fully comply with local regulations if it means it will generate more profit in the short term. These practices can be misaligned with the values of the other workers in the organisation and create a demotivating environment for people to work in. **Misaligned incentive to issue shares** Companies that are limited by shares mean people are given perpetual incentive rights in the organisation. This can make it more common to excessively compensate the earlier contributions as a larger amount of shares is often distributed during this initial phases of an organisation. Shareholders are incentivised to minimise the dilution of their ownership whenever this is possible as this would reduce any future profits they might receive. This incentive and approach to ownership can lead to an increasingly uneven distribution of compensation rights over the long term. The distribution of any financial reward for contribution would likely not reflect the fair value of each person's contributions made towards the organisation. A worker could make a contribution that completely transforms the organisation. That contribution could make the organisation far more valuable than it would have been than without this person's contribution. With companies that are limited by shares, this worker would not be entitled to receive a fair reward based on the value and impact of their contribution. Instead they would rely on the goodwill of the owners to reward them for the value they have provided. Shareholders are still incentivised to reward these contributions enough so that these type of contributions continue to happen, but not too much that it would sacrifice their own profits achieved through company growth or dividends. Companies that are limited by shares can creates an environment that incentivises the perpetual extraction of profit generated from workers labour. # Excessive competition Companies limited by shares can incentivise excessive amounts of competition due to the perpetual need for workers to create their own organisations to be fairly rewarded for their contributions. **Critique** Companies limited by shares can incentivise excessive amounts of competition due to the perpetual need for workers to create their own organisations to be fairly rewarded for their contributions. **Excessive competition** Companies limited by shares create a two class ownership structure that often disconnects contribution with ownership. This structure can incentivise the exploitation of labour as owners can financially benefit from minimising the amount of income that workers receive. It can be common that workers do not receive a proportional reward based on the value and impact they generate with their contributions. Workers that want to be fairly rewarded can solve this problem by creating their own organisation. This incentive to exploit labour leads to a perpetual incentive for workers to create new organisations just to try and receive compensation that reflects their full value. Instead of fixing the incentives within existing organisations, companies limited by shares can encourage excessive competition through the incentive to continuously try and exploit labour. **Wasted labour and resources** Organisations that do not fairly reward peoples contributions can lead to situations where it makes sense for workers to try and start their own organisation. Creating a new organisation can be highly wasteful when compared to the alternative of operating organisations in a manner that rewards all forms of contribution more proportionally based on the value that was provided. Due to the incentives within companies limited by shares, new organisations may need to replicate many of the things that are required to operate the organisation to compete. This could mean new buildings, machinery or tools might be needed. This can be difficult to justify if the demand is not greater than what is being fulfilled by the existing organisation. This creates a risk that these resources are wasted unless this new organisation is able to outcompete the existing organisation. If they do outcompete the existing organisation then there is a subsequent risk that the resources of the existing organisation are then sat idle and wasted. All of the labour involved in setting up and competing with the other organisation could have been used to improve the existing organisation with better aligned incentives internally. The less wasteful and more pragmatic solution would have been to ensure that all contributions are rewarded fairly within the existing organisation. This would then give everyone the incentive to make the existing organisation the best it can possibly be. This is a more desirable outcome than incentivising workers to create new organisations just to correct any issues around unfair compensation, stagnation or failings from the existing organisations. # Equal opportunity and meritocratic fallacies Companies limited by shares do not always result in meritocratic organisations that have equal opportunity. **Critique** Companies limited by shares do not always result in meritocratic organisations that have equal opportunity. **The fallacy of equal opportunity** There is an equal opportunity for people to start new companies that are limited by shares. However, there is often not an equal opportunity for individuals within an organisation to be treated fairly. Workers within an organisation are not entitled to a fair reward based on the value of their contributions. Workers rely on the goodwill of owners to receive fair compensation. Owners are incentivised to maximise their own profit by minimising the amount they spend on workers. If a worker is unhappy with how an organisation is being operated they will often have little to no influence in making changes to that organisation. The notion of equal opportunity within a company is that any worker that disagrees with how an organisation is operated can choose to create their own organisation if they want to. This approach is often highly counterproductive as workers may just want to change a small number of things about how the existing organisation is operated but they have a limited voice and ability to collectively agree with the other workers what changes should be adopted. Changes that could be highly beneficial to the workplace. A number of organisations could have natural monopolies such as electric, water or gas providers or entrenched digital networks with large amounts of adoption such as online marketplaces or social networks. It is not practical to keep recreating these organisations due to the high cost and network effects they have. It is also a highly wasteful approach for workers to use a large amount of resources to start a new organisation instead of being more pragmatic and adopting a fairer approach to govern and improve the existing organisations. Workers are often subjected to the rules and policies of owners due to the impracticalities of duplicating existing and well established organisations. **The fallacy of meritocracy** The most hardworking and performant worker in an organisation is not entitled to receive the proportional and fair reward for their contributions. Instead it is up to the owners to decide how compensation is handled. This is not meritocratic for workers as regardless of how hard they work they are reliant on the owners to receive fair compensation for their labour. The owner is only incentivised to reward the contributor enough to keep them in the company but not too much that it reduces their profit margins that they benefit from. Organisations are also not meritocratic for the owners as they are often receiving the gains and upside from other peoples labour instead of being due to the merits of their own contributions. A truly meritocratic organisation would be one where contributions are proportionally rewarded based on their actual value and merit. Owners are not incentivised to create a truly meritocratic organisation. # Principles A list of principles for contributionism The following principles outline the fundamental ideas and concepts that underpin Contributionism as an economic model. Contributionism is focused on how organisations are owned, governed and incentivised. These principles represent the foundational guidelines and rules that an organisation should follow if they want to adopt contributionism. {% content-ref url="/pages/AMxriehDtCsYAYEztMaA" %} [Respect contribution](/contributionism/principles/respect-contribution) {% endcontent-ref %} {% content-ref url="/pages/AcrxpcfK1mumHTUodPyN" %} [Contributor & public ownership](/contributionism/principles/contributor-and-public-ownership) {% endcontent-ref %} {% content-ref url="/pages/oQpZDmnGhGKNHCB84j57" %} [Contributor governed](/contributionism/principles/contributor-governed) {% endcontent-ref %} {% content-ref url="/pages/xUingLqeZ5Esb2TYlaah" %} [Temporary governance rights](/contributionism/principles/temporary-governance-rights) {% endcontent-ref %} {% content-ref url="/pages/Ys9I7Vlg4eKVXdY82mrd" %} [Temporary compensation rights](/contributionism/principles/temporary-compensation-rights) {% endcontent-ref %} {% content-ref url="/pages/weF9efL7B7mlNUcXi3p2" %} [Transparent priorities](/contributionism/principles/transparent-priorities) {% endcontent-ref %} {% content-ref url="/pages/7ILkJr1CkDwRY1vZWbNN" %} [Collectively accepted leadership](/contributionism/principles/collectively-accepted-leadership) {% endcontent-ref %} # Respect contribution All contributions should be respected. **Principle** All contributions should be respected. **Contribution is the foundation of any economy** Contributions are required to create and operate any organisation. Some of the main contributions that an organisation can require or benefit from include labour, capital, consumption and donations. Organisations will need varying amounts of each of these contributions to operate effectively. One sign of a highly functioning economy is where there are many people making ongoing contributions to one or multiple organisations that generate value and impact for society. To consistently achieve this outcome over the long term, contributionism advocates for organisational structures that are effective at inviting, measuring and rewarding contributions. **Inviting contribution** * **Identifying** - The first step of respecting contribution is that an organisation first needs to identify which contributions would be valuable to the organisation at that point in time. The contributions that are valuable to an organisation in the short term can be different than the ones that will be most impactful in the future. The needs of the consumer, donator or worker could change over time as their preferences change and as the environment that the organisation is operating in changes. An organisation will need to repeatedly identify and select the most important contributions it requires and those that it could benefit from in the near future. * **Encouraging** - An organisation will need to decide how they want to share information about which contributions the organisation is looking for and what it can offer to attract those contributions. Organisations benefit from attracting skilled talent and capital that can help the organisation with achieving its mission and addressing its current priorities. A clear mission, set of priorities and details about how contributions would be rewarded can help with encouraging people to contribute. * **Accepting** - Organisations need to decide how new contributions will be accepted by the organisation. For labour based contributions this could mean a job advertisement with a defined hiring process. For capital investments this could mean inviting people to meetings and discussing investment terms. Organisations will need to carefully decide which people they accept that would then be able to make their contributions. Some organisations may prefer to have a more open process that accepts a wide range of contributions, others may prefer more processes and structure to carefully select which contributors will be accepted. **Measuring contribution** * **Recording** - All contributions need to be recorded so that they can be properly verified and evaluated by the organisation. A record of all contributions means that an organisation is able to use this as historical information to reflect on any previous contributions, improve future decision making and inform new prospecting contributors. * **Verifying** - Recorded contributions need to be checked and verified by an organisation to ensure they are legitimate. The value of a contribution could often influence the amount of governance and incentive rights that someone receives. There is an incentive for people to lie or exaggerate about their contributions if they are able to do so as this would increase their governance and incentive rights. Verification will be an important part of ensuring that contributions are valid and correctly recorded. Some contributions are easier to verify than others such as online digital contributions whereas other contributions may require more checks and balances. * **Evaluating** - Organisations need to evaluate the performance of workers that provide their labour so that it can reward people who have demonstrated high performance. Evaluating contributions could include research and analysis of external contribution examples from other organisations that are similar to the ones in the organisation and how they were rewarded. Internally the organisation could also compare each person's contributions with others to better understand the impact and value of each of their contributions. **Rewarding contribution** * **Paying** - Workers could receive income, bonuses or dividends for their contributions. Investors could receive loan repayments or revenue share income depending on the type of capital that has been invested into the organisation. Organisations need to fairly compensate any of the contributions that people provide. * **Reflecting** - Certain contributions could generate a larger amount of value and impact for an organisation over a number of years. Due to this factor, organisations may want to reflect on historical contributions and determine if there are contributions that have been particularly impactful for the organisation that could be further rewarded. Rewards for impactful contributions could come in the form of dividend payments. * **Appreciating** - The final part of rewarding contributions is to ensure that contributions are being properly recognised and appreciated across the organisation. This could translate into sharing awareness of the different contributions that have been happening across the organisation at weekly, monthly or annual intervals. It could mean hosting events to celebrate everyone's contributions or more specific contributions. Each organisation could approach contribution appreciation in a different way depending on what is suitable for the type of environment that the contributors prefer to operate in. **Compliance with this principle** Organisations will need to collectively decide how they want to respect contributions. For example, it is desirable to record the contributions of each contributor to improve the accuracy of any evaluations. Recording contributions is not required for contributions to be respected. Some organisations may decide to simply make sure they observe who is making what contributions and then make sure they take this into account when deciding what each contributor should be paid for their efforts. The larger and more complex an organisation is, the more valuable it will be to record contributions properly to make it easier to verify, evaluate and reward contributions more accurately. Organisations that want to have a more competitive environment for rewarding contribution will particularly benefit from accurate records of contribution. # Contributor & public ownership Organisations should be contributor owned or publicly owned. **Principle** Organisations should be contributor owned or publicly owned. **Ownership in contributionism** Contributionism advocates for social ownership. Organisations are either privately owned by contributors or publicly owned by the government. Organisations need to self determine which contributors will be the most suitable for handling the governance of the organisation out of workers, consumers and donors. For situations such as for national defence, these organisations will be better suited for public ownership. **Contribution based ownership** Contribution based ownership means that contributions would be used to determine who has ownership in the organisation and who will receive governance rights for those contributions. Contributor ownership approaches include labour, consumption and donation based approaches. Organisations could decide to become a type of worker, consumer or donator based cooperative however a formal legal structure is not required for organisations to operate under contributionist principles. Each of the following contributions can be suitable as an approach for determining ownership: * **Labour** - Labour is a contribution that will nearly always be required to create, maintain and operate an organisation over the long term. Therefore workers are naturally a default suggestion for how many organisations will want to be owned and governed. Workers should usually be the most well informed about exactly how an organisation operates and how it could be operated effectively in the future. The experience and knowledge gained by contributing labour towards an organisation should result in workers being a highly suitable group of individuals for owning and governing the organisation that they are responsible for. * **Consumption** - Consumption is often a necessary contribution for an organisation to survive over the long term. Consumers that pay for products and services could become owners of an organisation. Web3 ecosystems are a good example of consumer based ownership where the common intent of these networks is that they are owned and governed by the people that use them. * **Donations** - Donations can be a necessary contribution for some organisations to thrive over the long term such as not-for-profits and charities. These organisations might not generate revenue from offering products and services. Donors that pay for the operational costs of an organisation could become owners of those organisations. A group of people may come together to donate their money towards a charity that could help with benefiting the local community. In these situations the donors might prefer to have ownership over the organisation and that their donations reflect the contribution that influences how the organisation is owned and governed. **Contributions that are less suitable for long term ownership** * **Capital** - Capital is a supplementary contribution. Not every organisation requires capital investments to get started or for it to be maintained and operated over the long term. Capital can be highly useful for certain organisations at certain stages of their development. Capital by itself does not create a highly functioning and profitable organisation. Instead, it is the labour that is able to utilise capital effectively that will determine whether an organisation is successful or not. In situations where capital is required, an agreement needs to be made about what the value of that capital is and what a fair and reasonable return on investment should be. Some types of capital don’t need to be invested and can be returned if the organisation fails such as property (physical capital) or patents and intellectual property (intellectual capital). If the capital can be returned to the investor they do not need to receive governance rights in the organisation as they are not risking the loss of their capital. Instead the type of governance rights that might be more suitable in those arrangements is that they might be able to influence how the asset can be used or modified if this was necessary. Financial capital investments are suitable for utilising loan structures that can account for the risk of the organisation failing. These loans could give the investor temporary governance rights so they are able to protect their interests. This is warranted as the capital they invest is at risk of being lost entirely if the organisation fails. Financial capital investments can in practice lead to organisations that will be governed by capital investors due to the amount of governance rights they receive. However this would be temporary as the governance rights would eventually lapse once the loan is repaid. The amount of voting power that an investor receives in their governance rights could be proportional to the remaining amount of capital that needs to be repaid. **Public ownership** Public ownership means the government owns the organisation. Workers would govern these organisations and receive governance rights for their contributions. As the organisation is not privately owned, workers would not be able to sell the organisation to another person or organisation. The same contributionist principles can be adopted in organisations that are publicly owned. A benefit of adopting contributionist principles, such as proper records of any contribution, is that it would mean that publicly owned organisations could be more easily transitioned into privately owned organisations due to the record of who has contributed towards the organisation. **Common ownership** Common ownership focuses on how resources or assets can be collectively owned without the pursuit of individual profit. Natural and digital resources could be owned collectively by a community to help prevent the misuse of those resources. Any organisation could be required to seek approval to use resources that are being governed under a common ownership model. Common ownership helps to prevent the need for community ownership over an entire organisation as the exact resources or assets that need to be protected can be governed in isolation by the community. How people decide to collaborate together in an organisation can be left to the contributors to decide as long as they comply with any relevant laws and regulations. **Compliance with this principle** When a new organisation is created the contributors involved will need to decide which type of ownership is most suitable. Organisations could be owned by workers, consumers or donors or they could be publicly owned. Anyone who contributes towards the organisation should know how the organisation is owned as this will determine who receives governance rights. Governance rights will determine who is responsible for governing the organisation. # Contributor governed All organisations are contributor governed. **Principle** All organisations are contributor governed. **Rationale for contribution based governance** Contributor based governance is a highly desirable outcome. Anyone that contributes towards the organisation would receive governance rights meaning they would have an influence in organisation decisions. In competitive environments, the people that actively contribute the most towards an organisation would be the ones that receive the most influence in how the organisation is operated and incentivised. In cooperative environments, the organisation may simply adopt a one person one vote type of approach for decision voting power. Contributor governed organisations have a number of advantages: * **Evidence of involvement** - Governance rights are distributed based on people's contribution. Contributions can be recorded and verified. Evidence of making contributions towards an organisation are useful for aligning governance influence with people that have demonstrated more involvement with an organisation. Higher involvement can help to indicate a larger amount of interest or commitment towards the organisation. Organisations could potentially require a threshold amount of contribution for people to receive governance rights. Governance rights could alternatively be awarded proportionally based on the value of each person's contribution. It could also be a custom variation between these two approaches. * **Organisation alignment** - The more that someone contributes towards an organisation the more that they are demonstrating a commitment towards making the organisation successful at achieving its goals. Some organisations may want to ensure that governance and voting power is based around contribution. * **Equality and inclusion** - Contribution based governance would mean that all contributions are respected and treated equally. For instance, organisations that are worker owned would always give governance rights to people that contribute their labour. * **Informed decision making** - Organisations that are governed by the contributors that have been actively contributing towards an organisation should be able to make decisions more quickly and with less effort than people who have not been contributing. Each contributor would likely have a level of understanding about how the organisation operates and what the organisation is trying to achieve. Contributor based governance helps to align the responsibilities of governance with people that should be the most sufficiently well informed about how to operate the organisation. **Those that are affected by a decision** Regardless of how an organisation is owned and governed there are situations where people outside the organisation should be involved in handling certain decisions. These decisions will be those where others will be affected by the organisation. Some common examples could be when an organisation wants to use natural resources to create new goods or when the creation of new infrastructure could negatively impact the lives of other people such as through congestion or pollution. In these situations it is important that the organisation follows any regulations and laws that exist to handle these cases. Sometimes community governance might be needed to approve the requests of an organisation for them to use resources or capital that are publicly owned by the wider community. Governments will be responsible for ensuring that community owned resources and assets are respected and sustainably used. **Market failures** Market failures could still occur in any market economy regardless of how an organisation is governed. Governments will need to introduce policies and regulations that prevent or resolve these market failures. Organisations will need to comply with any changing rules and regulations such as taxes, access to resources or infrastructure changes or any other policy changes that influence how they need to operate the organisation. **Compliance with this principle** Anyone that makes a contribution towards the organisation that matches the ownership approach should receive governance rights. No contributor should be unfairly excluded from receiving these rights. A worker owned organisation would mean that anyone that provides their labour would receive governance rights. Contributors could decide to govern and operate the organisation in a number of ways. In competitive environments, governance rights could be distributed proportionally based on the value of each person's contributions. In cooperative environments, governance rights could be distributed equally using a one person one vote approach. It is up to the contributors to collectively decide how governance rights should be distributed. # Temporary governance rights Temporary governance rights should be awarded to all contributions that match the contribution ownership type. **Principle** Temporary governance rights should be given to all contributions that match the contribution ownership type. **Governance rights** Governance rights could give contributors voting power for a variety of different decisions. An organisation with more contribution based governance should mean the contributor receives a proportional amount of governance rights that reflect the value of the contribution they made. Organisations may also agree on other structures such as one person one vote if they prefer a more cooperative approach. If an organisation was owned by its workers then labour contributions would be what is used to determine who gets what amount of governance rights. Some examples of the type of rights that organisations could have: * **Right to use** - Contributors can collectively use their property as they see fit within the bounds of the law. This includes using assets to produce goods or services or for personal enjoyment. * **Right to transfer** - Contributors have the right to sell, lease or give away their property. This includes transferring property through sales, inheritance or gifts. Contributors might also be given the right to sell their governance rights to someone else. * **Right to exclude** - Contributors can prevent others from using or interfering with their property. This is fundamental to maintaining the exclusivity and control of owned assets. * **Right to modify** - Contributors can alter or modify their property, such as developing land or renovating a building providing it complies with any legal constraints. * **Right to modify the organisation -** Contributors would be able to collectively decide on any changes to the ownership, governance and incentive structures that are adopted in the organisation. Contributors would have the right to vote on any of these changes. **Mixed governance structures** Organisations may decide to delegate some of the governance rights to other individuals that are relevant to the organisation for a number of reasons. For instance a charity could be owned by its workers that operate the organisation. Those workers could decide to give governance rights to the donors to decide what should be prioritised so that they have a say in how their donations are used. Workers would keep the governance rights to determine how they want to operate on a daily basis. This mixed governance structure could be beneficial for increasing trust in an organisation or resolving any misaligned incentives that might exist. **Problems with perpetual governance rights** Under contributionism, contributions are respected and awarded with governance rights. The problem with the approach of constantly awarding governance rights to recent contributions is that the longer an organisation has been operating the more that perpetual governance rights could become problematic. Perpetual governance rights have the following issues: * **Creates a perpetual ownership market** - If governance rights are perpetual someone would be able to buy governance rights and have perpetual influence over how an organisation is operated. This person could have no involvement or understanding about how the organisation is operated and not be aligned with the preferences and values of the contributors that are actively involved in the organisation. Temporary governance rights help to limit the impact of a secondary market forming as older governance rights will eventually lapse and new governance rights would only be given to people that have recently contributed. * **Dilution of future contributions** - Perpetual governance rights results in the dilution of the amount of influence that future contributions would have due to an ever growing amount of historical contributions. Over time these historical contributions would represent a larger percentage of contribution than the recent contributions. Historical contributions need to be able to protect their interests until they have been fairly rewarded for their contributions. The older these contributions are the less relevant they become to the organisation and how it is being operated today. * **Increased governance complexity** - Perpetual governance rights could result in an ever increasing amount of people that are involved in governance decisions. Many of these people might not be actively involved in the organisation anymore. This can increase the complexity of the governance process and could lead to suboptimal decisions if older governance rights are not fully informed on what is happening in the organisation and about the surrounding environment the organisation is currently operating in. **Many contributions might be suitable for receiving temporary governance rights** * **Capital** - Financial capital investments could be a good example of a contribution that could benefit from receiving governance rights as the organisation would use or spend the capital that gets invested. If the organisation fails the investor could lose all their capital which warrants them having governance rights. This could give them some influence over how the organisation is operated or how the capital is used. What exact governance rights are given or whether they are given at all is up to the organisation that is making the agreement with the investor. * **Consumption** - Consumer owned organisations could use consumer purchase contributions to determine and distribute governance rights. * **Donations** - Donator owned organisations could use donation contributions to determine and distribute governance rights. * **Labour** - Worker owned organisations could use labour contributions to determine and distribute governance rights. **Not all contributions need to receive governance rights** * **Contributions not relevant to the ownership type** - If the organisation is owned by its workers the consumption and donation contributions wouldn't need to receive governance rights. Similarly if the organisation was owned by consumers or donators the other contributions types would not be eligible for governance rights. **Respecting historical contributions** Governance rights could last for multiple years and give someone a prolonged influence over an organisation. This can be important in situations where the full value of someone's contributions are difficult to know ahead of time or at the point they make the contribution. The impact of some contributions could take multiple years to be realised. For instance, if a group of people were working on an innovative and novel new product it might take multiple years before this product gains traction. Due to this it is important that their initial contributions are respected over a sufficient period of time so that they can receive the full value of their contributions. An organisation will need to decide how long it could take for this value and impact to be realised. It could be effective for someone to receive governance rights and compensation rights to ensure they are able to influence the decisions about how historical contributions are rewarded when the organisation is ready to do so. **Respecting recent contributions** Governance rights need to eventually lapse once the full value of the contribution can be compensated. If governance rights are perpetual the recent contributions would get increasingly diluted due to a growing amount of historical contributions. This results in historical contributors becoming increasingly influential in how the organisation is operated even though the recent contributions represent who is currently contributing towards the organisation and ensuring it succeeds. Respecting recent contributions means that a balance must be struck between respecting historical contributions that have not yet had their full value realised with the need to also respect recent contributions by giving them influence over the organisation that they are responsible for operating. **Social governance** Social governance could be an important part of operating an organisation that is trying to operate in the best interests of the communities it serves. Some of the decisions that an organisation makes could have a wider impact than for just those that are contributing towards the organisation. In these situations it is often the responsibility of regulation and policy to influence how those decisions can be handled. Sometimes these regulations and policies might not exist yet and the organisation may need to decide whether it makes sense to delegate a certain decision to a wider audience so that they don’t negatively impact other people due to their own decisions and actions. **Compliance with this principle** All governance rights should have an eventual end date so that they aren’t valid in perpetuity. Governance rights only need to last long enough for the contributor to protect their interests so that they can receive the full value from their contributions. Any additional clauses and policies should be clear such as whether the holder is able to sell their rights to other people. If governance rights can be sold, it will be important for people to know whether there are any changes or restrictions to those rights for those people that have bought them. # Temporary compensation rights Contributions should receive temporary compensation rights so that contributors can benefit from the full value of their contributions. **Principle** Contributions should receive temporary compensation rights so that contributors can benefit from the full value of their contributions. **Compensation rights** Compensation rights help to ensure that contributors will receive a fair amount of compensation for their contributions. All financial capital and labour contributions should receive compensation rights. Labour and financial capital contributions that take on initial risk during the beginning of an organisation will need to receive a fair return based on that risk. The compensation rights that these contributions could receive include: * **Right to a fair reward** - Contributors should be entitled to a fair reward for their contributions based on the value that has been provided. For financial capital investors this could be a return that reflects the risk of potential loss when they invested into the organisation. For labour contributions there might need to be periodic reflections about historical contributions to understand what impact and value has been generated over the long term so that a fair reward can be determined. * **Right to transfer** - Contributors that receive compensation rights could be allowed to transfer these rights to other people if they want access to money in the short term. Those buying the compensation rights would be taking on the risk that the organisation would fail so these investors might pay a lower value than the compensation rights are worth to reflect this risk. **Problems with perpetual compensation rights** * **Recent contribution value dilution** - If compensation rights from historical contributions do not lapse there would be an ever increasing amount of compensation rights that need to be compensated in the organisation. This would dilute the value of recent contributions due to the majority of the organisation's profit being used for compensating historical compensation rights. Compensation rights are an important solution for rewarding historical contributions over a period of time. However at some point those compensation rights need to lapse so that new contributions can receive a fair reward based on their value. If compensation rights don’t lapse the workers in an organisation would eventually have an increasing incentive to leave and start a new organisation due to the fact that most of the value and reward of their own labour contributions is going towards historical contributions rather than paying for their own efforts. * **Overcompensation of historical contributions** - Organisations that are operated over a number of decades could create situations where early contributions are excessively rewarded even though those contributors are not actively contributing towards the organisation anymore. The early contributions also might not have been the most impactful contributions that determined the recent successes of the organisation yet they are still being rewarded as if they were still highly important to the organisation. A balance needs to be struck between rewarding historical contributions the full value they have generated with the need to also respect the value of recent contributions by eventually lapsing the compensation rights of all historical contributions. **Contributions that could receive temporary compensation rights** * **Labour** - The value of labour contributions are sometimes not known at the time they are made. Labour contributions highly benefit from compensation rights so that the organisation can reflect on the importance of historical contributions and which ones have been the most important for generating any recent success for the organisation. * **Capital** - The full value of a financial investment is known at the time it is made, as it is a fixed amount that the organisation is receiving. To make an investment agreement the organisation and the investor need to decide on what the risk of failure is for the organisation. This risk then needs to be converted into a fair return on investment. The parameters of the loan then need to be agreed on when the organisation will start paying back the investor. This loan will give the investor compensation rights on future income of the organisation based on the agreed parameters of the loan. **Contributions that would not receive compensation rights** * **Donation** - Donations are given without an expectation for return so these contributions would not be applicable for compensation rights. * **Consumption** - Consumer contributions don’t need to receive compensation rights as in a market economy the consumer is exchanging their money for goods and services. **Limited compensation rights duration** Contributions should receive compensation rights that last long enough for them to be compensated based on the value and impact that was generated. For some organisations this could be ten years or more due to the amount of time it takes to develop new innovations. For other organisations, such as a restaurant or service business, the long term value and impact of many contributions might not need more than a few years for their value to be fully realised and respected. It is important to limit the duration that a contribution can be rewarded as a perpetual compensation right would mean contributions could become increasingly overcompensated over the long term. This overcompensation could occur at the expense and exploitation of future contributions that are now responsible for operating the organisation. **Handling extraordinary contributions** An individual could make an extraordinary contribution that has a very long term positive implications for a local community or society more broadly. These types of contributions can be more difficult to evaluate and reward within an organisation due to the scale and impact of the contribution. These contributions could require ongoing reflection about how much impact has been generated. A balance needs to be struck between rewarding these contributions fully and also ensuring that other contributions in the organisation are not under compensated just to reward the extraordinary contributor. A society that encourages and rewards contribution will be one that actively celebrates and rewards these types of contributions more broadly. Contributors responsible for generating large amounts of impact could be rewarded financially or shown greater appreciation by the wider community in a number of different ways. Some examples of these types of awards that help to show appreciation for highly impactful contributions include the Nobel prize, Breakthrough prize, Fields medal, Turing award, Lasker award, Copley medal, Wolf prize, Kyoto prize and the Millennium technology prize. **Compliance with this principle** All compensation rights should have an eventual end date so that they aren’t valid in perpetuity. Compensation rights should last long enough so that a contributor can receive the full value from their contributions. Any additional clauses and policies should be clear such as whether the holder is able to sell their rights to other people. If compensation rights can be sold, it will be important for people to know whether there are any changes or restrictions to those rights for those people that have bought them. Compensation rights that can be sold may also benefit from the transfer of governance rights from the original holder so that the interests of the investor can then be protected. Organisations will need to determine whether compensation rights can be sold independently of governance rights or not. # Transparent priorities Priorities should be transparent so that people can contribute towards organisations that they are aligned with. **Principle** Priorities should be transparent so that people can contribute towards organisations that they are aligned with. **Contribution alignment** Transparency of priorities is an important part of enabling anyone to match their contributions with organisations that they are aligned with. Increasing alignment within an organisation can help with maintaining higher levels of enthusiasm and morale from those that decide to contribute due to a collective alignment around what they are trying to achieve as a group. **Collectively agreed priorities** Contributors should be able to share and vote on what they believe are the most important priorities for an organisation. Members of publicly owned organisations would respond to the priorities were set by the wider community. Contributors would decide in contribution owned organisations. In both of these scenarios all community members or contributors would be involved in priority setting decisions. **Example long term priorities** Organisations could adopt a number of different priorities. These priorities can influence how they operate on a day to day basis. Determining which priority is the most important to an organisation can be highly beneficial for increasing contribution alignment within the organisation. Collectively agreeing on the most important priorities should be an ongoing process. The choices that are initially made for an organisation could change over time as the contributors learn new things and their preferences adapt and change. Some example long term priorities that an organisation could adopt include: * **Impact focussed** - Some organisations could focus on achieving a certain mission or generating impact above all else. The reward for labour contributions or capital investments may be limited due to this focus and collective alignment around addressing certain priorities to generating impact. Charities and not-for-profit organisations could be examples that might have a sole focus on generating impact and contributing towards socially beneficial outcomes. * **Availability & access focussed** - Prioritising access means that an organisation is trying to ensure that the supply of a product or services is always available to the consumer. Services such as water, electricity, heating or internet are common examples that can benefit from prioritising availability and access due to the importance of these services for the consumer. * **Profit focussed** - Organisations could be focussed on generating maximum profit. An important default outcome in contributionism is that the contributors involved in an organisation would be fairly rewarded for their contributions. * **Environmentally focussed** - Respecting and maintaining the environment and preventing any future harm can be an important priority for organisations that operate more closely with nature. Organisations that create physical products may decide to prioritise environmental concerns over profit to ensure they are environmentally sustainable over the long term. * **Safety focussed** - The safety of the consumer is an important priority for organisations that create products or services that can put peoples lives in danger. Pharmaceutical products, heavy machinery or airlines can be examples where safety is often an important long term priority. **Compliance with this principle** Any motives or priorities for the organisation should be set by contributors that govern the organisation. All contributors that govern or operate the organisation should have access to the priorities that have been agreed. Transparent motives and priorities means it will be easier for people to align their contribution efforts with organisations that match their preferences and values. # Collectively accepted leadership Leadership should be collectively accepted. **Principle** Leadership should be collectively accepted. **Collective influence over leadership choices** If contributions are used as the way to determine who receives governance rights within an organisation the choice of leadership could change over time as the needs and preferences of the contributors change. Contributors who take up leadership roles could remain in those roles for multiple years or even decades. Collective influence over leadership choices is useful for increasing the accountability of leadership and with resolving situations where leadership is more problematic. Contributors would be able to select other people to fill any leadership positions that exist. **Emergent leadership** Not every organisation requires formal leadership positions. Some organisations would prefer a flat operational structure where everyone participates in each decision democratically to influence how an organisation is operated. In these organisations an alternative approach could be emergent leadership. Contributors could naturally take initiative and put themselves forward to lead certain tasks and solve certain problems when they have relevant expertise or experience around certain topic areas. The main outcome that is important is that the other contributors collectively accept this emergent leadership. Contributors that do not like the result of emergent leadership could voice their opinions and concerns. In some cases contributors might suggest the introduction of specific processes and systems to prevent emergent leadership from happening. In other cases contributors might prefer to introduce a leadership position with a formal selection process. **Democratically elected leadership** Growing organisations can benefit from leadership roles that delegate certain responsibilities to selected individuals. Leadership roles can help to provide more structure and simplicity in how an organisation makes decisions and operates. It is difficult to expect every contributor in an organisation to be up to date with what is happening across an organisation and be well informed enough to participate in multiple governance decisions across different topic areas. Creating leadership positions with certain responsibilities can be an effective way to handle this complexity of scaling an organisation. In these situations a group of contributors could elect one or multiple contributors that are suitable for this role of handling certain decisions or responsibilities. If the leadership that is selected does not perform well, or the role becomes no longer necessary, the contributors should be able to eventually remove the current leadership and the role entirely through a collective decision process. **Leadership contracts** When a leadership role is defined a leadership contract could be used as a document to record the exact parameters and responsibilities of the role. Leadership contracts could be useful for isolating the exact responsibilities and authority that a leadership role is given and the constraints and duration of the contract. Startup organisations might decide to use leadership contracts so that the founders have long term influence over executing the vision they are trying to achieve. The benefit of leadership contracts is that workers would be able to see the exact scope and parameters of the contract and when that contract will lapse. This makes it easier for them to make informed decisions about which organisations they want to contribute towards based on any existing leadership contracts and any other working environment factors. Leadership contracts are also separate from incentive rights. Workers that contribute labour that is more impactful than people in leadership positions should still be able to receive compensation that reflects the larger value and impact of their contributions. This is an improvement over companies limited by shares that can often give founders and people in leadership positions shares that give them perpetual governance and incentive rights that never lapse or expire. Leadership contracts could be an effective solution for complex organisations where a balance needs to be struck between the efficiency of electing competent people into leadership positions against the need to also ensure that the collective opinions and preferences of those that work in the organisation is also taken into account. **Compliance with this principle** Contributors that govern the organisation should collectively decide whether leadership positions should be introduced or whether they should continue to exist or not. If they should exist, contributors should decide who will fill those positions through a voting process. New organisations may have leadership contracts that are self issued by the founders. In these situations any person that is considering joining the organisation must choose whether to accept the leadership or not when they decide if they will join the organisation. All leadership contracts should be publicly available for people to review so they can understand what the roles and responsibilities are for each contract. All contributors that govern the organisation should be able to define what those roles and responsibilities are when creating new contracts or when updating existing ones. # Characteristics A list of emergent characteristics of contributionism The following characteristics represent some of the emergent features and outcomes that you could expect to see in an economy where many organisations are adopting contributionist principles. These characteristics can help with understanding how the model could function in practice. {% content-ref url="/pages/PaiqSCABXhTQJoI6h4oW" %} [Permanent records of contribution](/contributionism/characteristics/permanent-records-of-contribution) {% endcontent-ref %} {% content-ref url="/pages/ywPamncPsG3anZbjVLxc" %} [Equal opportunity](/contributionism/characteristics/equal-opportunity) {% endcontent-ref %} {% content-ref url="/pages/y9IkIMCD3tg5lyVP9sIh" %} [Cooperative & competitive environments](/contributionism/characteristics/cooperative-and-competitive-environments) {% endcontent-ref %} # Permanent records of contribution Contributors highly benefit from their contributions being permanently recorded. **Characteristic** Contributors highly benefit from their contributions being permanently recorded. Recorded contributions provide the maximum opportunity for contributors to benefit from the full value of their contributions. **Importance or permanent records of contribution** Contributors highly benefit from their contributions being permanently recorded so that they can benefit from the full value of their contributions. A contributor would not want an organisation or individual to be able to remove or alter their contributions without their permission. Contributors that are able to own and share their contributions will be able to take full advantage of those contributions. In a market economy this would mean that a contributor would be able to more easily demonstrate their competencies and effectiveness when working in different organisations. The easier it is to share and prove someone's skills and expertise the easier it can become for people to receive a fair reward for their contributions. It can also make it easier for people to move between organisations based on the provable value and impact they’ve generated. Recorded contributions help to empower the individual over the organisation by giving people full ownership and control over their contributions. **Usage possibilities for contribution records** Records of contribution can be highly useful for a number of use cases: * I**nterests & values** - Someones contributions help with providing evidence about their interests and values. * **Achievement** - Contributions can help with showcasing peoples achievements and how they have generated value and impact for different organisations. * **Proof of contribution** - An accurate record of contribution can be used as evidence to prove that a contributor has done what they said they have. * **Reputation** - Accurate contribution records would give people an effective way for people to build up their own reputation. People would be able to more easily prove their skills and expertise if their historical contributions are recorded and verifiable. This could be highly useful for applying to new roles and positions in different organisations. If the contribution records are public it can also be useful for other people and organisations that are looking for individuals with certain experiences, skills and expertise. * **Legacy** - Contribution records could be an effective way for someone to showcase their legacy of contribution across different organisations. How people contribute towards society over their lifetime can be better understood if contributions are recorded. * **Compliance** - Contribution records could be useful for complying with different rules and regulations providing the contributions are verifiable. * **Prospecting contributors** - Contributors that are still considering whether to join an existing organisation or not could greatly benefit from seeing the contributions from other people in the organisation. This could help with better understanding the skills and expertise that are required in a certain role and whether the position is a good fit for them or not. Public contribution records could help people with making more informed decisions about which organisations they want to join. * **Reflection** - A historical log of contributions can help with making it easier to reflect on what contributions have been the most impactful to an organisation. A record of contributions enables an organisation to also fully evaluate the changes in contribution patterns over time and how each individual has progressed in making impactful contributions. # Equal opportunity All contributions would receive equal opportunity to be rewarded fairly based on the value they provide. **Characteristic** All contributions would receive equal opportunity to be rewarded fairly based on the value they provide. **Equal opportunity for contributors within an organisation** Under contributionism, contributions are invited, measured and fairly rewarded. Labour contributions can be used to determine the long term ownership and governance of an organisation. All contributions made within an organisation would be evaluated to determine what the fair value is for those contributions. This evaluation helps to determine what is fair as an immediate reward for those contributions. The full value and impact of a contribution is often not fully known until later in the organisation's development. Reflection on historical contributions is an ongoing process that helps to identify the contributions that have made impact over multiple years. Giving people that contribute incentive and governance rights means there is a stronger alignment with rewarding people that actually contribute towards an organisation. Each contributor would have some influence in the organisation to initiate and vote on decisions and be fairly rewarded for the contributions they have made. **Equal opportunity for creating new organisations** Individuals would also have equal opportunity to start their own organisation and receive the reward from any success of that organisation. New organisations that adopt contributionist principles would result in an environment where any contributor that joins the organisation would be entitled to a fair reward for their contributions. **Proportionally rewarding contributions** An economic model that is truly focussed on equal opportunity is one that ensures that all contributions are fairly rewarded. To align the incentives with everyone wanting to make meaningful contributions it is important that all of the people that contribute are proportionally rewarded for the value of their contributions. If performant contributors are always rewarded for their efforts this aligns the incentives for these contributors to continue working in these types of organisations. When contributors are only partially rewarded or not rewarded at all there is an immediate incentive for these contributors to identify other opportunities that would better respect and reward their contribution efforts. Proportional rewards based on the value of peoples contributions is one of the potential incentive structures that could be adopted a contributionist organisation. **Alternative contribution reward approaches** Not every group of contributors will prioritise or value the importance of proportional rewards based on the value of each person's contributions. This approach could be ideal for more competitive and high growth markets however this outcome may not be as important for other contributors within different types of organisation. Some contributors may be more interested in the community aspect or the work life balance aspect of an organisation. Contributors could collectively agree on any incentive arrangement that they prefer when operating their organisation. Under contributionism, the main outcome that should be achieved is that contributions should be fairly respected in a way that is collectively agreed. An organisation will need to determine how they want to ensure that contributions are respected and fairly rewarded. **Reduction of class inequality** Contributionism seeks to reduce class inequality by providing truly equal opportunity for all individuals. Contributors should be compensated fairly based on the value of their contributions. Contributionism removes the two class system found in companies limited by shares where contributions are not always connected with receiving governance and compensation rights. Contributionism removes this two tier structure and emphasises the importance of fairly rewarding all contributions. Inequality can still exist within contributionism however this should mostly be because of differences in contribution between people and the differences in the value and impact that each person's contributions have generated. # Cooperative & competitive environments Contributors would self determine how cooperative or competitive they want their organisation's environment to be. **Characteristic** Contributors would self determine how cooperative or competitive they want their organisation's environment to be. **Supportive of competition** Animals compete for resources and against each other in the natural world. Humans also compete for resources, status and partners. Sports are an example of environments where competition is rewarded and celebrated. Contributionism accepts the fact that some people might prefer a competitive environment where they can compete with others and be rewarded for their accomplishments and success. Rewarding contributions proportionally based on the value and impact they generate is one approach that can help with aligning the incentives with rewarding top performing talent. **Supportive of cooperation** A number of people prefer more cooperative environments over competitive ones. A cooperative organisation could prioritise more collective and community based values and outcomes. This could translate into having a better work life balance, simpler governance and incentive structures or a larger emphasis on community well being over individual progress and achievement. **Competition & cooperation under contributionism** Both cooperative and competitive organisations can be highly effective and can both be desirable places for people to join and provide their contributions. Contributionism advocates for organisations to collectively self determine how they want to be structured to reward contribution. Governance, incentives and working environments should align with the values and preferences of the people that contribute towards the organisation. Governance and incentive structures need to be collectively agreed and transparently shared. Individuals should be able to align themselves with the organisations that match their preferences and values. Contributionism advocates for freedom of choice so that people can create and join the organisations that they are most aligned with. Contributions should always be respected regardless of the governance and incentive structures that have been adopted. **Balancing individual and collective progress** Contributionism seeks to balance individual rights with collective progress. Contributionism has overlap with capitalism when these economic models are compared in a market based economy. Contributionism similarly values individual freedoms, choice and self responsibility. However, contributionism also outlines principles that ensure these freedoms and ideals are not at the expense of others. In a market economy success and failure is seen as a result of personal effort and decision-making. Contributionism emphasises equal opportunity, collective involvement and fair competition between individuals and organisations. Valuing both competition and cooperation means that each individual should be able to create or join an organisation that matches their preferences. Some organisations could be more individually focussed and competitive, some could be more balanced between competitive and cooperative and others might be more heavily focussed on collective progress. **Organisations should self determine their ownership, governance and incentive structures** Organisations could be owned, governed, incentivised and operated in a number of ways. Contributionism advocates for organisations to make their own decisions about how they structure and organise themselves. Some organisations might be better suited for a more competitive environment such as novel new tech products. Other contributors might prefer to have a more cooperative environment. Organisations that prefer more cooperation over competition could adopt approaches such as one person one vote and also limit the usage of large bonus incentive structures. Organisations that prefer a more competitive environment could use proportional governance and incentives approaches that are based on the value of each person's contributions. Organisations will ultimately need to align themselves and how they operate with the collective preferences of those that are contributing towards the organisation. # Economic model Outlining the economic model with the different approaches for how contributionism could adopted Contributionism is an economic model that focuses on how organisations are owned, governed and incentivised. Organisations play a large role in influencing how the wider economy functions. Contributionism represents an alternative approach to companies limited by shares, which has been a large part of the capitalist economic system. How goods and services are exchanged, what money is being used and how nation state governments function are all areas of importance when thinking about the wider economy. The principles outlined in contributionism can also be considered when thinking about these other economic areas. For instance, contributionist principles could be particularly relevant for governments which themselves are a type of organisation where people come together to collaborate and make decisions.
Contributionism is flexible and could be adopted within many different economies. Contributionism is not opinionated about how the rest of the economy must function. Different approaches for exchange, money and government could be adopted within each nation or community that decides to adopt contributionism. **Economic model** {% content-ref url="/pages/zjfzZFtetbkvDTzn15tN" %} [Organisations](/contributionism/economic-model/organisations) {% endcontent-ref %} {% content-ref url="/pages/Nda4Lyp0F0r0B0txyL1A" %} [Exchange](/contributionism/economic-model/exchange) {% endcontent-ref %} {% content-ref url="/pages/ZeuqE0Ja7UjoeqZFsG7e" %} [Money](/contributionism/economic-model/money) {% endcontent-ref %} {% content-ref url="/pages/41hfaoD7PmcRQrCQwf43" %} [Governments](/contributionism/economic-model/governments) {% endcontent-ref %} # Organisations Understanding how organisations can be owned, governed and incentivised under contributionism Organisations include small businesses, large corporations, charities, small community projects or even local sports clubs. Any person or group of people that comes together for a particular purpose could be considered an organisation that could adopt contributionist principles and approaches. Three important areas that influence how an organisation is operated include how it is owned, governed and incentivised. Organisations could adopt a variety of approaches within each of these areas under contributionism.
**Organisation economic model** {% content-ref url="/pages/uUJIq4dHKqXWRJhDeoA5" %} [Ownership](/contributionism/economic-model/organisations/ownership) {% endcontent-ref %} {% content-ref url="/pages/i2VVhDNQa88eXXEY4sZ6" %} [Governance](/contributionism/economic-model/organisations/governance) {% endcontent-ref %} {% content-ref url="/pages/BYiE1aD5UBFNzB1dcOGK" %} [Compensation](/contributionism/economic-model/organisations/compensation) {% endcontent-ref %} # Ownership Ownership approaches that could be adopted within a contributionist organisation Contributionism advocates for organisations that are collectively owned by those that contribute towards the organisation or that are publicly owned by the government. ## Ownership approaches The adopted ownership approach will determine who receives governance rights in the organisation. An organisation will need to think about the governance decisions that are involved in operating the organisation and which contributor might be the most suited to handle those decisions. Governance rights will give contributors influence and control over how the organisation is operated. Organisations would always be collectively owned. [Consumer and donor ownership](/contributionism/economic-model/organisations/ownership/consumer-and-donor-ownership) approaches can have some limitations due to scaling complexities. However these approaches are still highly useful in certain situations. [Mixed contribution ownership](/contributionism/economic-model/organisations/ownership/mixed-contribution-ownership) was also considered as another potential ownership approach. A [mixed ownership model](/contributionism/economic-model/organisations/ownership/mixed-contribution-ownership) could be used smaller and simpler organisation however it is still difficult to recommend this approach due to the unnecessary complexities it can introduce even for those organisations.
**Worker ownership** Worker owned organisations are those that are owned by people that provide their labour to the organisation. Labour contributions would influence who has ownership in the organisation. **Consumer ownership** Consumer owned organisations are those that are owned by people that consume the goods or services that are provided by the organisation. Consumption would influence who has ownership in the organisation. In a market economy this will mean consumer purchases. **Donor ownership** Donor owned organisations are those that are owned by people that donate towards an organisation. Donations would influence who has ownership in the organisation. **Public ownership** Public ownership means that the government would own the organisation. Contributions would not result in ownership of the organisation, however contributions would still be used to determine who receives governance rights. ## **Documenting the type of ownership** An organisation should document the type of ownership it has adopted so that it is clear to all contributors who will be receiving governance rights within the organisation. The type of ownership that has been adopted could change in the future as an organisation develops and evolves. It would be up to the existing owners to determine whether another ownership approach would be more suitable. Market failures could provide another reason why an organisation's type of ownership might get changed due to an intervention from the government to resolve or prevent these failures. For worker, donor and consumer owned organisations, the ownership of the organisation will dynamically change over time based on the contributions that people make towards the organisation. ## Contribution tables Under capitalism, ownership is determined by capital based shares. Shares can be sold to other people which can lead to changes in the ownership of an organisation. Shares give owners perpetual governance and compenastion rights within the organisation. Shareholders determine who sits on the board of directors. The board of directors select executives that will determine how the organisation is governed and incentivised. Capitalism uses capitalisation tables to break down who owns what percentage of equity in the organisation. Under contributionism, ownership is determined by contribution. Contributions made towards an organisation cannot be sold to other people. Instead contributions are always permanently recorded and tied to the individual that made them. Contributors receive temporary governance and compensation rights for their contributions. These temporary governance and compensation rights can be sold to other people. Contributors with governance rights will determine how the organisation is operated and incentivised. Contributors determine whether leadership positions need to exist. If they do exist, contributors will also decide who fills those positions. Contributionism uses contribution tables to record every person's contribution towards an organisation. Contribution tables would record consumer purchases, donations, labour contributions and capital investments. ## Permanent record of contributions Contributions made towards an organisation should in most cases be permanently recorded. Contributionism advocates for the usage of contribution tables regardless of whether an organisation is publicly owned or owned by contributors. Contribution tables can help with changing an organisation's ownership structure in the future if each type of contribution is accurately recorded. Records of contribution can be used to ensure that contributions are respected. Contribution records should be non-transferable as contributions can be used for a number of long term use cases such as for aligning the incentives with top performing contributors, reputation building, future reflection, compliance and as a proof of contribution. Temporary governance and compensation rights can be sold to other people. Records of these exchanges can also be an important additional piece of information that should be recorded so that the organisation can remain aware of who has what governance and compensation rights in the organisation. These records of exchange might also be important for remaining compliant with different laws and regulations. ## Common ownership Contributionism focuses on how organisations are owned, governed and incentivised. This focus does not cover how other types of resources and capital should be owned and governed. Common ownership could be an important approach for protecting scarce and important resources and assets. Public parks, community buildings and other natural resources are all examples of resources that could benefit from common ownership. Organisations may need to request access to use these resources and assets from communities that govern their usage. # Consumer & donor ownership Considerations towards when consumer and donor ownership could be effective Consumer and donor owned organisations could often have a number of limitations. These are still important approaches that could be adopted for certain organisations. ## **Limitations & concerns with consumer & donor ownership** **Participation & scalability limitations** For medium sized to larger organisations, it could be difficult to expect that consumers and donors will vote on every decision that is involved in governing and operating an organisation. This approach would often be not pragmatic or desirable as the cost of becoming well informed about each decision and then voting on each one could become extremely high. The larger the number of voters the more problematic this factor could become. If only a limited number of people participate in governance this could distort decision outcomes to favour certain individuals over the general preferences of the wider collective. **Informed voter concerns** Organisations often need to adapt and evolve over time and update their processes and systems that help them to operate most effectively. An ongoing problem with consumer or donor based ownership is that these contributors might not be sufficiently well informed unless they are properly aware of what is happening in the organisation and what problems or opportunities exist. Voters that are not sufficiently well informed could lead to suboptimal decision outcomes. **Commitment concerns** Consumer and donors could have multiple choices in where they allocate their attention and capital. A donor could find another charity to donate to. A consumer could find another organisation to buy a similar good or service. Consumers and donors could have a limited incentive and justification to be highly committed and actively engaged with an organisation. Limited incentives can translate into a risk that important decisions are not prioritised by these individuals. **Influence over workers concern** Ownership of an organisation by consumers or donors means that they would receive governance rights to influence how the organisation is operated. These governance rights would influence how workers contribute towards the organisation. This control over the organisation could cause conflict if the consumers or donors are not as well informed as the workers about how to operate the organisation as effectively. Consumers or donors also might not fully understand the problems and opportunities that exist within the organisation when compared to the workers who are actively contributing. ## **Use cases for consumer & donor ownership** **Donation or consumption dominant organisations** Organisations that are more donation or consumption dominant instead of labour dominant could be suitable for consumer or donor ownership. An example of this could be a local table tennis club where each member contributes by paying a small annual fee so that they can join and play at the local venue each week. Members would contribute with more consumption than labour in this organisation as they would be mostly playing table tennis. This organisation would still require some amount of labour to handle club administration and things like setting up and putting away the tables each week. **Smaller organisations** Smaller organisations are inherently more viable for consumer or donor owned organisations as they wouldn’t have the voter scalability complexities to handle. Larger organisations that have many consumers or donors is where the governance complexity can become increasingly time consuming and problematic. **Active and engaged consumers or donors** Situations where consumers or donors are highly active and engaged in an organisation could also be a valid reason why the consumer or donor might be the most suitable contributor to own and govern the organisation. It will be important for the consumers or donors to be well informed when making decisions about how the organisation is operated. ## When to use worker ownership Worker owned organisations would be a very common type of organisation under contributionism. Labour is often one of the most important and ongoing contributions for many organisations. Workers should usually be the most well informed and suitable for handling governance decisions as they contribute towards the organisation on a regular basis. Worker organisations can sometimes benefit from delegating certain decisions to consumers or donors to give them more influence over the organisation. This can help with building trust and could also help with fixing specific incentive imbalances or alignment issues. For example, donors may prefer to make donations to organisations that enable them to vote on how their donations will be used. This helps to give donors more influence over what the charity prioritises to help other people. Organisations that expect a growing amount of labour contributions will often benefit from being worker owned as workers will then be able to handle the growing complexity of governing that organisation. # Mixed contribution ownership Considerations towards a mixed contribution ownership approach Organisations could be owned by contributors that provide different types of contribution. Mixed ownership would mean a combination of worker, donor or consumer based contributors would receive governance rights to influence how the organisation is operated. This approach has a number of implications that could impact how an organisation would be governed in practice that need to be considered. ## Organisation examples The following are a few example organisations that might consider a mixed ownership model. In all of these examples at least two types of contributor could want to have an influence over how an organisation is governed and operated. **Community bank** Consumers could want to have ownership over a community bank so that they can ensure it is operated for the benefit of the local community and not just for profit. Workers could want ownership in the bank as this could represent their full time job, due to this it will be likely that they will want to influence how they operate the organisation. **Local food market cooperative** Consumers could want to have ownership over a local food market cooperative so they can ensure that the food is always locally sourced. Workers would likely want ownership as their stall or shop could represent their livelihood and full time job that they’d want to have influence over. **Poverty fighting charity** Donors could want to have ownership in the organisation so that they can influence how their donations are used to help fight poverty. Workers would want ownership in the charity as their role could represent their full time job that they’d want to have influence over. ## **Problems with mixed ownership** **Increased governance complexity** Giving two types of contributors the responsibility of operating an entire organisation is inherently more complex than leaving this responsibility to one of these groups of contributors. A larger amount of individuals involved in governance will usually mean it takes longer for people to become well informed about each decision that gets made. More time would likely be needed for people to vote on these decisions. Communication would be more challenging with two different groups of contributors as both would now need to be contacted and informed about any decisions. **Conflicting responsibilities** Donors or consumers that have a moderate to large amount of influence over how an organisation is operated could be problematic. Workers could disagree with the decisions that are made by consumers or donors. There is a risk that donors and consumers are not as well informed as the workers on how the organisation should be operated on a day to day basis. Workers could have disagreements with donors in charity organisations in situations where donors have a large amount of influence in deciding how the organisation is operated and how they use donor money. However if workers govern the organisation and donors disagree with their decisions they could simply decide to stop donating in the future. **Changing or unbalanced governance control** Contributions could determine the amount of governance rights that each contributor receives. In these situations the amount of contributions from each group of contributors could result in changing governance control over an organisation. Sometimes this could result in certain contributors having an unbalanced amount of influence over the organisation for an extended period of time. This could occur if there were sudden spikes in one type of contribution such as donations, consumption or labour contributions. **Contribution comparison complexity** There is a complexity around determining what is fair and reasonable when comparing different types of contribution. In a mixed ownership model each of these contributions might result in governance rights. Either of the following approaches for calculating voting power could be problematic: * **Competitive organisations that calculate contribution value** - Competitive organisations might want to give people more proportional influence over the organisation based on the value of their contributions. This means that evaluation of one type of contribution when compared to another type needs to be fair. An example situation could be consumer purchases, should the full value of the sale price be used to determine their voting power or just the profit generated? And how would that compare to the approach being used to evaluate worker contribution voting power? * **Cooperative organisations that use a threshold value** - Cooperative organisations may prefer to give people equal voting power once someone hits a threshold of contribution. This could be problematic for a mixed ownership organisation as the difference in people's contributions could be much higher across a larger diversity of contributors. This could make it unfair for certain contributors who have contributed much more than others. One consumer for instance could have purchased enough goods or services to pay for multiple workers yet their voting power is greatly diluted. ## **Solutions** Organisation ownership does not need to include multiple types of contributors for certain decisions to be spread out across these multiple types of contributors. Multiple contributor groups also do not need to handle every decision that happens in the organisation. These decisions could be divided and grouped together and the most suitable type of contributor could be delegated that type of decision. Decisions could then be handled by the most suitable type of contributor. Who makes what decisions could also change over time, the adopted approach does not need to be fixed and unchangeable. Delegating decisions to the most suitable group of contributors is highly desirable as it makes governance simpler, helping to reduce conflicting responsibilities and prevent changing or unbalanced governance control between two contributor groups. The complexity of comparing different types of contributions could also be removed. Although it could be considered desirable to increase governance involvement across many decisions, the cost of involving two types of contributor in every single organisation decision is likely too high to justify the complexities and costs of this ownership structure. Therefore it is difficult to recommend this approach for most organisations. A simpler approach that can achieve much of the same benefits is to use a single contributor ownership model and then use a mixed governance structure where certain decision responsibilities are delegated to the type of contributor that is most suitable to handle them. A number of delegation approaches could be considered that handle this need for dividing responsibilities across multiple contributors. Examples include optional voting power delegation to other people, agreements and bylaws or the use of appointed leadership positions. Mixed contribution ownership is not required to operate a mixed contribution governance structure. Therefore a mixed contribution ownership approach does not need to be recommended under contributionism. Solutions that are focussed around the delegation of responsibilities can solve these issues and create mixed contributor governance structures. # Governance Governance approaches that could be adopted within a contributionist organisation Under contributionism, organisations are always governed by those that contribute towards an organisation. The ownership type determines which contributors will receive governance rights. Each governance right would have a certain amount of voting power. Voting power will determine how much influence someone has in each governance decision. ## Temporary governance rights All governance rights received for making contributions are temporary and do not last in perpetuity. A contribution needs to be fairly rewarded over the long term based on the value it provides. Governance rights should last long enough to give a contributor influence over how their contributions can be rewarded. Governance rights help to protect people's interests in the organisation. **Labour** Publicly owned and worker owned organisations would use labour to determine who receives governance rights. **Consumption** Consumer owned organisations would use consumer purchases to determine who receives governance rights. **Donations** Donor owned organisations would use donations to determine who receives governance rights. **Capital investments** Capital investments could receive governance rights when they risk losing the capital they invest. Financial investments are an example of an uncollateralised investment as organisations could spend the majority or all of the investment before the organisation fails. Giving a capital investor governance rights can help them with protecting their interests so that they have influence over how the organisation operates. In some cases this might mean governance rights that cover how the organisation is able to use the capital invested. Organisations with every ownership approach can benefit from capital investment. Capital investors could receive temporary governance rights in every type of organisation. Publicly owned organisations will usually receive their capital investments from the government so governance rights would not be necessary. ## Voting power Governance rights will give people a certain amount of voting power. Voting power determines how much influence they have in organisation decisions. If contributions are being used for ownership and determining governance rights the two main voting power approaches are one person one vote and proportional contribution value based. One person one vote would translate into determining what threshold of contribution is required for a contributor to receive the same voting power as everyone else receives. The proportional approach is where voting power is distributed based on the value of each person's contributions. Organisations could create a voting power approach that sits somewhere between these two options or that blends them together. Different decisions could use different voting power approaches. ## Labour voting power approaches **One worker one vote** Each worker involved in the decision is given equal voting power. A worker would include anyone that is contributing their labour towards an organisation. An organisation may decide to require a certain threshold of contribution such as the contributor should be working full time or that they have contributed for a minimum period of time such as three months before they are eligible to receive their governance rights. A one worker one vote approach could be effective for organisations that want to operate with a more cooperative and simple governance structure. It also might be relevant for situations where there is not a drastic amount of difference in the amount or quality of contributions that each person is making. Contributors that prefer simpler voting structures and more cooperative environments may prefer this approach. **Labour value based** Each worker involved in the decision is given voting power that is equal to the value of the labour contributions they have provided. This approach can be effective for organisations where there is a big difference in the amount or quality of the contributions that each person is making or when the environment benefits from a more competitive environment. Contributors may also just prefer this approach if they want a competitive environment where the incentive structures more accurately reward people for performance and impactful contributions by giving them more influence in the organisation. ## Donation voting power approaches **One donor one vote** Each person that donates to an organisation would receive equal voting power. The donor might need to reach a certain donation threshold value to receive any voting power. **Donation value based** Each person that donates is given proportional voting power based on the value of their donations. The more that someone has donated to an organisation the larger their voting power is. ## Consumption voting power approaches **One consumer one vote** Each person involved in the decision is given equal voting power. In a market economy, a consumer would be anyone that has been purchasing the product or service that is offered by the organisation. **Consumer expenditure based** Each person is given an amount of voting power that is based on the amount they have spent with the organisation. Consumer expenditure based voting power would mean that the biggest consumers of the product or service would have the most influence in governance decisions. ## **Other voting power approaches** **One person one vote** Each person involved in the decision is given equal voting power. A person could include anyone that has been contributing towards an organisation or that will be impacted by a decision. This approach could be suitable for situations where each person voting could be affected by a decision equally. **Based on the degree in which a decision affects someone** Each person is given an amount of voting power that reflects the degree in which it affects them. This could mean that a number of people are involved for different reasons due to how one decision could impact a range of people in different ways. As an example, if an organisation wanted to open up a manufacturing facility in a local area the decision to approve the construction of that facility might need approval from the people that will be affected by its construction. The facility might generate pollution or traffic congestion which could impact the lives of others negatively. Sometimes existing regulations and policies can handle these situations by making a defined process that an organisation can follow to seek approval. In other situations where the decision is more complex it might be necessary to involve all of the people that will be affected by the outcome of a decision. ## Combining voting power approaches The voting power approaches mentioned above could be combined together in a number of ways and weighted differently. For instance an organisation could use a one worker one vote voting power approach and partially combine this with a labour value based approach so that there is at least some increase in voting power for people who have contributed more than others. Alternatively another decision might use a labour value based approach for the majority of the voting power but give everyone a minimum amount of voting power by applying an element of one worker one vote. Another way that these voting power approaches could be combined is in situations where a certain decision could impact people outside of an organisation such as the construction of a new manufacturing facility. In these situations there could be a number of decisions that are handled by the local community. Each decision within an organisation could adopt a different voting power approach or a combination of approaches to more effectively and fairly govern the organisation. An organisation ultimately wants to make good decisions. Those that are relevant or impacted by the decisions will ideally be involved and be able to provide their input during a governance process. ## Stacked voting power One person one vote voting power approaches could be adopted in a few ways. The simplest approach is that it is always one person one vote for every decision. Another approach is that people's voting power could increase and stack based on the number of years they have participated. For a one worker one vote approach this could mean that a worker that has provided three years of their labour could be given 3 points of voting power instead of just 1 point of voting power. Any of the voting power approaches mentioned above could adopt a system of stacking voting power based on an increased amount of contribution or participation. An organisation might also need to consider applying limits to a stacked approach so that the influence of certain individuals doesn’t become too excessive. For example, labour based voting power could be limited to the most recent five years worth of contribution. This means that contributors that stay with the organisation beyond five years would not receive an ever increasing amount of voting power. Organisations need to self determine whether it makes sense to introduce stacked voting power and what limits should be applied if any. ## Direct voting In an ideal world contributors would directly vote on all governance decisions within an organisation. This means the organisation would be governed democratically between all its contributors. Direct voting could be an effective approach for smaller organisations, organisations where there is not a large amount of complexity in the decisions being made and organisations where the number of decisions is low. If these factors increase in scale or complexity over time it could become less practical to expect people to vote on all governance decisions. ## Delegated voting Delegated voting can be an effective way to increase the scalability and efficiency of handling governance decisions within an organisation. There are a few example variations that are worth consideration: * **Autonomous team decision making** - A commonly used approach for scaling an organisation’s ability to handle governance decisions is to give teams autonomy to make their own decisions about how they operate and execute different tasks. An example could be an engineering team that is responsible for deciding on what tech stack they are going to use or a marketing team that is responsible for deciding how they will allocate their marketing budget across different marketing channels. This common approach for distributing responsibilities helps to distribute and minimise governance complexity as it prevents the need for every contributor to vote on decisions that they are less informed about or that they have less responsibility over. * **Optional delegation** - Individuals could directly vote on certain decisions or they could delegate their vote to another individual to handle that decision. Someone may prefer to do this as they could have limited time to properly participate, not have enough context or experience about the decision or they might just prefer that someone else handles it for them. It’s advantageous to have systems that enable this behaviour as it is not possible to prevent someone from copying someone else’s voting decisions. A formal and transparent process for voter delegation means that the organisations could at least be well informed on how people are actually deciding to vote. * **Agreements & Bylaws** - Agreements or bylaws could be introduced that ensure that other contributors have certain governance rights and involvement in certain decisions. For instance, workers could use these agreements or bylaws to give donors or consumers some guarantees on the involvement they will have over certain decisions in the organisation. This could be an effective approach for increasing the amount of trust between different contributor groups that both could have different interests and preferences. * **Appointed leadership** - Leadership roles can be a way that certain responsibilities can be delegated to individuals or groups. Leadership roles could be selected in a number of ways. Workers could select another worker to handle certain responsibilities in a leadership position. Workers could also select a consumer or group of consumers to handle certain decisions. Another example could be consumers being given responsibility for selecting someone to fill a leadership position within the organisation. ## Elected leadership positions Elected leadership positions can represent an important approach for scaling an organisation’s governance process. Leadership positions could be seen as a form of forced voting delegation. Leadership positions would be given certain responsibilities and control over making certain decisions. This could be useful for situations where there is a difficulty in coming to an agreement and a group is satisfied with delegating this responsibility to someone who can handle the decision or due to the need to increase decision making efficiency. Elected leadership positions could be an effective way to limit the governance complexity that each voter needs to handle in an organisation. Founders or managerial positions can often have a large amount of influence over the direction of an organisation. Some organisations may prefer to operate in this manner out of efficiency or simplicity. Under contributionism, individuals in leadership roles would be elected by the contributors that govern the organisation. Leadership contracts could help to define the parameters, rules and duration of any leadership positions. Leadership roles might be get introduced for a number of reasons: * **Growing organisation** - A growing number of contributors in an organisation can result in an increasing cost for everyone to participate in governance decisions. Leadership positions can be effective for removing some of this cost by delegating certain responsibilities to individuals. * **Growing complexity** - The complexity of decisions could increase as the organisation scales or when it changes what it is executing. Higher complexity could put a large amount of responsibility and pressure on every contributor to be well informed and participate in these decisions. Leadership roles could help with isolating some of these complex decisions and giving someone or a group of people responsibility over handling certain decisions. * **Growing decision volume** - The number of decisions an organisation needs to handle could increase as the goods and services being provided evolve over time or as the organisation grows and is handling more consumers. * **Competent individuals** - Some individuals in the organisation could be highly competent and effective at leading teams or making complex decisions. An organisation may decide to trust these individuals with certain responsibilities to handle complex decisions. * **Highly competitive market** - The organisation may operate in a highly competitive market where the efficiency of the organisation is of high importance. Leadership roles could help with delegating some of this complexity to individuals that can execute decisions more quickly. * **Simplify worker responsibilities** - Workers may prefer an environment where their responsibilities are minimised so that they can focus on specific tasks they would prefer to spend their time on. * **Handling difficult decisions** - Workers are not well incentivised to make decisions that are not beneficial to themselves. For instance workers may be reluctant to identify and introduce new innovations into the organisation if that meant some of them could be made redundant. Individuals could be elected into leadership roles that give them the responsibility of identifying and introducing new solutions and innovations. # Compensation Compensation approaches that could be adopted within a contributionist organisation Anyone that makes contributions towards an organisation should have their contributions fairly measured and rewarded. Compensation can play an important role in retaining high performing contributors. The more valuable and impactful someone's contributions are the more that it should be rewarded when this is possible. One potentially popular compensation structure for any organisation could be to proportionally reward contribution based on the value and impact it generates. This is unless another collective agreement has been made about how contributions will be rewarded. ## Temporary compensation rights Labour and capital are the two main contributions that can receive temporary compensation rights. There are a number of incentive mechanisms that could be used for rewarding both these types of contribution. ## **Labour compensation mechanisms** Financial incentives help with encouraging people to make impactful contributions in a market based economy. **Salaries** Contributors will often receive financial compensation for their labour in the form of a salaried income. Salaries or hourly rates can often be determined based on the skill and expertise of the individual as well as the amount of responsibility they are taking on in their role. **Bonuses** Bonuses are an effective way to reward top performing contributors. It is hard to know ahead of time who will be the most performant and impactful. Numerous things can happen that impact someone's performance and how much they are able to contribute. Bonuses can provide an effective way to reward people based on what actually happens rather than a prediction of someone's likely performance and impact based on historical contributions. Accurate bonus allocations can help with ensuring that top performers get recognised and fairly rewarded. **Vested bonus** Similar to vested stock options, a vested bonus structure could be an effective approach for retaining top talent. If a contributor has performed well they could be rewarded a vested amount of bonus income that they receive over time if they continue to contribute towards an organisation. This type of incentive could stack each year and give the contributor an ongoing reward for high performance. **Group bonuses** Teams that are performing well together could be rewarded as a group for their contributions. Rewarding groups rather than individuals with a bonus compensation structure could be an effective way to maintain and increase team collaboration and morale. **Labour contribution dividends** Contributions at the beginning of an organisation are often more risky due to there being less guarantees that a contributor will receive a fair reward for those contributions or that the organisation will even survive over the long term. Contributions made towards the beginning of an organisation, when it is most likely to fail, will usually be taking on more risk than those contributions that are made when the organisation has become more profitable or financially stable. Historical labour contributions could be rewarded on an ongoing basis for a certain period of time based on the impact of their previous contributions. This type of reward structure can help with better aligning the incentives with rewarding risk taking so that people are encouraged to create impactful organisations. ## Capital compensation mechanisms **Loans** Capital investments are highly suitable for being rewarded in loan based structures. A loan could be implemented with a wide range of parameters based on the needs of the agreement. For instance a long term investment could have a delay of multiple years or even decades before the organisation needs to start repaying the loan. When a loan is being created the value of any capital invested can be calculated at the point of investment and the risks of investing in the organisation can also be documented. These calculations and information should then help with making a fair loan agreement that matches the requirements of both the investor and the organisation. **Revenue share agreements** A revenue share agreement is a financial arrangement where two or more parties agree to share a percentage of the revenue generated from a business venture or partnership. These agreements could last for a certain amount of time or up to a certain financial value that has been rewarded. Network introductions are a good example of situations where a revenue share agreement might make sense. The more valuable an introduction is for setting up new business relationships the more compensation the person could potentially receive due to the agreed percentage of revenue share that they will receive. **Leases** Capital such as properties and machinery (physical capital) or patents and trademarks (intellectual capital) could be leased to an organisation so that the capital investor can generate a return on investment on their capital. The organisation would then be able to utilise the capital for its own benefit and the investor would receive regular payments as their reward. ## Other labour incentive mechanisms Incentives do not need to be financially based. A range of other incentives should be considered that could also be effective for encouraging people to perform their best within an organisation. **Access based incentives** * **Home, food & resources** - Contributionism could be adopted in a variety of different economic models. In gifting economies or economies that don’t use markets the role of contribution could translate into access to homes, food and resources. * **Wellness & health** - Contributors could benefit from access to gyms, sports facilities and health and wellness facilities. * **Other shared resources** - Contributors could benefit from other shared resources such as entertainment, social or dining facilities. **Recognition and reward incentives** * **Certificates & awards** - Recognising top performers through certificates and awards could help with showing appreciation towards impactful and performant contributions. * **Appraisals** - Appraisals from individuals or groups can help to ensure someone's contributions have been recognised and celebrated by their friends and colleagues. * **Gifts** - Buying personalised gifts to reward contribution efforts could help with making a contributor feel more valued and appreciated. **Working environment incentives** * **Flexible working hours** - Contributors could receive more flexible working hours if they have provided a certain amount of contributions historically or if they have had a high level of performance. * **Paid time off** - Contributors could receive paid time off due to their contribution efforts. * **Career advancement** - High performing contributors could be given preferential treatment towards a future role change or for other progressions in their career due to their contribution efforts. * **Role flexibility** - High performing contributors could be given more influence over determining the responsibilities and tasks they will perform in their current role. **Skills & expertise incentives** * **Mentoring** - Organisations could provide mentoring from within the organisation or from external experts to give contributors an opportunity to learn new skills and expertise. * **Educational courses & training** - Educational courses and training can help with providing contributors an opportunity to learn new skills or improve upon existing skill sets. * **Self development** - Giving contributors time to work on themselves could be an effective way to incentivise some contributors that want to work on their own self development. **Social incentives** * **Social events** - Events can help to increase social bonding and team building within an organisation. Cultural events, celebrations and experiences could all be effective for bringing people together. * **Volunteer opportunities** - Contributors could be allocated time to contribute towards other causes that are meaningful to them such as charitable events or community initiatives. **Intrinsic incentives** * **Autonomy** - Autonomy over what a contributor works on and how they work can create a more engaging and rewarding environment for contributors. * **Purpose & meaning** - An organisation's mission and goals could resonate with a number of contributors that join an organisation. Contributions that have meaning and purpose can be an important intrinsic incentive and motivation for contributors. * **Mastery** - The complexity and skills required to execute certain tasks to a high level can itself be an effective challenge and intrinsic incentive for contributors that want to master different skill sets. # Exchange Understanding how goods and services can be exchanged under contributionism Contributionism could be implemented across different economic models, with various approaches for exchanging goods and services. ## Market exchange Markets are currently the most prominently adopted approach for exchanging goods and services across the world. Market exchange is a system in which the production, distribution and pricing of goods and services is determined primarily by supply and demand in competitive markets. Prices act as signals for both producers and consumers, and voluntary exchanges take place in markets based on these price signals. Individuals and businesses make their own economic choices about what's goods and services to provide and how they will be priced. Prices are determined by the forces of supply and demand, serving as a signal for what to produce, how much to produce and who receives goods. Individuals and businesses compete in the market to provide goods and services efficiently. In a market based economy, governments are often responsible for regulating the market and resolving any market failures, enforcing contracts and protecting property rights. More information about market failures can be found here: {% content-ref url="/pages/Erw00yn3mJqisaejLbCa" %} [Market failures](/contributionism/economic-model/exchange/market-failures) {% endcontent-ref %} ## Market pricing approaches Market based economies have a variety of different pricing approaches that are commonly used when exchanging products and services. These same pricing approaches would be relevant and applicable for contributionist organisations that operate in a market based economy. **Cost-based pricing** * **Cost-plus pricing** - The price is set by adding a fixed percentage or markup to the cost of producing the product or service. * **Markup pricing** - A specific amount or percentage is added to the cost of the product to determine its price. * **Break-even pricing** - Price is set to cover costs and reach a break-even point, without aiming for profit initially. This can be a common approach when entering new markets. **Value-based pricing** * **Perceived value pricing** - Price is set based on the customer’s perception of the value of the product or service, rather than the actual cost of production. * **Willingness to pay (WTP) pricing** - Prices are determined by what customers are willing to pay, often through surveys or market research. * **Premium pricing** - Products are priced higher to reflect their superior quality, brand reputation or uniqueness. **Competition-based pricing** * **Going-rate pricing** - The price is set according to what competitors are charging for similar products. * **Competitive parity pricing** - Prices are set to match competitors, often to avoid price wars. * **Loss-leader pricing** - A product is sold at or below cost to attract customers, with the hope that they will purchase other higher-margin items. **Dynamic pricing** * **Demand-based pricing** - Prices fluctuate based on real-time demand, such as higher prices during peak seasons or due to popular events. * **Surge pricing** - Similar to demand-based pricing but with more extreme adjustments based on sudden increases in demand. This is commonly used by ride-hailing services like Uber. * **Time-based pricing** - Prices vary depending on the time of purchase, such as discounts for early bookings or increased prices during rush hours. **Psychological pricing** * **Charm pricing** - Prices are set slightly below a round number (e.g. $9.99 instead of $10), which can make them seem lower to customers. * **Prestige pricing** - Prices are set higher to signal luxury or exclusivity, which may attract status-conscious buyers. * **Anchor pricing** - A higher "reference" price is displayed next to a discounted price to make the latter seem like a better deal. **Geographical pricing** * **Zone pricing** - Different prices are charged based on the geographical location of the buyer, for example applying higher prices in urban areas. * **Freight-on-board (FOB) pricing** - Prices vary based on shipping costs. Buyers in distant locations would pay more. **Negotiation pricing** A negotiation determines the maximum price a customer is willing to pay that the seller must also be satisfied with. **Quantity pricing** Different prices are charged based on the quantity purchased or product version. **Demographic pricing** Prices differ for specific customer segments based on demographics (e.g. student or senior discounts). **Penetration pricing** Prices are set low initially to enter a competitive market and attract customers, with the intention of increasing prices once a loyal customer base is established. **Skimming pricing** High initial prices are set for a new product, targeting early adopters, with gradual price reductions over time to reach broader market segments. **Bundle pricing** Several products or services are sold together at a lower price than if they were purchased individually. This can be a common approach with software or fast food chains. **Subscripting pricing** A recurring fee is charged for continuous access to a product or service, commonly used by software-as-a-service (SaaS) platforms, streaming services and magazines. **Freemium pricing** Basic services or products are offered for free, while more advanced features or premium versions are charged at a higher price (e.g. mobile apps or software services). **Pay-what-you-want pricing** Customers are allowed to choose the amount they want to pay for a product or service, with some firms suggesting a minimum or average price. **Performance based pricing** Pricing is based on the results or outcomes delivered. Common in consulting, advertising (e.g. pay-per-click) and commission-based services. **Auction based pricing** Prices are determined through bidding processes, as in traditional auctions, reverse auctions, or online platforms like eBay. Each customer is charged the maximum price they are willing to pay. **Economy pricing** Prices are kept low by minimising marketing and production costs, often used for generic or low-cost goods like store brands or no-frills services. **Seasonal pricing** Prices are adjusted depending on the time of year, with higher prices during peak seasons (e.g. holidays) and lower prices during off-peak periods. **Hybrid pricing** A combination of different pricing models is used to fit various products, markets or customer segments. For example, a company might use freemium pricing for software but bundle other services. **Optional product pricing** The base product is sold at a lower price, but customers are charged more for optional features or add-ons (e.g. airlines charging extra for checked luggage or in-flight meals). **Price lining (Product line pricing)** Different versions of a product are priced at distinct points along a spectrum (e.g. economy, standard and premium versions) to cater to various market segments. ## Alternative economic exchange approaches Markets are not the only way that goods and services can be exchanged. There are a number of other approaches for handling the exchange of goods and services that don’t require a market. Contributionism could be adopted alongside any of these other exchange based approaches. **Sharing** * **Communal ownership -** Goods and resources are shared among community members without direct compensation. Examples include communal housing, shared food resources and tool libraries. * **Resource pools -** Communities create shared pools of resources (e.g. equipment, land or food) that members can draw from as needed. These systems are often governed by mutual agreements or norms rather than markets. **Mutual aid** * **Cooperative production and sharing -** People work together to produce goods and services that are shared among the group. Mutual aid emphasises voluntary cooperation, where individuals or collectives pool labour, skills and resources for mutual benefit, especially in times of need (e.g. community kitchens and volunteer-based medical care). * **Time banking** - In this system, people exchange services using time as a currency. One hour of work earns one time credit, which can then be used to receive one hour of work from another participant. This system eliminates the need for traditional currencies or market mechanisms. **Reciprocity** * **Delayed reciprocity** - While gifts are given freely, there may be an unspoken expectation that the recipient will eventually reciprocate, but not necessarily with an equivalent good or service, and often at a different time. * **Generalised reciprocity** - Goods and services are exchanged freely, with the expectation that participants will continue to contribute to the community as needed. This is common in small, tightly-knit communities, where the social fabric itself ensures that contributions and needs are balanced over time. * **Balanced reciprocity** - In some societies, goods and services are exchanged with the understanding that something of roughly equal value will be returned in the future. Unlike barter, the exchange does not happen immediately, and there is flexibility in how and when the return happens. **Barter** * **Direct barter -** Goods and services are exchanged directly between individuals or groups, without the use of money. The key limitation here is the "double coincidence of wants" meaning both parties must want what the other has to offer. * **Barter networks -** These systems formalise barter exchanges among larger groups, where individuals can trade with anyone in the network using an internal credit system (e.g. Local Exchange Trading Systems), reducing the reliance on one-to-one bartering. **Giving** Goods and services are provided freely without an explicit expectation of a return. The giving is based on social or cultural norms, often promoting social bonds or status within a community. Examples include traditional indigenous societies, religious practices or modern movements like open-source software. **Needs based distribution** Goods and services are distributed according to need instead of profit or exchange value. Everyone receives what they require for a good quality of life and resources are managed scientifically to ensure sustainability. **Direct consumption** People produce what they need for themselves and their families, with minimal or no exchange. Any surplus may be shared within the community rather than exchanged for profit. # Market failures Identifying the different market failures that can occur along with the solutions that can help to prevent or resolve them Market economies can encounter various types of market-based failures, but numerous solutions exist that can help with preventing and resolving these issues. ## **Resource allocation and utilisation failures** **Externalities** Occurs when a third party is affected by a transaction that they are not involved in, leading to costs (negative externalities) or benefits (positive externalities) that are not reflected in market prices. These gains or losses are imposed on a third party that did not take part in the original market transaction. Some examples include: * **Positive externalities** - Goods or services that benefit a third party such as less congestion due to more cycling. * **Negative externalities** - Goods or services that impose a cost on a third party such as cancer from passive smoking. **Public goods** Public goods are characterised by being non-excludable and non-rivalrous. Public goods lead to underproduction or non-production because individuals cannot be effectively charged for their use. Some types of public goods include: * **Pure public goods** - Pure public goods are entirely non-excludable and entirely non-rivalrous. National defence is a common example of a pure public good. The market failure arises because private markets struggle to provide such goods efficiently since it's difficult to exclude non-payers, leading to the free-rider problem as individuals have little incentive to pay for this good or service. * **Common goods** - Non-excludable but rivalrous. Fisheries are a common-pool resource where overfishing leads to the depletion of the fish population. This represents a "tragedy of the commons" scenario. The market failure occurs because individuals have an incentive to exploit the resource before others do, resulting in overuse and potential collapse of the resource. * **Club good** - Excludable but non-rivalrous up to a point, as congestion can introduce rivalry. A private park or golf course where access is limited to paying members can become congested if too many members use it simultaneously. The market failure can stem from setting membership or usage fees that fail to account for congestion, reducing the overall enjoyment and quality of the good. * **Digital goods** - Excludable but entirely non-rivalrous. Can be consumed by one individual without reducing availability for others. May or may not be excludable. Digital goods, like software or digital music, where the cost of production is high, but the cost of additional consumers is low. This can result in pricing and distribution inefficiencies because such goods are easily copied and shared, raising intellectual property concerns and possibly reducing the incentive to create the good or service. **Merit goods** Merit goods are goods that are undervalued and under-consumed by individuals, relative to the level that would be socially optimal. They provide positive externalities and benefits that are often not fully appreciated by consumers. Education and healthcare are classic examples, where the market may under-provide these goods because individuals might not recognise their full benefits, leading to under-consumption. **De-merit goods** De-merit goods are goods that are overvalued and over-consumed by individuals, often resulting in negative externalities that are not accounted for in the market price. Tobacco and alcohol consumption can lead to social costs, such as healthcare burdens and reduced productivity. The market failure occurs because consumers may underestimate the personal and social harm from consuming the good. **Factor immobility** Factor immobility refers to the difficulty in reallocating factors of production, such as labour and capital, to where they are most valued or needed, leading to inefficient resource distribution and unemployment. Structural unemployment is one example that can occur when workers lack the skills needed for new jobs or cannot relocate to areas where jobs are available, leading to persistent unemployment and lower economic output. ## **Market structure and competition issues** **Monopoly power** Monopoly power occurs when a single firm or a group of firms has significant control over a market, which often leads to higher prices and reduced output compared to more competitive markets, ultimately diminishing consumer welfare. Market structures that can exhibit such power include monopolies, oligopolies, monopsonies and oligopsonies. Economies of scale can enable a firm to achieve significant cost advantages, increasing efficiency and allowing larger firms to dominate the market, thereby creating entry barriers for smaller competitors. For instance, a monopolistic company might set prices above competitive levels and restrict output and consumer choice, as often seen with utility companies when they lack any regulatory oversight. **Network effects** Network effects occur when the value of a product or service increases as more people use it, which can create a strong market position for the first successful adopter and this can lead to market lock-in. Dominance of tech platforms like social media networks can stifle competition and innovation because new entrants struggle to attract users without an existing base. **Incomplete markets** Incomplete markets exist when there is no market for some goods or services, thus failing to meet potential demand and leaving beneficial exchanges unmade. One example could be the absence of insurance markets for certain risks, like those related to new technologies. This can lead to inefficiencies and underinvestment. **Indivisibility** Indivisibility refers to the inability to scale goods or services without significant cost, often resulting in natural monopolies or inefficient allocation. Public utilities may face challenges due to high fixed costs and indivisibilities, leading to inefficiencies without appropriate regulation. **Speculation and bubbles** Speculation can drive asset prices far beyond their intrinsic values, leading to bubbles that can burst and cause market crashes, destabilising the economy. The real estate bubble leading up to the 2008 financial crisis is a prime example, where speculative investments caused a severe economic downturn. **Dynamic inefficiency** Dynamic inefficiency occurs when resources are misallocated over time due to inadequate investment or poor capital allocation, hindering long-term growth. Insufficient investment in research and development in a rapidly advancing technological industry can result in lost opportunities and reduced competitiveness. ## **Information and behavioural dynamics** **Imperfect information** Imperfect information occurs when parties in an economic transaction have unequal or incomplete knowledge, leading to inefficiencies as decisions are made based on partial or incorrect data. Some examples of imperfect information include: * **Information deficiencies** - Information deficiencies arise when necessary information is unavailable or insufficient for making informed decisions, leading to suboptimal outcomes. Consumers may purchase low-quality products due to lacking information about product quality. In labour markets, employers might not recognise the full set of skills a candidate possesses, leading to mismatched hiring. * **Misinformation** - Misinformation involves the distribution of false or misleading information that distorts decision-making processes and market outcomes. Advertising that exaggerates product benefits can lead to consumers making poor purchasing decisions. In financial markets, false information about a company's performance can mislead investors, impacting stock prices. **Adverse selection** Adverse selection occurs when there is asymmetric information before a transaction, leading high-risk individuals to be more likely to participate, skewing market outcomes. An example of this could be for insurance markets. Individuals with high health risks are more likely to seek coverage, leading insurers to raise premiums or withdraw from the market, potentially leaving out low-risk individuals. Used car markets also experience adverse selection, where sellers know more about vehicle quality than buyers. **Incomplete contracts** Incomplete contracts occur when not all future contingencies can be anticipated and specified, leading to disputes and inefficiencies. An example could be a construction contract that doesn’t specify who bears the cost of unexpected delays. This can result in disagreements and increased project costs. Another example is employment agreements, vague job descriptions might lead to disagreements over duties and performance metrics. **Moral hazard** Moral hazard arises when one party takes on risk without bearing the full cost of that risk. For instance, insured individuals might engage in riskier behaviour because they don't bear the full cost of their actions, such as driving recklessly with car insurance. Another example could be financial institutions that take on excessive risks if they expect government bailouts. **Principal-agent problem** This occurs when agents (such as employees) have different incentives than principals (such as employers), leading to actions that are not in the principal’s best interest. An example of this could be where a company's managers might prioritise personal goals over collective interests, potentially resulting in inefficient operations or resource misuse. In healthcare, doctors might over-prescribe treatments that are not necessarily in the patients best interests due to being paid by that service. **Bounded rationality** Bounded rationality describes the limitations of human cognitive processing, leading to suboptimal decision-making due to incomplete information and processing capabilities. Consumers for instance might stick to familiar brands rather than researching alternatives because of information overload. Another example is investors that rely on heuristics, leading to suboptimal portfolio choices. **Time Inconsistency** Time inconsistency arises when the preferences of individuals change over time, leading to decisions that may not align with long-term goals. For example, consumers might overspend on credit due to a preference for immediate gratification, impacting their future financial stability. Another example could be governments that prioritise short-term economic boosts over long-term fiscal sustainability. **Coordination failures** Coordination failures occur when economic agents fail to synchronise their actions, leading to inefficient outcomes that individual efforts can't resolve. Businesses may fail to adopt compatible technology standards, slowing industry innovation. Collective efforts to reduce emissions may falter if countries do not act in cooperation. **Information and incentive compatibility issues** These issues arise when information discrepancies and misaligned incentives prevent economic agents from acting in a way that is socially or economically optimal. In auctions, bidders may underbid due to fears of overpaying (winner's curse). In employment contracts, poorly aligned incentives might lead workers to underperform. ## **Equity and access challenges** **Inequality** Inequality as a market failure arises when the distribution of wealth and resources is uneven, hindering economic efficiency and access to opportunities, which can lead to underutilisation of potential talent and resources. High levels of income inequality can lead to reduced overall consumption, as lower-income individuals have less purchasing power. It can also cause economic instability and limit social mobility, perpetuating poverty cycles. **Cultural and social barriers** These barriers can prevent certain groups from accessing markets or opportunities fully, due to biases, discrimination or cultural norms which lead to inefficiencies and a loss of potential economic contributions. An example of this could be gender discrimination in the workforce, which can result in underemployment or misallocation of skilled workers, while cultural biases may prevent minority groups from accessing education or financing. These factors can limit overall economic growth. **Liquidity constraints** Liquidity constraints occur when individuals or firms cannot access the necessary capital or cash flow to invest or consume, restricting economic activities and growth. Small businesses may fail or stagnate due to an inability to secure loans, despite having viable projects. Households might defer necessary spending (e.g. for healthcare or education) because of cash shortages, leading to longer-term societal costs. **Regulatory capture** Regulatory capture happens when agencies tasked with regulating industries act in favour of those industries, rather than public interest, leading to distortions and inefficiencies. When financial regulators prioritise banking industry interests over systemic stability, it may lead to relaxed regulation and contribute to economic crises. Public utility boards captured by energy companies might set rates that favour the company whilst harming consumers. **Institutional failures** Institutional failures occur when formal systems (e.g. legal, governmental) are ineffective or corrupt, undermining market function and eroding trust and economic efficiency. Weak legal systems could lead to property rights uncertainties, discouraging investment. Corrupt bureaucracies might inflate costs for business activities, reducing competitiveness and hindering market entry for new firms. ## **Solutions** **Market based solutions** Solutions that are predominantly driven by market forces and private sector initiatives. They leverage economic incentives, competition and innovation to address market failures. * **Impact investing** - This approach involves investing in companies, organisations or funds with the intention of generating measurable social or environmental impact alongside a financial return, thereby addressing market failures related to funding sustainable initiatives that traditional investors might overlook. * **Crowdfunding platforms** - These platforms enable entrepreneurs and projects to raise small amounts of capital from large numbers of people, democratising access to funding and overcoming market failures where traditional financial systems are unable or unwilling to provide support to innovative or risky ventures. * **Dynamic pricing models** - Implementing dynamic pricing strategies that can adjust based on demand and supply conditions, helping to efficiently allocate resources in the case of congested infrastructure or services. * **Cap-and-trade systems** - Using market-based solutions like cap-and-trade for environmental challenges, which limit overall emissions while allowing for flexible compliance through trading permits. * **Market design and auction theory** - Markets and auctions can be structured to enhance efficiency and transparency by implementing mechanisms that prevent market abuses and ensure fair competition. This is achieved by designing rules that facilitate open access to information, encourage truthful bidding, and align incentives to allocate resources to those who value them most, thereby optimising market performance. * **Standards and certifications** - Standards and certification processes are established to ensure the quality and safety of products and services, effectively reducing information asymmetries and boosting consumer confidence. Industry groups often develop voluntary standards and guidelines to fill gaps in existing regulatory frameworks, which can help with enhancing trust and reliability in the marketplace. * **Blockchain solutions** - Blockchain solutions could help with reducing information asymmetry and inefficiencies and helping to address issues such as fraud, counterfeiting and unethical practices. An example of this could be the application of blockchain to supply chains to enhance transparency, security and traceability of any goods being transported. * **Technological solutions** - Technological solutions can play a crucial role in addressing market failures by improving existing infrastructure and market systems. For instance, smart grid technology can mitigate energy distribution and environmental impact market failures by enhancing demand responses, using real-time monitoring and by providing a seamless integration of renewable energy sources. * **Private contracts and agreements** - Private contracts and agreements allow parties to negotiate solutions that address externalities and improve resource allocation efficiency. The utilisation of legal frameworks can help with tackling market failures without requiring government intervention. The Coase Theorem suggests that, if property rights are clearly defined and transaction costs are negligible, parties can negotiate to resolve externalities efficiently; however, real-world frictions often impede such negotiations. Pollution from a factory could harm nearby residents, yet resolving this without clear property rights or low transaction costs often requires regulatory intervention. Noise pollution disputes between neighbours are sometimes not resolved through negotiation due to high transaction costs or emotional factors. * **Corporate social responsibility (CSR)** - Encouraging businesses to voluntarily adopt practices that go beyond profit-making to include social and environmental sustainability. * **Rating agencies** - Rating agencies provide independent assessments of creditworthiness, helping to reduce information asymmetry in financial markets. By offering standardised evaluations, they enhance market transparency and efficiency, enabling investors to make more informed decisions. * **Joint ventures** - Strategic partnerships between companies to collaborate on specific projects or markets enable resource sharing and risk mitigation, fostering innovation and overcoming barriers to entry. **Government based solutions** Solutions that rely on government action, regulation and policy to correct market failures. * **Public goods provision** - Governments provide or fund public goods, such as national defence, education, public parks, infrastructure and public health services, which can be typically under provided by the market due to their non-excludable and non-rivalrous nature. * **Taxation & subsidies -** Using taxes and subsidies to align private incentives with social welfare. For instance, taxing activities that produce negative externalities (like pollution) and subsidising activities that yield positive externalities (like education). * **Progressive taxation -** Implementing progressive taxes, where higher income brackets are taxed at higher rates, can help with addressing economic inequality by redistributing wealth more equitably. * **Minimum wage laws** - By implementing a legal minimum wage, governments aim to protect workers from exploitation and reduce income inequality. This policy helps with market failures in labour markets by ensuring that workers receive better compensation which can help with improving overall economic equity. * **Social insurance and redistribution -** Developing social insurance programs and redistributive policies that help to address inequality and provide a safety net for individuals, mitigating the risks associated with unemployment, illness or old age. * **Incentive alignment** - Incentive alignment involves designing policies that align private interests with social goals, using tools like performance-based payments in public procurement and tax incentives or subsidies to encourage beneficial activities. * **Price controls -** Implementing temporary price floors or ceilings to manage situations where certain goods are too expensive or too cheap due to market failures. These can often be used sparingly due to potential distortions. * **Regulation and legislation** - Governments impose regulations and safety standards to protect public interests, mitigate negative externalities and ensure safe and fair practices. Regulation and legislation can help with correcting market failures that occur due to inadequate information or private incentives. * **Antitrust laws** - A type of law that can help with preventing anti-competitive behaviour and promoting market competition by prohibiting monopolistic practices. This can help to ensure that consumers benefit from fair pricing, innovation and choice. * **Tailored policy design -** Developing context-specific policies that are tailored to the unique needs and circumstances of each country, rather than relying on generic, one-size-fits-all solutions. * **Zoning regulations** - Governments use zoning laws to control land use, manage urban development and mitigate negative externalities like congestion and pollution, ensuring that resources are allocated efficiently. * **Urban planning & infrastructure development** - Through strategic planning and infrastructure investments, governments can try to optimise the use of space, reduce congestion and support economic development, correcting market failures related to public goods and externalities. * **Financial market interventions** - Interventions such as regulating financial institutions and providing deposit insurance aim to maintain stability and trust in financial markets, addressing issues like asymmetric information and systemic risk. * **Resource quotas** - Quotas limit the use of common resources, such as fishery catch limits, to prevent over-exploitation and ensure sustainable management, addressing the tragedy of the commons. * **Cost-benefit analysis** - Governments can use cost-benefit analysis to help with evaluating the economic efficiency of projects and policies, ensuring that public resources are allocated toward interventions that maximise social welfare. * **Property rights -** Clearly defining and enforcing property rights to prevent overuse or misuse of resources, such as common resources that suffer from the tragedy of the commons. * **Patent and copyright laws** - Intellectual property laws incentivise innovation and creativity by granting temporary monopolies, allowing creators to recoup their investment, yet this must be balanced to prevent market distortions. * **Strengthening institutions -** Building and reinforcing institutions that support market function, such as legal systems, property rights and financial regulation bodies, to better provide stability and trust. * **Regulatory sandbox** - Creating a regulatory sandbox where new business models can operate under relaxed regulations to innovate and address potential market failures without excessive bureaucratic constraints. * **Behavioural nudges -** Designing policies that use insights from behavioural economics to gently steer people towards making choices that lead to better market outcomes without restricting freedom of choice. * **Corruption mitigation -** Introducing measures to reduce corruption risks, such as increasing transparency, accountability and monitoring within government agencies as well as ensuring that regulatory bodies are independent and well-governed. * **Tort lawsuits** - Tort lawsuits can help with internalising negative externalities by holding parties accountable for the harm they cause to others. By imposing legal costs on harmful behaviour, tort law incentivises individuals and businesses to take adequate precautions to prevent harm, aligning private incentives with social welfare. **Collective and community based solutions** Solutions that depend on collective action, community involvement and partnerships. * **Cooperative models** - Cooperatives are member-owned organisations that operate for the mutual benefit of their members, addressing market failures by fostering equitable access to goods, services and profits. Cooperatives can help with improving community welfare and reducing market power imbalances. * **Collaborative consumption models** - Promoting sharing economies and collaborative consumption models that maximise the utilisation of resources and reduce negative externalities through shared access to goods and services. * **Public-private partnerships (PPPs)** - Partnerships between the government and private sector to design, finance and deliver public services or infrastructure projects by leveraging the strengths of both sectors. * **Collective bargaining** - Through collective bargaining, workers negotiate with employers as a unified group to secure fair wages, benefits and better working conditions. This can help with mitigating power imbalances in labour markets that could be causing lower living standards. * **Community land trusts** - These are nonprofit organisations that hold land on behalf of a community to ensure long-term affordability and sustainable development, addressing market failures related to housing and land use. * **Peer-to-peer platforms** - Platforms that facilitate direct exchanges between individuals, such as ride-sharing or home-sharing services, improve market efficiency by utilising underused assets and creating new economic opportunities. * **Environmental stewardship programs** - Community-led initiatives that promote conservation and sustainable management of natural resources foster collective action to address ecological market failures, enhancing local environmental outcomes. * **Open source platforms** - These platforms allow collaborative development and sharing of technology and software, reducing barriers to innovation and addressing market failures related to proprietary access and cost. * **Industry consortia** - Groups of companies within an industry collaborate to set standards, share research and drive innovation, helping to address market failures through collective expertise and resources. * **Social norms and networks** - Informal systems of shared values and behaviours within a community can influence individuals to act in socially beneficial ways, overcoming market failures related to public goods and externalities. * **Non-profit and charitable efforts** - Encouraging non-profit organisations to address areas where markets fail to provide adequate services or goods, often through donations and volunteer work. * **Innovation and research funding** - Government or private funding of research and development to overcome market undersupply in areas where private sector investment is insufficient due to high risk or long time horizons. * **Public lending and microfinance** - Providing access to credit for underserved populations to overcome market failures in credit markets, promoting entrepreneurship and economic development. * **Social entrepreneurship support** - Encouraging and supporting social enterprises that aim to solve social problems through market-based solutions, combining philanthropic goals with commercial strategies. **Educational and informational solutions** Initiatives focused on changing behaviour through education, information dissemination and awareness-raising. * **Education and awareness campaigns** - Increasing public awareness about products or activities that have negative externalities such as health or environmental implications, helping to change consumer behaviour and reduce market failures. * **Consumer advocacy** - Organisations and movements that represent consumer interests work to ensure fair treatment and transparency, addressing market failures related to deceptive practices and information gaps. * **Consumer protection agencies** - Creating agencies to protect consumers from misinformation and ensure fair practices. * **Online educational platforms** - These platforms provide accessible learning resources for diverse subjects, democratising education and helping mitigate knowledge disparities that contribute to market inefficiencies. * **Market-driven information platforms** - Platforms that provide real-time data and insights, such as price comparison websites or financial analytics tools can help with empowering consumers and businesses to make informed decisions, reducing asymmetric information. * **Ethical labelling** - Labels indicating ethical practices, like being cruelty-free, to better inform consumers about product attributes, allowing them to make value-driven purchases and to promote more socially responsible market behaviour. * **Financial literacy programs** - These programs equip individuals with knowledge and skills to make informed financial decisions, reducing market failures associated with asymmetric information and poor financial planning. * **Decentralisation and local governance** - Empowering local governments to address public good provision and market failures more efficiently through localised knowledge and implementation strategies. * **Provision of information** - Ensuring transparency and availability of information to consumers and businesses to address asymmetric information issues and improve decision-making. * **Improving information dissemination** - Establishing systems and regulations to ensure better information flow and transparency in markets, which can mitigate problems associated with information asymmetries. # Money Understanding how money fits into the economic model for contributionism Money is used to facilitate exchange by acting as a common medium and unit of account. Money also serves as a store of value, enabling people to save and transfer wealth over time. Contributionism can be adopted in many different economies that each could be using multiple forms of money. Contributionism could also be adopted in economies that don't even use money. ## Gold Gold is a precious metal that has been used as a store of value and a medium of exchange for thousands of years. **History of usage** Gold has been used as money since ancient times, with the earliest known gold coins dating back to around 600 BCE in Lydia (modern-day Turkey). **Current usage** Today, gold is primarily used as a hedge against inflation and economic uncertainty. It is often bought and held as an investment and a reserve asset by central banks and individuals rather than as a direct medium of exchange in everyday transactions. **Problems** Although gold remains a popular store of value, it faces challenges such as storage and transportation issues, lack of liquidity compared to other forms of money and no yield in terms of interest. Its popularity can fluctuate based on market perceptions of stability and economic forecasts. ## Fiat currencies Fiat currencies are government issued currencies that are not backed by a physical commodity but rather derive their value from the trust and authority of the issuing government. **History of usage** Fiat currencies became the predominant form of money in the 20th century, particularly after the Bretton Woods system ended in 1971, when the U.S. dollar ceased to be convertible into gold. **Current usage** Fiat currencies are the most widely used form of money today, facilitating everyday transactions, trade and investments globally. They serve as both a medium of exchange and a unit of account, and their supply is typically managed through monetary policy by central banks. **Problems** Fiat currencies can be subject to inflation and hyperinflation if mismanaged. They rely heavily on government and policy stability. While universally accepted, concerns over centralisation, monetary policy impacts and national debts can affect their popularity. ## Cryptocurrencies Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate on decentralised networks, usually based on blockchain and distributed ledger technology. **History of usage** The first and most well-known cryptocurrency, Bitcoin, was introduced in 2009. Since then, thousands of different cryptocurrencies have been developed. **Current usage** Cryptocurrencies are used for a variety of purposes including investments, transferring value across borders and financial services like lending and borrowing in decentralised finance (DeFi). Some are used for direct purchases, often where traditional payment methods may not be available. **Problems** Cryptocurrencies face issues such as price volatility, regulatory uncertainty and scalability challenges. Security concerns, environmental impacts of mining and lack of widespread acceptance for everyday transactions can hinder their growth. Cryptocurrencies remain popular for their potential high returns, decentralisation features and innovation in financial services. # Governments Understanding how governments fit into the economic model for contributionism Nation state governments are responsible for establishing and enforcing laws, managing public resources and providing services such as education, healthcare and defence to ensure the welfare and security of its citizens. Governments also will often engage in diplomatic activities and negotiate with other governments to maintain international relations and address global challenges. Governments can range from being very small to very large in terms of responsibilities and scale depending on the preferences and needs of a nation. Organisations that adopt contributionist principles would need to comply with local laws and regulations in any of the nations they are operating in. Contributionism could be adopted across a variety of economies that each could be using different approaches for their government. ## Government responsibilities Nation state governments could be responsible for handling a range of services depending on the size of the government and preferences and needs of the nation. Some responsibilities could include national security and defence, law and order, public goods, public infrastructure, public education, public healthcare, social welfare, foreign relations, environmental regulations, crises management and taxation and revenue collection. Governments are also often responsible for economic management which involves the creation of policies that help with promoting growth and stability whilst also managing inflation, unemployment and taxation. Many nation states manage their own national currency through a central bank. This responsibility could be challenged over the coming years and decades as cryptocurrencies continue to improve and offer people decentralised alternatives. As part of managing public goods and resources, local community governments and nation state governments could also be responsible for determining who will be affected by certain decisions. Those that are affected by certain decisions can then be included in the governance process to influence how those goods and resources get managed and used. ## **Government approaches** The size and responsibilities of a nation state government will vary depending on the needs and preferences of each nation. The following approaches help to highlight some examples of governments that range from small to large in terms of their responsibilities. Any of the following approaches could be adopted in a contributionist society. This list is not exhaustive, there are many approaches that could be adopted within each nation state government. **Classic liberal government** A classic liberal government emphasises individual freedoms, limited government intervention, and the protection of civil liberties. The role of the state is primarily to ensure the protection of individual rights, such as property rights, freedom of speech and the right to participate in free markets. Economic activity is largely driven by businesses. Government regulation is kept to a minimum. Some key characteristics include: * **Minimal government intervention** - The government plays a limited role in economic and social affairs, emphasising free markets, competition and individual choice. * **Protection of individual rights** - The government’s primary role is to protect civil liberties and political rights, such as freedom of speech, religion and assembly. * **Free markets** - Classic liberal governments favour laissez-faire economic policies, where the private sector drives economic activity with minimal state intervention. * **Rule of law** - There is a strong emphasis on the rule of law, ensuring that individuals are protected from government overreach or arbitrary decisions. **Regulated government** A regulated government maintains a balance between free markets and government intervention to correct market failures and protect the public interest. The state intervenes to regulate industries, protect consumers and ensure that economic competition remains fair. While there is still room for private enterprise and free markets, the government has a more active role in ensuring that businesses do not exploit consumers, workers or the environment. Some key characteristics include: * **Active regulation of markets** - The government implements regulations to prevent monopolies, protect consumers, ensure labour rights and address environmental concerns. * **Balance of freedom and oversight** - While private enterprise and free markets are central, the government enforces rules to maintain fairness, safety and sustainability in the economy. * **Correcting market failures** - The government intervenes to address issues like externalities (e.g. pollution), public goods provision (e.g. infrastructure) and information asymmetries (e.g. consumer protection). * **Regulatory agencies** - The government creates and maintains regulatory bodies to oversee sectors like finance, health, labour and the environment. **Social government** A social government (also called a welfare state) takes a more active role in ensuring social welfare and economic equality, providing extensive public services such as healthcare, education, housing and social security. Social governments are characterised by their emphasis on reducing inequality through redistributive policies, progressive taxation and strong welfare systems. While they still allow for market economies, they place greater importance on public goods and social safety nets. Some key characteristics include: * **Strong welfare state** - The government provides extensive social programs, including universal healthcare, education, unemployment benefits and pensions to ensure the basic needs of citizens are met. * **Redistributive policies** - The government uses progressive taxation and other policies to reduce income inequality and redistribute wealth. * **Government ownership or involvement in key sectors -** In some cases, social governments may control or heavily regulate industries like healthcare, utilities and education to ensure accessibility and fairness. * **Emphasis on equality and social justice** - Social governments prioritise reducing disparities in wealth, access to services and opportunities, aiming to create a more equitable society. **State government** A state government refers to a system where the state plays a significant role in managing key aspects of the economy, including the ownership and operation of major industries, provision of public goods and regulation of resources. Unlike purely centralised or autonomous operations in other systems, state governments can vary in their structure, emphasising a range of control from centralised planning to allowing some degree of public participation, depending on the political environment and governance goals. Some key characteristics include: * **State ownership and management** - Major industries and resources, such as healthcare, energy and transportation, are owned and managed by the state. Control may be centralised or involve various degrees of public and worker participation in governance, depending on the state's approach to economic management. * **Provision of public goods** - The state is responsible for ensuring the availability and accessibility of essential services and public goods, including education, healthcare and infrastructure. * **Regulation and oversight** - The state implements and enforces regulations to manage resources effectively, maintain social welfare and ensure economic stability and fairness. * **Social cohesion and equality** - State governments often prioritise policies that promote social justice and equality, aiming to distribute wealth and resources fairly to reduce disparities. * **Accountability and checks** - Systems of accountability, such as regulatory bodies, oversight mechanisms and sometimes public participation, are implemented to ensure that the state's power is not misused and remains aligned with the citizens' needs and values. ## Central vs democratic economic planning Economic planning means the government would determine what goods and services to produce, how to produce them and how to distribute them. More economic planning would result in a larger amount of publicly owned organisations. These organisations could still adopt contributionist principles. In a market economy, a classical liberal government would mostly or entirely leave the responsibility of determining which goods and services should get produced to the market. A planned economy represents an alternative approach where all economic decision-making is handled by the government. This would mean that market exchange, driven by consumer choice and competition, would be replaced by government directives and plans that are designed to meet specific economic and social objectives. Mixed economies can combine elements of both market economies and economic planning. Economic planning would be relevant to the regulated, social or state based government approach examples. **Central planning** In a centrally planned system, the people that work within the government would be responsible for making key economic decisions, including what goods and services to produce, how to produce them and how to distribute them. This system is most commonly associated with command economies. This approach has the issue that it would mean reducing the amount of direct representation and involvement that people can have in the decisions that impact their daily lives. In contributionism, leadership contracts are suggested as an optional solution for handling governance in organisations. Any responsibilities and control that these leadership positions would be given should be fully justified and accepted collectively. Any government position of influence should also be limited in duration and the scope of responsibilities so that the position cannot be abused and so that new leadership can be selected in the future. Late stage capitalism can result in a small number of actors having a large amount of control and influence over the economy and society. Central economic planning can result in this same outcome, however these actors would instead be in the government. Central planning is therefore less desirable as an approach for handling economic planning. If an economy does decide to use a central planning approach, influential positions should be specifically tailored to the problems that need to be addressed and have a limited duration of influence. **Democratic planning** Democratic planning involves collective decision-making processes where citizens, workers and stakeholders actively participate in determining economic policies and resource allocation. It aims to combine planning with democratic governance. Democratic planning is aligned with contributionist principles as it ensures that people's rights and ability to influence their economy are not taken or delegated away. Delegation of voting power in a democratically planned economy would be a choice and not a requirement. Democratic planning can increase the risk of making decision making slower and more complex due to the need to balance diverse interests and try to reach a consensus. However this approach also helps to encourage inclusivity and accountability, ensuring economic decisions reflect the broader community's needs and values. The right systems and processes would be required to effectively facilitate democratic planning. Overall, democratic planning would be the preferred planning approach due to it giving individuals the ability to directly influence the decisions that impact their daily lives. # Complimentary models A list of complimentary models that could be adopted alongside contributionism There are a number of complementary economic models and approaches that suggest new solutions for managing resources and the handling of the means of production. Some economic approaches suggest that markets could be replaced with economic planning using governance or technological solutions. Even in the more all encompassing economic models, contributionism could still be widely adopted as the preferred approach to invite, measure and reward contributions within an organisation. A number of alternative economic approaches could gain adoption in certain communities or nations across the world over the coming years and decades. The adoption of any of these economic models could result in an increasingly mixed global economy for a period of time. Mixed economies could also end up being a transitory phase until one or a handful of economic models succeed against some of the existing approaches. Other economic approaches could also represent a balancing force for market based approaches, where these other approaches could provide long term solutions that are more efficient or effective in certain areas such as for social safety nets, supporting public goods and addressing inequalities or market failures. Many of the economic models mentioned below can overlap with one another in how they would handle things like governance, economic exchange, planning, technology and general social wellbeing. **Resource-based economy** A resource-based economy is a system where goods and services are distributed based on the availability and sustainability of resources rather than through markets, monetary systems or direct trade. The allocation of resources is managed scientifically and efficiently to ensure that all members of society have their basic needs met. This model emphasises technological solutions to production and distribution challenges, aiming for a sustainable and balanced use of natural resources. Some key characteristics include: * **No money or markets** - Resources are allocated without the use of money or market mechanisms. Instead, decisions are based on resource availability and need. * **Sustainability** - The system focuses on managing natural resources in a way that is sustainable for both people and the planet. * **Technological management** - Advanced technology is used to optimise production and distribution, ensuring efficiency and minimal waste. * **Need-based distribution** - Goods and services are provided based on need rather than ability to pay or exchange. * **Global approach** - Typically aims for a global rather than local approach to resource allocation, ensuring that resources are shared across society based on collective goals. **Cybernetic economy** A cybernetic economy is a system where computers, algorithms and advanced data management tools play a central role in managing the economy, including the production, distribution and consumption of goods and services. Rather than relying on markets or human planners, economic decisions are made through automated systems based on real-time data inputs. Cybernetic economies are highly dependent on technology and aim to optimise resource use, production efficiency and distribution in a decentralised or centralised manner. Some key characteristics include: * **Automation** - Computers and algorithms manage the economy, often in real time, using vast amounts of data. * **Data-driven decision-making** - Economic decisions are based on data inputs such as resource availability, production efficiency and consumption patterns. * **Decentralisation & centralisation** - Can be centrally controlled or decentralised, depending on the design of the cybernetic system. * **Efficiency focus -** Aims to maximise efficiency in resource allocation and production by reducing human error and inefficiencies. * **Technological dependence -** Relies on advanced technology, artificial intelligence and automation to replace or support human decision-making. **Commons-based economy** A commons-based economy is a system in which resources are collectively owned or managed by a community and shared among its members according to agreed-upon rules or norms. The "commons" refers to resources like land, water, or even digital resources like open-source software that are held in common by a group. These resources are typically governed through democratic processes, ensuring that their use is sustainable and equitable for all members of the community. This model relies on cooperation, collective responsibility and long-term resource management. Some key characteristics include: * **Collective ownership** - Resources are owned and managed collectively, rather than by private individuals or the state. * **Democratic governance** - Decisions about resource use and distribution are made collectively, often through participatory or democratic processes. * **Sustainability** - Emphasises sustainable management of shared resources to ensure long-term use for the community. * **Social norms** - Sharing and managing resources often rely on social norms and rules that are designed and enforced by the community. * **Diverse resources** - Commons can include both physical resources (e.g. land, forests or fisheries) and digital and intellectual resources (e.g. open-source projects or Wikipedia). **Post-scarcity economy** A post-scarcity economy is a theoretical system in which resources, goods and services are so abundant that they are no longer scarce. Technological advances, such as automation, artificial intelligence and advanced manufacturing such as 3D printing are thought to make the production of goods so efficient that nearly everything is available at little or no cost. In a true post-scarcity economy, the concept of pricing, money and trade would largely become irrelevant because goods are plentiful and people's basic needs are met automatically. Some key characteristics include: * **Abundance of resources** - Advanced technology enables the production of goods and services in such quantities that scarcity is virtually eliminated. * **Minimal or no prices** - With abundant resources, goods are provided freely and pricing becomes irrelevant for many essential and non-essential goods. * **Automation and AI** - Automation and artificial intelligence handle most production and decision-making, minimising the need for human labour. * **Needs-based distribution** - Goods and services are distributed based on need, rather than ability to pay or market demand. * **Focus on quality of life** - The system emphasises meeting basic needs, such as food, shelter, healthcare and education, allowing people to focus on personal fulfilment, creativity and leisure. **Other economic models** A number of other economic models could be adopted in parallel to contributionism. Contributionism focuses on how organisations are owned, governed and incentivised rather than how goods and services should be exchanged and how a nation state should be governed. Examples of other economic models include subsistence, mutualism, communalism, Autarky (self-sufficiency), solidarity and steady-state economies. These are just examples and this list is not exhaustive. These other economic models could be mostly or entirely compatible with contributionist principles and ideas. As contributionism is solely focused on the organisation it is highly versatile and flexible in where it could be adopted. # Implementation More information about how contributionism could be implemented. {% content-ref url="/pages/zje0uH2N6pbdYMmfnyML" %} [Contribution tables](/contributionism/implementation/contribution-tables) {% endcontent-ref %} {% content-ref url="/pages/f9TpREohstzBi6ZWjKeS" %} [Loans](/contributionism/implementation/loans) {% endcontent-ref %} {% content-ref url="/pages/9ekC5pwoGzAOTHkussa3" %} [Leadership contracts](/contributionism/implementation/leadership-contracts) {% endcontent-ref %} {% content-ref url="/pages/P8CYgin7TKmjDC8iPp8o" %} [Organisation parameters](/contributionism/implementation/organisation-parameters) {% endcontent-ref %} {% content-ref url="/pages/vC18hUN7tO2rixIn6Zyz" %} [Data modelling](/contributionism/implementation/data-modelling) {% endcontent-ref %} # Contribution tables Initial ideas about how contribution tables could be implemented Contribution tables are a record of what people have contributed towards an organisation. Contributors can highly benefit from contributions being recorded and verified. Every type of contribution could be recorded in contribution tables. **Capital** Capital investments can be recorded by including the date of the investment, the asset being invested and its total value and who the investor is. Most capital investments would be converted into risk adjusted loans that the organisation will pay back sometime in the future. The details about that loan should be linked to any capital investment contribution information. **Donations** Donations can be recorded by including the amount being donated, the time the donation was made and the person that made the donation. **Consumption** Consumption can be recorded by including the good or service that was provided to the individual, the price they paid for that good and service, the date they paid and received the good or service and who the individual was that made the purchase. In some situations the consumer would want to remain anonymous, a unique reference identifier could be used to make a contribution log but enable the consumer to remain anonymous. The consumer could also be given a way to prove that they purchased a certain good or service if they needed to in the future using technology such as zero knowledge proofs. ## **Labour contributions** Capital, donation and consumption contributions are often much easier to understand from a value perspective as most of the value of these contributions is known at the time they are made. Labour contributions are often more complex due to the fact that the value of the labour is sometimes not immediately obvious or measurable. Some contributions could take multiple years before it is clear on how valuable that contribution has been for an organisation. This makes it important for an organisation to understand who made what contributions so this can be tracked over an extended period of time. Recording labour contributions accurately will help with rewarding impactful contributions in the future based on the value and impact they generate for an organisation. The following are some initial suggestions about the parameters that could be used for recording labour contributions. **Worker details** Details about the person who provided their labour should be recorded on each contribution entry. This could be details about the individual or another organisation that has made the contribution. **Start date and end date** The start and end date for when the contributions were made. **Market rate** In a market based economy the labour for different roles and skills can have a different value based on the supply and demand for people that could fill those roles. Each skill can have a varying level of difficulty and amount of effort that is needed to master the skill. An organisation can use market data to determine what a fair market rate is for certain roles and skills and then using that data determine what their own agreed rates should be. **Agreed rate** Organisations can pay different rates based on how well the company is doing and where it is along its own startup journey. In the earlier stages it is common for organisations to not have the same amount of capital and resources due to a lack of income from consumer purchases or donations. An organisation will need to collectively agree on what a fair agreed rate should be for different roles based on what the organisation can afford at that point in time and what is fair and reasonable for the responsibilities and complexities of each role. An agreed rate doesn’t guarantee that contributors will be paid this much that year as the revenue for the organisation will often not be known ahead of time. **Salary** Each worker would receive a salary or wage based on an agreed contribution period and payment for that period. The salary that someone receives should be a prediction of the value of the contributions they will make based on their historical performance and impact. For some organisations, it could be beneficial to agree on income levels that are below the market rate of each worker. This is because it is only a prediction of what they will contribute and how they will perform. Capital can then be reserved for a bonus incentive in the future. **Unpaid salary** Sometimes an organisation is unable to pay the agreed rate that each worker was expecting. Unpaid salaries are the total amount of the agreed rate that has not been paid to the worker. The worker should be paid this missing income in the future when and if the organisation is able to do so. **Outcome percentage** At the end of each contribution period an organisation can benefit from determining what percentage of the current outcomes were due to the contributions of each person. This is important for a more competitive environment where people are rewarded based on the value of their contributions. There are many ways that this percentage could be determined that will need separate and more in depth analysis. The level of accuracy that is needed will be based on the needs of the organisation and how competitive they prefer their environment to be. **Bonus percentage** An organisation needs to decide what percentage of the existing assets should be allocated towards contributors through bonuses. An organisation will need to decide what amount of capital it needs to reserve for future expenses and salaries before making an informed decision about what percentage could be used for bonuses. **Bonus** A bonus incentive is an effective way to pay workers for what has actually happened after they have finished a period of contribution. It is hard to predict how performant and impactful someone will be ahead of time. Contributors can come together at the end of a contribution period to discuss and vote on which contributors have been the most performant and impactful based on what actually happened. This means that enough capital should be reserved for this review period when possible. Even if there is little to no capital for a bonus incentive available this same process can help with identifying the most performant contributors who can then be rewarded in the future. Contribution tables help to ensure that organisations can reflect on these contributions in the future and take into account whether people were fairly compensated for those contributions. **Paid income reward** Paid income rewards combine the income and bonus for a contribution period that someone has received and then multiplies this income by a reward multiplier. The justification for this reward is because the value of someone's contributions can be higher in certain circumstances such as during the starting stages of an organisation where it is riskier to make contributions as it is not always guaranteed the organisation will be around to pay them in the future. An increased reward could also be provided when someone has made contributions for multiple years as their expertise and understanding of the organisation could now be even more effective for the organisation. **Unpaid income reward** Unpaid income is the agreed rate minus the amount that the contributor has actually been paid. If this results in an amount that has been unpaid then the unpaid income should be similarly rewarded in the future. Unpaid income can be even more greatly rewarded than paid income as the contributor is taking on delayed risk as they might not get paid this delayed income in the future. Organisations may purposefully decide to delay paying people their agreed rate salaries to maximise the chance the organisation survives. These contributors are taking a risk that the organisation could fail and due to this their unpaid income reward needs to reflect this risk in their future reward. **Total contribution value** A person's total contribution value will combine someone's paid income reward and the unpaid income reward for a given contribution period. This value will include the income, bonus and any added rewards that they should receive in the future. This value helps to express a more accurate representation of the value that someone has provided an organisation. **Cumulative contribution value** A person's cumulative contribution value is the sum of all the total contribution values for each contribution period. This value will represent the total contribution value they have provided to an organisation up until the current point in time. **Contribution logs** Accurately working out how performant and impactful someone's contributions are will require a thorough understanding of what each person has contributed. To achieve this, contributionism advocates for people to record logs of any contribution outputs they have generated over a period of time. Contribution logs can be used as a way to verify someone's contribution efforts and outcomes. The aggregation of someone's contribution logs should give a good indication of how performant and impactful a contributor has been. This information can then be fed into the review process and inform future income and bonus compensation decisions. ## Automatically recorded contributions Blockchain and ledger technology is a complimentary technology for automatically recording contributions that could be used for contribution tables. All donations and consumer purchases could be easily recorded using on-chain transactions. When labour contributions are paid out a transaction could be created that can be used as a receipt for the contribution period that has been paid. Capital investments could mostly be converted into risk adjusted loans where the contracts could also be added on-chain. A number of governance systems and processes would be needed for contribution tables to function properly in an on-chain environment. # Loans Exploring how loans could be used in contributionism Organisations may not have the capital available to pay for a contribution that has been provided. Organisations could also have capital available but would still prefer to pay the contributor back in the future. Loans are a commonly used financial structure that could be used for compensating any contribution over a period of time. ## **Relevant contributions for loans** Contributions that are not relevant for risk adjusted loans would include donations as they are given without an expectation of return and consumption as a consumer in a market economy is exchanging their money for goods and services. **Capital** Under capitalism, capital invested is commonly converted into share ownership. Investors receive benefits such as voting rights, dividends, profit from organisation growth and appreciation, assets claims in liquidation, protection against dilution, legal protections and limited liability. Contributionism advocates for the abolishment of capital based share ownership. Loans are able to achieve near equivalent benefits and outcomes that share ownership provides. Capital investment in contributionism results in permanent ownership over the contribution, temporary governance rights and temporary compensation rights. These temporary governance and compensation rights will last until the loan has been repaid. Investors can still achieve a large return on investment, protect their capital invested and be involved in the governance of an organisation until their investment is repaid. **Labour** People that provide their labour will usually receive a certain amount of income as a financial reward for their contributions. Sometimes an organisation does not have enough capital to pay people a fair market salary. In these situations the organisation could raise capital from investors. Alternatively the workers could decide to accept a loan with the organisation itself. This loan would total the amount of income that can’t be paid to the worker in the short term. The worker would then benefit from the same interest and benefits that a capital investor would have received due to the delay repayment of the loan. Some workers may be happy with this arrangement as they will receive a larger future payment by sacrificing an amount of their income in the short term. ## Temporary governance rights Under contributionism, capital investment does not translate into shares that have perpetual governance rights. Capital invested is converted into a loan and optionally this loan could be given governance rights that enable the lender to be involved in certain governance decisions. Loans can achieve a very similar outcome as capital based shareholder ownership: * **Voting rights** - Temporary governance rights can be given to investors so that they can protect their capital investment and have an influence in governance decisions within the organisation until the loan can be repaid. * **Asset claims** - The loan agreement could include provisions that give the investor priority access to liquidated assets in the event of bankruptcy. * **Protection against dilution** - The return on investment and interest rate of the loan could be agreed ahead of time and similar to shares that couldn’t be diluted by the organisation. * **Legal protections** - The legal system would protect the loan agreement. This loan would be enforceable under law. * **Limited liability** - Investors would not have liability for the actions and finances of the organisation they lend their capital to. Loans would also have some differences with capital based shared: * **Dividends** - The investor would usually only receive the agreed return on investment and any interest on the loan that has accumulated until the loan has been repaid. Capital would be rewarded with a fair return on investment instead of returns that could be infinite and excessive. In certain circumstances the investor may be given compensation rights for a capital based investment. For instance, intellectual property might be a reason that an organisation decides to give an investor temporary contribution dividend rights due to the unique value the capital has which can’t be found elsewhere. * **Profit from company growth and appreciation** - Investors would only receive a return on investment that is fair and reasonable based on the risk of the organisation failing and the length of time it takes until the loan is repaid. If the loan is not repaid on time the investor could benefit from the ongoing interest that accumulates on the debt. Capital is mostly invested into an organisation to solve a specific problem such as the need to pay for contributors, fixed costs or any other area that requires investment, maintenance or improvement. A lot of the value in the capital is how well it is utilised by labour within the organisation. Risk adjusted loans are a suitable structure for rewarding capital based contributions. The long term value of an organisation is more heavily influenced by how it is operated and maintained by labour contributions. It is the workers that will determine how effectively the capital will be utilised and how effectively they are able to use their time, resources and assets to make a successful organisation. ## Organisation financial priorities The following are some example financial priorities that an organisation will need to handle: 1. **Revenue share agreements** - Income that comes in that is attached to a revenue share agreement should be respected and paid. 2. **Capital loans** - Investments into the organisation that have been converted into a capital based loan need to be repaid once they are due. Many loans could have a delayed start date for the first repayments. In these situations the loan would not be the immediate priority for the organisation until the repayment start date is approaching. 3. **Worker unpaid income loans** - A worker may end up receiving less than their agreed rate due to a weaker revenue performance and a lack of capital in the organisation. In these events the organisation has the responsibility to repay any unpaid income to the worker once the funds become available. 4. **Contribution dividends** - An organisation is responsible for rewarding historical contributions that have helped the organisation achieve the success it has achieved so far. Contribution dividends are how surplus income can be used to reward these historical contribution efforts. Any unpaid loans that are due for repayment would be higher priority than contribution dividends. 5. **Bonuses** - A bonus helps with rewarding current workers in an organisation. Bonuses can be a part of the income a worker receives to pay their agreed rate. Bonuses could increase beyond the market rates of each role once the organisation becomes more profitable. ## **Loan parameters** There are a large number of parameters and variations in how a loan can be created depending on the requirements and preferences of the two parties that make the agreement. The following are some example parameters that could be involved when setting up a new loan. **Lender personal details** Personal details about the lender. An organisation may need to do background checks on potential investors if they are going to give them influence in the organisation in the form of temporary governance rights. **Risk factors** Both parties may want to define the risks that are involved in the organisation that might prevent the loan from being paid. These factors could help with determining a more accurate and fair return on investment. Organisations might be held accountable for ensuring they disclose all of the known risks they are aware of that might prevent or delay the loan from being repaid. **Financial history** Historical financials and any credit history about the organisation should be shared and disclosed so that both parties are aware of what the organisation's current financial situation is before any loan parameters can be agreed and finalised. **Loan purpose** For capital investments the lender might want to know how the investment will be used and for that to be agreed beforehand. For some organisations this added clarity could translate into agreements where the lender doesn’t require temporary governance rights in the organisation as the loan itself has specified how the investment can be utilised. **Agreed return on investment** The loan could state what the expected return of investment is by a specified date. Riskier loans that get repaid after a longer period of time could result in a return on investment that is many multiples of the original investment. Organisations may also add provisions that give a different return on investment amount depending on how long it takes to repay the loan. **Interest** Interest could be added onto loans based on the current cost of borrowing more broadly or using a fixed rate. Loan interest could be an additional part of the loan or it could be used as an alternative to an agreed return on investment amount. **Repayment dates & duration** The loan could define the start date for when the organisation must start repaying the loan and how many instalments will be used to complete the repayment. Alternatively there might not be a fixed repayment start date and duration and the organisation may be able to decide when they want to start repaying it. Delaying the loan repayment would just mean that the organisation would likely be responsible for paying a larger amount through interest or a higher agreed return on investment that is based on how long it takes the organisation to repay the investor. **Default & late payment penalties** Lenders that require repayments by certain timelines may decide to include penalties for when an organisation defaults on the loan or makes late payments. Example penalties could be one off fees or added interest for everyday that the late payment hasn’t been made. **Governance rights** Lenders could be given temporary governance rights in the organisation so that they can protect their interests until the loan has been repaid. The decisions the investor is able to influence and how much voting power they have should be made clear in the loan agreement. **Exchange rights** Some organisations might only want specific people to invest and have governance rights in the organisation. Exchange rights could define the conditions in which a lender is able to sell some or all of their loan to another person and what this would mean for any existing governance rights. Some organisations may want the governance rights to lapse if the loan is exchanged. The loan's compensation rights would never lapse as this is the financial agreement that must be honoured. **Loan covenants** Any other specific conditions or clauses included in the loan agreement to protect the lender or that might be needed by the organisation. # Leadership contracts Exploring how leadership contracts could be used in contributionism Some organisations can greatly benefit from strong leadership. Leadership could help with guiding an organisation towards greater success, increasing operational efficiency and with the creation of more innovative solutions. However leadership can also be highly problematic. Leadership can become stagnant and difficult to change due to the ownership and governance structures that have been adopted. Workers may become demotivated and disengaged if leadership becomes increasingly misaligned with the values and preferences of its workers due to differing motives or incentives. Organisations need to self determine what balance they want between adopting individual leadership roles with collective governance responsibility. Leadership contracts can help with enabling individuals within an organisation to take on greater responsibility and autonomy to make important decisions and lead the organisation in certain areas. Leadership contracts need to apply suitable terms for the arrangement to be accepted by the workers and be beneficial for the organisation. Having the right terms will mean the scope of the leadership role is limited to what is required to achieve the intended outcome. The benefit of using leadership contracts is that they would be time bound so that someone doesn’t have perpetual influence and control over certain areas within an organisation. This makes leadership more accountable towards the collective preferences of the organisation. Leadership that doesn’t take into account worker preferences will make it less likely that they are elected again into that position. Leadership contracts represent an opportunity to balance the benefits of high responsibility roles that have more autonomy and efficiency to make important decisions with the need for those roles to have greater accountability and flexibility to be changed over time as the needs and preferences of the organisation evolve. ## **Leadership contract parameters** Leadership contracts will need to include a number of parameters to define the responsibilities included in the contract with any sensible policies and clauses that can help to protect the organisation. **Contributor** Personal details about the contributor that is being selected for the leadership role. **Duration** A start and end date for how long the contract will be valid. This means that workers will not need to make a dissenting proposal and vote to remove a person from a leadership position in most cases. Fixed term length contracts help to ensure that leadership roles aren’t given in perpetuity and instead it is earned through contributor selection. Temporary durations should also help to reduce the likelihood for conflict. **Governance rights** A leadership contract should define exactly what responsibilities and controls the position includes. This could mean outlining the key decisions that they are responsible for and what processes they must follow. Making this well scoped instead of broad means that both the wider organisation and the person that takes the leadership role will be confident in what is expected from the leadership role. **Veto power** The organisation could include veto authority to overrule a decision that has been made by leadership. This overruling authority could be useful for preventing leadership from making decisions that are strongly opposed by the wider organisation. If veto power is included the terms and thresholds required to use it will need to be accurately documented. **Early cancellation** The preferences and opinions of the contributors could change over time. They could become increasingly opposed to the approach or decisions that leadership is making. In these situations it could be useful to have an early cancellation clause in the contract so that an organisation's contributors are able to make changes to the leadership when it makes sense for them to do so. The thresholds and steps to complete this cancellation process will need to be defined in the contract. **Rules & policies** How the leadership should behave and act throughout their term can be documented. The contract might be automatically cancelled if any of these rules of policies are breached. ## Emergent leadership Sometimes leadership can emerge out of challenging situations. A leadership role might not even be defined. There could be many situations where leadership emerges in group working environments. Leadership contracts might not be necessary for some organisations or for certain situations. The main desirable outcome for situations where leadership has emerged is that it is accepted by the group. If there is opposition to the emergent leadership then contributors within the organisation would be able to express their opposition. They might suggest that this role should not exist as it is excessively influencing the organisation in one direction. Others might suggest that the role is beneficiary and it should be legitimised by creating a proper leadership role with a contract so that a person can then be elected into that position. ## Specific governance contracts Organisations could benefit from creating contracts that give someone highly specific responsibilities in the organisation. This could be a single decision that the organisation wants to delegate to a person or group that is inside or outside the organisation. In these situations a more specific contract could be used to delegate this responsibility. Responsibilities that are historically bundled together into single leadership role positions could be broken down into very specific responsibilities that are distributed across multiple people. When decisions are overlapping and require similar context it might be more efficient to bundle these responsibilities into a single role. In other situations an organisation might want to delegate decisions to people to increase governance efficiency but would still prefer to delegate the responsibilities across multiple people. This approach could help to ensure that each individual is only given a limited amount of control and influence over the organisation. ## Founder leadership contracts Sometimes a person or group of people can come together and have a vision for something valuable and impactful that a new organisation could achieve. Without leadership contracts there is a risk that future contributors that join these organisations do not agree with the direction of the organisation. If this happens the new contributors in the organisation could democratically decide that the organisation should go in another direction instead of what is preferred by the founders. Sometimes the founders could be right and sometimes the other contributors could be right about which direction would be best for the organisation. Founders could create leadership contracts at the start of an organisation that outlines the responsibilities they have and how long it should take for them to execute their vision. These contracts provide the benefit of reassurance to the founders that they can execute their vision as intended. They are also beneficial for the contributors that join the organisation as the responsibilities and influence that the leadership has is very clearly defined. Workers can either accept or reject these terms when deciding whether to join or not. A leadership contract should also mean that a finite amount of time has been specified in which the leadership is given these responsibilities. After these contracts lapse, contributors would be able to vote on whether the leadership role should continue to exist or not and if so who is going to be elected into that role. # Organisation parameters A list of some example parameters that could be used within a contributionist organisation The following operating and startup parameters could be useful for setting up a contributionist organisation. Most of these parameters are being used in the data modelling examples to demonstrate how these parameters could influence financial outcomes for different types of organisations. ## **Startup parameters** **Risk** *Suggestion*: Scored out of 10 A risk score looks to quantify how risky it is to start an organisation and what probability it has to fail. A number of questions could help with justifying a risk score. Has this organisation been tried before? If so, how often have those organisations been successful? How many organisations still exist that are doing what this new organisation is intending to do? What are the costs involved in setting up and operating the organisation? Does the organisation have high capital requirements? How long could the organisation survive without having any consumer purchases or donations? Is the business model already well regulated or are their regulatory risks and concerns? Is the work that people perform safe? Does the product or service already have proven demand in the market? Does the organisation already have the talent required to execute the product or service as intended? What external factors could make the organisation less viable? **Complexity** *Suggestion:* Scored out of 10 A complexity score looks to quantify how difficult it would be to start and operate an organisation. A number of questions could help with justifying a complexity score. What skills and expertise are required to start this organisation? How many people realistically have these skills and expertise? How hard is it for people to attain the skills and expertise required to operate this organisation? How many people will need to have these skills and expertise for the organisation to function effectively? How complex is the product or service that is going to be provided? Will this complexity likely decrease or increase over time? What other external complexities will the organisation need to handle such as regulation, supply chains or any reliances on third party providers? Is the product or service being offered novel or not well understood? Does the organisation require a large number of people for it to be operated effectively over the long term? **Minimum reward multiplier duration** *Suggestion*: 3 years The purpose of having a minimum reward multiplier duration is so that there is always a reward given to people who start a new organisation regardless of when it becomes break-even. **Multiplier reward duration** *Suggestion*: Largest number out of minimum reward multiplier duration Sometimes an organisation can take longer to break-even than the minimum reward multiplier duration value. In these events the contributors who join at this stage are taking a risk that the organisation does not break-even and become sustainable in the near future. Due to this it makes sense to reward the contributors who are involved up until the organisation achieves break-even. Either the break-even year or the minimum reward multiplier duration should be used, whichever value is greater. A default suggestion would be that the startup reward multiplier would be reduced proportionally each year that it is applied. **Startup paid income reward multiplier** *Suggestion: Scored out of 4*, calculated by taking the risk + complexity values and multiplying by 0.2. The startup paid income reward multiplier takes the risk and complexity scores and takes the average of those two scores to generate a final reward multiplier value. This multiplier value will then be used to reward the paid contributions for starting the organisation. **Startup unpaid income reward multiplier** *Suggestion: Scored out of 10*, calculated by taking the risk + complexity values and multiplying by 0.5. The startup unpaid income multiplier is used for the same reasons as the paid income multiplier, however the value is increased to account for the higher risk that contributors take on when they aren’t paid by the organisation in the early stages. This is the riskiest time for someone to contribute to an organisation and not be paid as it is more likely at this stage that they never get paid for their contribution. ## **Organisation parameters** **Break-even year** The break-even year is the year that the organisation's revenue is equal to or greater than the total expenses and outgoings of the organisation. Break-even will mean that contributors should be receiving their agreed rate on average through a combination of the salaries and bonuses. **Contribution dividend to bonus ratio** *Suggestion*: 2:1 The dividend to bonus ratio is used to ensure that historical contribution efforts are rewarded. If an organisation wants to reward contributions in the current year with bonuses it should also need to distribute rewards to historical contributions that helped get the organisation to where it is today. The dividend to bonus ratio should only apply for any amounts that are distributed above the agreed rates. **Unpaid income multiplier** *Suggestion:* 1.1 A general unpaid income multiplier can help to ensure that anyone who doesn’t receive full compensation for their contributions would be awarded with a larger amount of compensation in the future. The multiplier could be applied once or yearly. The multiplier amount could be determined in a number of ways such as using a simple percentage amount or based on the current market rates for lending and borrowing capital. **Non dilutive governance & compensation rights duration** Suggestion: 3-10 years Impact that is generated by someone's contributions can take time to be fully understood and realised. It is not enough to just reward someone within the same year they make contributions as at the start of an organisation a lot of the growth and reward from those efforts can come years in the future. Contributions also need to have a finite amount of time that they have governance and compensation rights as if this is infinite you end up with a similar capitalist type of structure where perpetual governance and compensation are based on who owns the most historical contributions. Organisations might use a lower duration for dilution protection if it is not expected that worker contributions will have much impact in the future. A service based business such as a group of electricians could be an example where the impact of their work is realised more immediately. For organisations that take a longer time to realise the full value of the earlier contributions they may decide to use a much longer duration. An electronics product startup that is creating something novel and new that has never been seen before could be an example of a situation where contributions could take a longer time frame to generate the intended impact. Only then could those contributions be rewarded more accurately. **Contribution dividend distribution formula** *Suggestion (formula):* If the sum of all cumulative income and dividends distributed is less than the cumulative contribution value then divide each person's cumulative unpaid contribution value with the cumulative total unpaid contribution value and proportionally reward those contributors with the dividend. Otherwise divide each person's total contribution value with everyone's cumulative total contribution value and reward each contributor based on their percentage of the contribution. Dividends are used to reward historical contributions. After unpaid income repayments have been made the dividend is then used to reward peoples contribution efforts. The first responsibility of the dividend is to reward any contributors that have not been paid the value of their contributions yet. After everyone has received the value of their contributions the next responsibility is to proportionally distribute the dividend based on the proportional value of each person's contributions. A contribution dividend helps to ensure that historical contributions that helped an organisation achieve its current success are fully rewarded over time. # Data modelling Data modelling some example organisations to showcase how different parameters could be used and how they might impact an organisation The following data models apply some of the contributionist concepts and most of the suggested operating parameters. These models include a simplified example of contribution tables and loans. These example data models are provided to explore some simple implementations of contributionism across different types of organisation. These models are just basic examples. It should be expected that the parameters and approaches used for these models will evolve and be updated over time. The current data models can be found here - **Novel product** The novel product example looks to show an organisation that goes through large employee growth and large revenue growth. This is then used to see how early contributors are rewarded compared to others and then to compare contributors who stay at the organisation for different periods of time. A large dividend is distributed to the contributors due to the organisation's success. This example helps to show that a highly profitable business can lead to contributors receiving a larger return on investment than their market rates. Some overview details: * Workers: Starts with 4, ends with 314. * Revenue: Starts with $0 annually, ends with $139,000,000. * Risk: 10/10, product has never been created before. * Complexity: 8/10, product is complex and no existing examples, required capital investment loan to get started. **SaaS** A SaaS product example looks to show an organisation with modest growth but that made a choice to slowly expand headcount and eventually achieve market rates for those that are working in the organisation. This example helps to highlight the impact of unpaid income over a longer period of time contributing towards a higher contribution value that might not get paid until further into the future. The early contributors chose to bring in more workers than repay their own unpaid salaries and this translated into a large contribution value in the later years that had still not been paid due to a lack of income repayment and dividends. This example highlights the importance of organisations being able to decide when they want to do the unpaid income repayments and the importance that early contributions are sufficiently rewarded in the long term when the organisation is ready to pay for those contributions. The reward multipliers are an important part of making it fair for contributors that took the risk in the earlier stages of the organisation. This risk translated into more governance and compensation rights for those contributors. Another thing this example highlights is the importance that early contributors don’t lose their governance and compensation rights in the short term and that they persist until they have been fairly rewarded for their contributions. Some overview details: * Workers: Starts with 2, ends with 9 * Revenue: Starts with $16,000, ends with $1,030,000 * Risk: 6/10, Moderate risk but also a lot of other example companies who have done similar business models. * Complexity: 7/10, Software startups are fairly complex and require a high level of skill and expertise across different domain areas. **Clothing producer** The clothing company example shows a fairly fast growth company that repays all of its unpaid income and then by the end it starts to distribute contribution dividends to reward historical contributions. This example helps to show the high contribution value of the first few years of contribution where the initial contributions start to become increasingly rewarded over time as the organisation grows and is able to start paying contribution dividends. The annual average compensation for the early contributors such as Alice would keep increasing in subsequent years due to the higher contribution value that was historically established. One thing that might be important for this organisation is a leadership contract so that Alice can operate the business how she would prefer until a fixed date in the future. This approach could be fair due to the large risk that Alice took in the first few years by herself where only partial payment was received. Some overview details: * Workers: Starts with 1, ends with 20 * Revenue: Starts with $0, ends with $2,590,000 * Risk: 6/10, Moderate risk as it is often a competitive market and often requires the development of a strong brand image to attract and retain consumers. * Complexity: 5/10, Moderate complexity with handling distribution, online administration and marketing at different scales as the organisation grows. **Marketing agency** The marketing agency example shows an organisation that immediately starts making a modest amount of revenue and that moderately grows over time. The example helps to show that the early contributions and a small team can lead to the early contributors naturally having a large amount of governance and compensation rights within the organisation. In this example Alice and Bob have a majority influence in the organisation from start to finish due to the initial years of contribution effort they made. This organisation also shows a more mild impact from the startup reward due to the organisation being easier to set up in a market that had already proven demand. The startup reward multiplier still helps to ensure that their efforts to startup the agency are rewarded over the long term. Some overview details: * Workers: Starts with 2, ends with 6 * Revenue: Starts with $165,000, ends with $790,000 * Risk: 4/10, Fairly low risk as it is a very similar business model to what exists in the market and there is proven demand for this type of marketing work. * Complexity: 6/10, Moderate complexity as the most effective marketing approaches and skills needed can often change over time. **Restaurant** The restaurant example helps to explore an organisation with a lower startup reward multiplier due to moderate risk and lower complexity. It maintains modest salaries and bonuses throughout and moderate revenue growth. This example helps to show an organisation that might never go above the market rates due to its limitations in what revenue it can achieve in the market that it operates. Dividends are not being rewarded due to the financials of the organisation. In these situations it highlights the importance of getting the salary and any bonus measurements as accurate as possible for all workers involved in the organisation as there is no guarantee that the organisation will generate more than the workers agreed rate salaries over the long term. Some overview details: * Workers: Starts with 3, ends with 5 * Revenue: Starts with $200,000, ends with $427,000 * Risk: 6/10, Moderate risk as it’s a competitive market but not excessive risk as there is proven demand and good footfall in the area that the restaurant operates. * Complexity: 3/10, Food being offered is not complex to make once the business is set up and many people could be trained to operate the business. Some complexity in starting and operating the business admin efforts. # Companies limited by shares vs contributionism A comparison between companies limited by shares and contributionism that looks at their similarities and differences Capitalism is more broadly defined than contributionism. Contributionism is focussed on how the organisation is owned, governed and incentivised. Companies limited by perpetual shares have been a popular organisational structure that has emerged within the economic system of capitalism. The following explores some of the key similarities and differences between companies limited by perpetual shares and contributionism for structuring an organisation.
## Similarities Similar to companies that are limited by shares, contributionism is a flexible approach for structuring an organisation and this could be adopted in many different economic environments. **Money** Both companies limited by shares and contributionist organisations could use multiple forms of money including gold, fiat currencies or cryptocurrencies. **Exchange** Both companies limited by shares and contributionist organisations can operate within free markets where there are high levels of competition and freedom of choice for consumers. **Governments** Both companies limited by shares and contributionist organisations could operate within nations that adopt different governance structures such as classic liberal, regulated, social or state based governments. **Shared values and characteristics** * **Encouraging entrepreneurship** - Individuals that start contributionist organisations would be rewarded for risk taking just as they are in companies limited by shares. Any risks involved with starting up an organisation would be taken into account when evaluating and rewarding each contribution. * **Wealth accumulation** - Individuals could seek to accumulate wealth in either companies limited by shares or contributionist organisations. * **Profit motivation** - Contributionist organisations would collectively self determine their own motivations and priorities. This could similarly include a motivation for profit, which is a common motivation within companies limited by shares. * **Rewarding effective organisations** - In a market economy, both contributionist organisation and companies limited by shares would be rewarded based on their productivity, efficiency and ability to meet market demands. * **Personal freedom** - Capitalism and contributionism both advocate for people freedom. People would have the autonomy to make their own economic decisions, such as choosing their occupation, how they spend their money and what they decide to produce or consume. ## Ownership
Companies limited by perpetual shares
Contributionism
**Ownership** How is the organisation owned? What does ownership mean? What outcome does that approach lead to?

Capital shares based ownership.

Ownership is determined by capital based shares. Shares give owners perpetual governance and compensation rights. Existing owners have full control to decide who receives any future shares regardless of the contributions they provide. Shares are commonly distributed between founding members based on labour and capital contributions. Future contributions may or may not receive shares. Capitalist organisations could be owned by one person or by a small number of individuals. They can also be owned by every worker in the organisation depending on how the initial owners decide to distribute shares.


Perpetual shares create a disconnect between contribution and ownership. Those that own the organisation do not need to contribute towards the organisation over the long term. Shares give them perpetual governance and compensation rights regardless of whether they make any future contribution.

Contributor ownership (Based on donations, consumption, labour or mixed contributions) or public ownership.

Ownership is determined by contributions or the organisation is publicly owned by the government. In contributor owned organisations, contributors receive temporary governance and compensation rights for their contributions. Owners collectively decide who else will be able to contribute. Any contribution that matches the contribution ownership approach will lead to ownership in the organisation. Contributionist organisations are always collectively owned by those that contribute or collectively by society through their government.

Contribution should always be respected within the organisation. In all contributionist organisations governance and compensation rights are temporary, meaning that contributors will need to contribute over the long term if they want to receive future incentives or for them to have any influence in the organisation.

**Investment** How do organisations handle financial investment?
Financial capital could be invested into an organisation through the issuance of common stock, preferred stock, convertible securities, stock options, warrants, bonds, convertible bonds and convertible notes as some common examples. Sometimes a cap is used for preferred stock, convertible bonds and warrants that limits the potential upside for the investor. Without a cap the potential return on investment an investor can receive is limitless.
Financial capital can be invested into an organisation using loans. Loans can apply similar incentives and terms that are found in capital shares structures. Loans can be flexible and enable an organisation to repay the loan when or if they’re ready to. Loan structures mean a cap would be applied that limits how much an investor could expect to receive back. Interest or penalties could still be applicable for any unpaid loans.
**Ownership changes** How can the ownership of the organisation change? What are the implications of this?

Capital based shares often represent permanent ownership, governance and compensation rights. Shares can be exchanged with other people.

The owners of the organisation that govern how it operates could be people that do not actively contribute towards the organisation. These owners would have perpetual influence over the organisation regardless of any future contributions that other people make towards the organisation.

Contributions made towards the organisation are permanent and non transferrable. Temporary governance and compensation rights received for those contributions can be exchanged with other people. Sometimes an organisation might collectively decide to prevent the exchange of governance or compensation rights.

Exchangeable governance rights could give other people temporary influence over an organisation. People that buy governance rights to influence an organisation would need to perpetually buy more governance rights as these rights would lapse over time. New governance rights would be given to contributors that continue to contribute towards the organisation.

**Record of ownership** How is the record of ownership handled?
Capitalisation tables list all of the shares that exist within a company and who owns those shares. This could include stock, convertible notes, warrants and equity ownership grants.
Contribution tables are used to record every persons contribution towards the organisation. The ownership type will determine which type of contribution will receive temporary governance rights.
**Private property** What rights do owners have? How can individuals invest and profit from organisations?

Under capitalism, individuals with shares have the right to use the organisations resources, land, capital and goods as they see fit. Ownership is protected by law and the transfer of shares is facilitated through market transactions.

Individuals can profit from organisations by investing their own capital or labour to receive shares of ownership that have future profit potential.

Under contributionism, individuals with governance rights are able to determine how the organisation uses its resources, land, capital and goods as they see fit. These governance rights should be protected by law and the transfer of governance rights is facilitated through market transactions.

Individuals can profit from organisations by investing their own capital or labour into an organisation. Temporary incentive and governance rights ensure that a contributor can protect their interests.

## **Governance** **Governance participants** Who receives governance rights and how do they elect leadership positions or decide how the organisation is operated? How does this approach impact workers?

Shareholders receive governance rights to influence who sits on the board of directors. The board of directors have governance rights to influence who fills any executive positions. The executive positions have governance rights to influence how the organisation is operated. This creates a top down structure where shareholders who might not actively contribute towards the organisation are in control over how the organisation is governed. Executives would make decisions about how the organisation is operated.

Workers may or may not receive shares in the organisation. Workers will often not receive shares that are proportional to the value and impact they have generated for the organisation. Workers without shares would have no voting power to influence who sits on the board of directors or who fills any of the leadership positions.

Any contributions made towards the organisation that match the ownership type would receive governance rights (labour, donations, consumption or mixed contributions). Collectively those with governance rights would vote on who is elected for any leadership positions that exist and would also vote on how the organisation is operated. A board of directors is not required.


Organisations that are governed by workers would always have workers vote on any leadership positions and any operational decisions. For other organisation types the worker may or may not have influence over who is elected for leadership positions.

**Governance rights duration** How long does someone have governance rights for in the organisation?
Share holders are given governance rights that last in perpetuity. However not all investments will receive governance rights. Bonds, preferred stock, convertible securities, warrants and options might not receive any governance rights.
Collectively the organisation needs to decide how long temporary governance rights should last for. Governance rights will need enough time for the full value of the contribution to be realised. Temporary governance rights could range anywhere from 1 to 10 years or more in terms of duration. Capital invested would never receive permanent governance rights. Instead capital investments would receive temporary governance rights until the loan has been repaid. In practice, capital investments could receive long term governance rights due to the delay in how long the organisation takes to repay the loan.
**Voting power** How much voting power do participants have?
Voting power is proportional to the amount of shares someone has when selecting board members. The boards of directors often use an equal voting power approach to make decisions. Executives may leave larger decisions to the CEO and other decisions could be delegated to certain executive to handle. The voting process may or may not be collaborative and use multiple stakeholders.
Voting power would be determined by the value of the contributions provided or equally between contributors. It could also be determined using a combination of these approaches.
**Leadership role duration** How long are leadership roles valid for? How does this impact the organisation?

Leadership is selected by shareholders and then by the board of directors. The leadership will only change if these stakeholders decide to change the leadership.

This approach to leadership selection means that leadership can be stagnant for long periods of time if the leadership is fulfilling the expectations of the shareholders and board of directors. Workers that don’t have shares would have little to no influence over changing the leadership.

Leadership is selected by the contributors that govern the organisation. Leadership roles will usually use leadership contracts to define the responsibilities and parameters of the position. These contracts would also include the duration for how long the contract will last for. Founders could issue themselves leadership contracts to ensure they have influence over the organisation for a certain period of time.

Leadership roles are temporary. Contributors would vote on which individuals should fill those positions. Contributors will decide whether they want a leadership role to continue or not when any existing contracts have lapsed.

**Leadership acceptance** Do leadership roles need to be accepted by workers?
Leadership roles do not need to be accepted by workers in a capitalist organisation. Workers have to accept what shareholders and the board of directors have decided when it comes to leadership positions.
Contributors would collectively decide who is selected for any leadership positions that are introduced. For startups with self elected leadership positions the contributors would need to decide whether they accept the leadership or not by deciding whether to join the organisation or not.
## **Incentives** **Contribution incentives** How are the incentives for contributors determined? Are certain people being prioritised?

Leadership will determine how much profit is allocated towards labour in terms of bonuses and how much is allocated towards growth, business expenses or shareholder dividends. Leadership is incentivised to maximise shareholder value by prioritising growth or paying dividends.

Shareholders are prioritised as they will receive the benefit from any business growth or dividend payments. If workers get prioritised for incentives this would be due to a goodwill decision from the leadership and shareholders.

Contributors will collectively decide how profit is distributed between contributors and what should be reserved for growth and business expenses. Organisations may use a proportional reward approach based on the value of each persons contributions. Other organisations may decide to adopt a simpler and more balanced reward structure in more cooperative environments.

Prioritises rewarding contributors. Everyone who is involved in creating and operating the organisation should be fairly rewarded.

**Contribution compensation duration** How long does someone receive compensation for their contributions?
Share holders receive perpetual compensation rights. Workers might not receive shares and might only be rewarded a salary in the year they contribute instead of being rewarded over the long term.
Compesnation rights could last anywhere from one to ten years or more. Capital and labour contributions would receive temporary compensation rights so that their contributions can be fully rewarded over the long term. Compensation rights would lapse once the contribution has been fully rewarded or after the incentive duration period.
**Equal opportunity** Do individuals receive equal opportunity in the organisation? What outcomes does this lead to?

Individuals may or may not receive fair compensation for their contributions depending on how shares and incentives are distributed within the organisation.

Under capitalism there is only equal opportunity for creating new organisations and not for individuals that make contributions within existing organisations.

Individuals have limited opportunity to improve their economic status through hard work and talent as they rely on the good will of leadership to be rewarded fairly in existing organisations. Alternatively they must start their own organisation.

Individual contributions would always be respected. Each persons contributions would receive a fair reward based on the value of the contribution. Contributors may alternatively decide to adopt a different incentive approach that is not proportional if this is preferred.


Under contributionism there is equal opportunity for creating new organisations and contributing towards existing ones. All contributions would be respected regardless of the organisation and its stage of development. Individuals have the maximum opportunity to improve their economic status through hard work and talent.

**Individualism** How meritocratic is the economic system? How can individuals act in their own self interest? How are the needs of the individual and collective handled?

Capitalism is only somewhat meritocratic as it enables organisational structures that are able to exploit labour contributions for the benefit of others. Capitalism advocates for equal opportunity of starting a new organisation to benefit yourself rather than trying to create a meritocratic organisation that benefits everyone that contributes.


A capitalist system values competition and the pursuit of self-interest as drivers of innovation and economic growth. The main way that an individual could act in their self interest in this economic model is by starting their own organisation.

Capitalism highly focuses on the needs of the individual and sometimes even at the expense of the collective due to the exploitation of labour. Meeting the needs of the collective requires goodwill gestures from capitalist owners.

Contributionism enables true meritocracy where each person is treated equally and each persons contributions are evaluated based on their merits. Individuals can start their own organisation or join existing ones and be rewarded based on the value of their contributions.

A contributionist system values both competition and collaboration. The pursuit of self-interest can be drivers of innovation and economic growth. An individual could act in their self interest by either starting a new organisation or by joining an existing organisation. Their contributions would be respected in any contributionist environment.


Contributionism seeks to balance individual rights with collective well-being. While it values individual freedoms, it also emphasises the importance of fair competition and cooperation within the organisation. Individual success should never come at the expense and exploitation of others inside the organisation.

**Inequality** What is the moral justification of inequality? What is the reality of of economic inequality under this model?

Belief that economic inequality is a natural and acceptable outcome of differing talents, efforts and choices. Justification of inequality as a necessary condition for incentivising hard work, innovation and risk-taking.

Capitalism can lead to excessive levels of inequality as contributions are not correlated with ownership, governance and compensation rights. Earlier contributions that are able to capture more shares than others are able to perpetually benefit from a smaller amount of contribution at the expense of future contributions. This create economic inequality that is not based on merit but is instead based on excessively rewarding earlier contributions made towards the organisation.

Contributionism advocates for organisations to self determine their own incentive structures. If the organisation is competitive then the justification for inequality is the same as capitalism where it is based on different talents, efforts and choices. Organisation that are more cooperative may handle incentives differently and decide to reduce the possibility of large differences in financial outcomes due to different collective values and preferences.

Contributionism only accepts economic inequality when the outcomes are actually based on differing talents, efforts and choices. This is achieved by respecting every contribution within an organisation so that top performing talent can be rewarded fairly regardless of when that contribution happened. Earlier and riskier contributions would still be highly rewarded but not excessively or at the expense and exploitation of future contributions. Inequality could still occur due to differences in organisation success and contribution value and impact.

**Rewarding risk taking** How is the risk of starting new organisations rewarded? What outcome does this lead to?

Early labour and financial capital invested into the organisation will often receive shares that give them perpetual governance and compensation rights.

Early contributions can receive an excessive reward due to shares giving them perpetual compensation rights.

The value of early contributions would be multiplied by a risk reward multiplier to ensure that earlier and riskier contributions are fairly rewarded. Any governance and compensation rights received would be temporary.

Someone could receive compensation that is many multiples higher due to their risk taking to start an organisation. The key difference is there is always a cap on the amount of compensation someone can receive for these contributions as this ensures that future contributions are respected. Risk must be fairly rewarded but not excessively and at the expense and exploitation of future contributions.

**Competition vs cooperation** How much competition is encouraged? How much cooperation is encouraged? What outcome does this generate?

Competition is excessive under capitalism. Workers are incentivised to start their own organisations when they do not get fairly rewarded for their contributions in existing organisations. This leads to a perpetual need for workers to create new organisations in an attempt to receive fair value for their contributions. This can lead to excessive amounts of competition.

Cooperation is limited or non existent under capitalism. Capitalism enables top down leadership structures that have full control over how the organisation is operated. Decisions around compensation and prioritisation are often handled by leadership positions. Workers have little to no control over organisation decisions.

Capitalism creates a highly wasteful environment due to the perpetual need for workers to create their own organisations if they want to be fairly rewarded for their contributions. This can waste resources and time that could have been better spent cooperating within an existing organisation.

Competition is balanced under contributionism. Organisations would self determine whether they want a competitive or cooperative environment internally. Competitive environments will often mean that contributions are evaluated and rewarded proportionally based on the value and impact they generate. This incentive structure makes it highly desirable for workers to join existing organisations but it could also still be lucrative to start new ones.

Cooperation is required under contributionism. Even in competitive environments there is a need to cooperate with others to decide how to measure, evaluate and reflect on contributions. This cooperation helps to ensure that contributions are always respected. Cooperative environments may use simpler incentive structures that match the preferences and values of the contributors that govern and operate the organisation.

Contributionism creates a balanced approach for handling competition and cooperation.

Contributors collectively agree on whether the organisation will lean towards being more cooperative or competitive. Workers would be able to join organisations that match their preferences or they could alternatively start their own organisation. There would be far less need to perpetually create new organisations in an attempt to be fairly rewarded for contributions. Innovation and impactful contributions would be highly rewarded within existing organisations as well as in new ones.

## Contribution **Inviting contributions** How are contributions identified, encouraged and accepted?

Identified - Executives will decide which contributions are required or beneficial to the organisation. They may also delegate this decision to other people.

Encouraged - Publicly shared information and job advertisements.

Accepted - Executives or delegates would decide who is accepted into the organisation.

Identified - Contributors will determine which contributions are required or beneficial to the organisation. Leadership roles may also be delegated this responsibility if these roles exist.

Encouraged - Publicly shared information and job advertisements.

Accepted - Contributors or leadership roles would decide who is accepted into the organisation.

**Measuring contributions** How are contributions recorded, verified and evaluated?

Recording - Shareholders partially have an incentive to record contributions so that they can remove poor performers. They are not incentivised to fully reward other contributors as this would reduce the potential profit for shareholders. Contributors will often rely on the goodwill of the leadership for their contributions to get noticed or properly recorded.

Verifying - Leadership will determine whether a process is introduced or not for properly verifying contributions. Contributors rely on the goodwill of the leadership for this to be done properly.

Evaluating - Leadership will determine what process is used if any to evaluate worker contributions. Contributors rely on the goodwill of the leadership for their contributions to be properly evaluated to understand the value and impact that was generated.

Recording - Contributionists are highly incentivised to record contributions accurately as this will be used to fully respect their contribution. The full value of the contribution can be rewarded over the long term if it is properly recorded. Contributors also benefit from their contributions being publicly available so they can benefit from the market being able to see their full value.

Verifying - A contributionist organisation would introduce a process for verifying contributions to ensure people did what they say they did. This is an important part of respecting peoples contribution.

Evaluating - A contributionist organisation would introduce a process for evaluating contributions that is either handled by those in leadership positions or collectively through a governance process.

**Rewarding contributions** How do organisations handle payment, reflection and appreciation of contributions?

Paying - Workers will be paid their agreed salary income and any bonus income will be determined by leadership. Alternatively, a separate process for handling bonuses could be used if the leadership decided to introduce this. Contributors would rely on the goodwill of leadership to receive fair compensation for their contributions. Capital share ownership structures incentivise the leadership to extract any surplus from labour to reward the share holders.

Reflecting - Leadership is not incentivised to reflect on historical contributions and reward them anymore than they have been as this would reduce profits for the shareholders. Contributors would rely on the goodwill of the leadership if their previous but highly impactful contributions are to be fully rewarded.

Appreciating - Leadership may or may not introduce a process for showing appreciation towards recent and historical contributions. Efforts around showing appreciation rely on the goodwill of the leadership to arrange these types of events and initiatives.

Paying - Contributors would collectively decide whether any surplus from labour is reserved or distributed. Donor and consumer owned organisations would not be able to extract out any surplus for their own benefit. Profit would be used to pay for labour, repay financial obligations or pay for other organisation expenses. Contribution evaluations would help with fairly rewarding each contribution.

Reflecting - Contributionist organisations would adopt a process for reflecting on historical contributions when this is necessary. Some contributions can take multiple years to understand the full value and impact that was generated. Contributors will look to highlight any contributions that they believe are worthy of further compensation due to the ongoing value and impact they generated.

Appreciating - Contributors or leadership would collectively determine how the organisation shows appreciation for recent and historical contributions. This could be small and informal initiatives or it could be much larger ones depending on the preferences and needs of the organisation.

# Critiques of contributionism A number of critiques about contributionism along with any counter arguments. A number of critiques can be made about contributionism that also have a number of counter arguments. ## Time consuming to record and verify contributions **Critique** The cost of recording and verifying contributions would be too high. Contributors should be fully focussed on operating and improving the organisation, not recording and measuring their contributions. **Counter arguments** * **Highly beneficial for contributors** - There is a cost to the organisation when time is required to record and verify contributions. However for contributors this can be highly valuable as it gives them a way to showcase their contributions to other people in the organisation and also outside the organisation. They would now be able to start building up their reputation using these records of contribution. * **Market created solutions** - A growing number of contributors that start recording and verifying their contributions can lead to a growing demand for solutions that simplify this process. Solutions that speed up and simplify the process could represent a valuable product that these contributors or organisations are willing to pay for. * **Start with simple solutions** - Organisations don’t need to record every single contribution someone makes. They only need to record and verify enough information to collectively make a sufficiently informed decision at the end of each year about how any surplus profits should be allocated. There is nothing wrong with using a more observational approach to start with. The organisation is ultimately just trying to create a fairer and more representative outcome based on the value of each person's contributions. ## **Complex and time consuming to evaluate contributions** **Critique** Evaluating contributions could be highly complex and time consuming and could lead to numerous arguments and conflicts that are more problematic than the value it provides. Many contributions are unique and it will be very difficult to compare these with others. **Counter arguments** * **Highly beneficial for incentive alignment** - If there is no effort to try and evaluate people's contributions there is no way to reward people fairly based on the value and impact they generate for the organisation. The cost of not doing this is too high as it leads to a demotivating environment where people don’t feel valued. Why work hard and make impactful contributions if this doesn’t lead to a fair reward? In structures like capitalism it leads to larger shareholders receiving the majority of the benefit which may be due to other peoples valuable contributions. Contributors highly benefit from their contributions being fairly evaluated as this creates the foundation for being treated fairly when working with others. Fair contribution evaluations can help with ensuring that incentives are strongly aligned with performance and impact. * **Market created solutions** - Organisations that regularly evaluate contributions can help with creating demand for new solutions that could make the evaluation process simpler and quicker. * **Varied approaches** - There does not need to be a one size fits all approach for contribution evaluation. There could be multiple simple approaches that are quick and simple but less accurate. Numerous complex approaches could also exist that are better at exploring the nuances between different contributions such as contributions that are more novel or unique. Each organisation could adopt different approaches based on its own preferences and requirements. * **Cooperative organisations** - Organisations that prefer to be more cooperative instead of competitive can be examples of where contribution evaluation would be less of an ongoing concern as they might not need to determine the most accurate outcome for compensating each person's contribution. Cooperative organisations might prefer simplicity when evaluating contributions and value other things such as achieving a certain mission, improving work life balance, increasing the amount of community interactions or on overall collective well being. ## **Complex and time consuming to reflect on contributions** **Critique** Contributors don’t have time to reflect on historical contributions and need to focus on operating the organisation. Reflecting on historical contributions could mean wasting time and giving competitors an advantage. **Counter arguments** * **Delayed reflection** - Organisations do not necessarily need to do reflections every year. If there is no surplus funds that could be used for rewarding historical contributions an organisation may decide to postpone any reflection efforts until a future year. Organisations should make their own decisions about when it makes sense to reflect on historical contributions. * **External data & reflection** - Contributors could benefit from data and reflections that have happened outside the organisation. External data could help with providing evidence about the impact and value that someone's contribution has made more broadly in a community. External reflections could come to similar conclusions about the value and impact that someone has generated. These data points could then be used internally in the organisation. * **External solutions** - Similar to evaluating contributions, other people may offer a service or solution to help with reflecting on historical contributions to make the process simpler and quicker. * **Varied approaches** - Organisations could choose to reflect on historical contributions as frequently or infrequently as they prefer. Many different approaches could be adopted based on the preferences and requirements of the organisation. * **Cooperative organisations** - Cooperative organisations that prefer more simple and equal distributions of compensation could also benefit from a simpler reflection process as they would not need to convert those reflections into suggestions for compensating the most impactful historical contributions. Instead a more cooperative organisation might focus on identifying the impactful and valuable contributions to show more appreciation to those contributors in different ways that might be preferred in that organisation. ## Ongoing possibility that riskier contributions are still excessively rewarded **Critique** The initial contributors that start an organisation could still use risk reward multipliers that give them an excessive return on investment for their contributions. This could come at the expense and exploitation of future contributions. **Counter arguments** * **Risk of losing top performing talent** - Early contributors could manipulate the organisation's parameters to their advantage, however these parameters and decisions would be known by any future prospecting contributors. If the early contributors have been unreasonable there is a higher chance that top performing talent decides to not join the organisations due to disagreements in these decisions. * **Prevents infinite compensation** - Even if the early contributors reward themselves beyond what is fair and reasonable there would at least be the benefit of a cap on the return they would receive. This would enable fair compensation for future contributions once this cap has been reached, or when the incentive right has expired. This enables the organisation to then evolve and move on as new contributions get provided. ## Ongoing battle for influence & power **Critique** People could continuously try to game the contribution system to get as much power and influence over an organisation as possible. If a small group is able to gain a governance majority due to their contributions they could try to exploit other contributors. **Counter arguments** * **Perpetual influence and power under capitalism** - What can be more problematic than an organisation that has changing influence and power structures is unchangeable stagnation. Contributors in a capitalist system can often be unable to influence change regardless of the collective preferences and needs of the organisation. Capitalism often leads to a small minority of contributors having perpetual influence and power over the rest of the organisation. Future owners could simply inherit the shares of previous owners and may have made no contributions to the organisation whatsoever. Contributionism help to avoid this problem of ownership stagnation but organisations would still need to take on the responsibility of handling changes in influence and power and selecting leadership when this is necessary. * **Leadership contracts** - Leadership contracts provide an organisation the ability to elect people into positions of influence and power when this might make sense to do so. Some organisations might prefer to do collective decision making for every decision. Others may prefer to benefit from the efficiency of selecting someone to take on certain responsibilities. * **Ongoing contribution reflection** - Reflections on historical contributions should help with identifying situations where someones contributions have been under or over compensated. These processes could help with rectifying these problems if they occur. If contributions are public these reflections could also happen externally where other data points or analysis on people's contributions could lead to identifying situations where someone is receiving an unfair amount of compensation. * **External solutions** - Contributions being measured and rewarded across different organisations can help with driving demand for solutions that do this accurately and easily. The better these solutions become the more fair and reasonable the outcomes will be that will prevent people from getting influence and power that they wouldn’t have received if the contributions were evaluated and understood more accurately. * **Regulation and compliance** - The justice system could introduce regulations and policies that help to protect minority contributors. Smaller contributors could be vulnerable to exploitation from people who have a lot of power and influence due to a larger amount of contribution. Courts could be used to help with handling disputes similar to how they protect shareholders in capitalist systems by preventing unfair dilution. * **Long term reputation damage** - If contributors try to take more compensation, influence and power than their contributions are worth then this can create a risk that they damage their reputation. This could be especially damaging if the contributions are public as this could limit their chances of being accepted into other organisations. This provides another reason why public contributions can be highly effective as it creates an effective deterrent for trying to abuse a single organisation as it could jeopardise the rest of their career. ## Market failures **Critique** Contributionism doesn’t solve the problem of market failures. If contributionism is adopted in a market economy it can be expected that market failures would still occur. These outcomes could be costly for society. **Counter arguments** * **Collective decision making** - Contributionism is more representative of collective preferences as most of the contributors involved in an organisation would receive governance rights. This could help with making decisions that are more reflective of what the rest of society would want rather than a small minority that is only focussed on profit. Collective decision making could help with reducing the amount of certain market failures and thus making it easier for governments to handle the remaining failures that do still occur. * **Government solutions** - Commons ownership, regulation, policies and governance interventions should help with both preventing and responding to market failures. * **Other economic approaches** - Contributionism could be adopted in different economic systems that don’t use markets. Contributionism isn’t reliant on exchange being handled in a specific way. Economies may eventually move away from market based economies which could resolve these issues. ## Difficulty in gaining adoption **Critique** Existing corporations and organisations don’t have an incentive to adopt this economic model as it is not beneficial to the existing shareholders. **Counter arguments** * **New organisations** - New organisations could be started that adopt contributionist principles. Even whilst using capitalist legal structures the principles of contributionism could still be adopted. Organisations that openly adopt these principles could help with creating demand for regulation that formally supports a contributionist organisational structure. New organisations could help with encouraging existing organisations to convert to a contributionist structure once the model has proven its effectiveness. * **Emerging Web3 ecosystems** - Web3 ecosystems can help with decentralising important pieces of infrastructure and systems that impact people's lives. There is a general intent from these ecosystems to push more power to the edges. Contributionism is highly aligned with the intents and motives behind Web3 technology. Smart contract platforms and organisations building on top of this infrastructure could adopt contributionist principles. These emerging Web3 economies could grow to eventually replace many existing organisations and systems across the globe. Web3 ecosystems represent a highly suitable industry for adopting contributionism. # Path to adoption Some initial thoughts and ideas about the adoption of contributionism. Contributionism can be adopted in existing economies across the world today. Markets, different forms of money and existing governments could all stay the same whilst contributionism is being adopted. Contributionism could also be adopted in changing economies where there are different approaches to economic exchange, new forms of money and different forms of government. Contributionism is solely focussed on the organisation which includes how it is owned, governed and incentivised. Contributionism has an influence on how people collaborate and work together. The key focus area for adoption would be around existing and new organisations that can experiment with contributionist principles. This would lead to more data and learnings that should be informative for any future iterations and improvements to the model or for any of the tools or processes that get created. ## Creating tools & processes As the economic model continues to mature a number of approaches should become more apparent that are most suitable for creating contributionist organisations. Tools and processes can then be developed that apply these approaches that help with the operation of a contributionist organisation. Once the economic model has had enough feedback and improvement the next phase of this economic initiative will include any efforts around the creation of tools and processes that make it easier to experiment with the principles and approaches that have been defined in the model. ## **Existing cooperatives** Cooperatives are already a good example of an existing organisational structure that can often be adopting contributionist principles. These organisations often ensure that all of its members have ownership in the organisation. These organisations can often lean towards being more cooperative than competitive. Existing cooperatives may be interested in experimenting with new tools and processes such as the recording and verification of contributions so that contributors can start to build up a reputation that they could use and benefit from for their entire career. ## New organisations New organisations could be a great starting point for experimenting with contributionist principles. Organisations that want to be more competitive could adopt some of the ideas and approaches for evaluating and reflecting on contributions that get suggested in the future. Smaller organisations would provide a great environment for finding out what works and what doesn’t in practice. ## **Web3 ecosystems** Web3 ecosystems are a highly suitable environment for adopting contributionist principles. Many of these ecosystems have the intention to replace many of the existing systems that we use today with systems that push more power to the edges. Contributionism could be adopted at the smart contract platform layer within ecosystem treasuries and funding processes. It could also be adopted by organisations that are building on top of these networks. Web3 could represent a high growth area for the adoption of contributionism. # Contribution table A record of the contributions that have been made towards Contributionism as an initiative The ideas behind contributionism rely on peoples contributions. The following is a record of who has contributed towards this initiative. ## Contributors Contributors submit contribution logs that highlight what they have been working on each month. **George Lovegrove** Contributor details: [docs.web3association.io/about/contributors/george-lovegrove](https://docs.web3association.io/about/contributors/george-lovegrove) Contribution logs: [docs.web3association.io/about/contributors/george-lovegrove/contribution-logs](https://docs.web3association.io/about/contributors/george-lovegrove/contribution-logs) # Roadmap A list of roadmap tasks that can help with the improvement, sharing and adoption of Contributionism The following is a priority ordered list of roadmap tasks. Overall the plan is to improve the economic model and then look at what tools and processes could be created and used in different experiments. ## **1. Get feedback** The economic model will benefit from as much feedback as possible from people that have different expertise and opinions. ## **2. Update economic model** Applying any feedback and continued research and analysis, the economic model will then be improved where necessary. Further efforts can be made around exploring the different approaches that could be adopted for handling important areas such as evaluating or reflecting on contributions. ## **3. Improve data models** The data models can be improved to include more of the approaches and parameters that organisations might use when operating a contributionist organisation. More scenarios can be covered to see how the model might need to respond to those situations. Currently the data models need to highlight how incentives could be awarded to people for staying longer in an organisation and how to handle contribution outcome percentages that highlight what percentage of the current outcome is each person responsible for. ## 4. Suggest processes and tools to develop Processes and tools could be created to help organisations with adopting contributionist principles in their organisation. ## 5. Start organisation experiments The economic model and any tools and processes that have been created can be applied to organisations that are looking to experiment with contributionism. The data and experience from these experiments will be highly valuable for identifying areas for improvement. Existing cooperatives, new organisations and projects building in Web3 ecosystems are all potential candidates for experimentation.