The Hybrid Stock Company is a proposed alternative to the Joint Stock Company. It is designed to actively compete with Joint Stock Companies for the $600 Trillion that is currently invested in the world's stock markets. If it is, as much fitter than Joint Stock Companies, as I believe it to be, it will drive them to extinction.
The idea behind Hybrid Stock Companies is an examination of what really makes a Company tick and who really has a stake in its success.
Traditionally we see Companies as being split between two diametrically opposed interests. The Workers and the Management.
This is not only a simplistic model but one that, I believe, does not even accurately represent the way modern Companies are organised.
In the old days the 'mill owner' was the guy that ran the show on a day to day basis. He was the individual that supposedly exploited his workers for his own profit and twirled his moustache of an evening over a giant pile of gold coins.
Of course, as I have already discussed, modern Companies are not run by their owners. They are run by mysterious Boards of Directors that are as often as not chosen by other Boards of Directors, that are chosen by other Boards of Directors, etcetera, etcetera, all the way down.
Becoming a Company Director involves joining an unofficial club whose membership requirements and procedures are completely mysterious. It is a closed shop with admittance by invitation only. Competence is not a requirement. It is probably actively discouraged.
This group is parasitic. It has no right to its position and it actively damages the health of any organisation it has attached itself to.
Traditionally we view the real owners of a Company as being its Shareholders. This is right and proper, without the Stock invested by its Shareholders the Company would not exist. Stock is excess income that an individual elects not to squander on frivolities but to invest in something that will make the lot of all mankind a little better. Such wisdom and self-sacrifice should be applauded and rewarded with a share of the profits generate by that Stock.
But the Stock is not the only leg that a Company stands on and therefore should not be the only voice that should have a say in its running.
Obviously a Company cannot exist without the skill, dedication and experience of its employees. Each employee is best placed to know more about his particular role in the Company and how it might be performed more efficiently than almost any other man in existence.
"It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of performing their own particular work, whenever the nature of it admits of such improvement. A great part of the machines made use of in those manufactures in which labour is most subdivided, were originally the invention of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it."
Adam Smith - The Wealth of Nations
There is however a third, often invisible, group that companies owe their existence to.
Without an expectation that contracts will be honoured, without currency to exchange or without knowing that all your inventory won't be stolen overnight, it is very difficult to run any sort of business profitably. The Rule of Law is the foundation that all trade is built upon. Similarly without customers who trust you and are willing to trade their hard earned wealth for the product you supply no business can long exist. A business exists solely because it benefits its customers. Not just individual customers but all of them as a group. These are truisms that many companies lose sight of. A business that thinks that it exists to maximize the profits of its shareholders has placed itself on the endangered species list.
An argument could be made that taxation and legislation give society as a whole a voice and a share of a company's profits but this assumes that government adequately represents the will of the people. I think that is an assumption that the average man on the street would vehemently disagree with.
I propose therefore to give a voice and a share of the profits of a Hybrid Stock Company to society as a whole by forming a Charitable Foundation, probably governed as some sort of co-operative, that holds an equal share of the stock as the investors and the employees each hold.
The Foundation can be organised to provide benefits to society as a whole in such a way as that society wants and needs and to help govern the parent company the way its customers want it governed.
[Communities become Brands.]
One final element would be the Trustee.
Three groups would have equal say over the management of the company which ought to create a co-operative environment where the three groups operate symbiotically to create the greatest benefit for all. Nonetheless there exists the possibility that these three groups may not initially be capable of co-operating effectively or may become unable to do so at various points in the future. There also exists the possibility that the desires of two groups might align to the detriment of the other and of the overall intended aims of the Company.
Therefore the Hybrid Stock structure includes a Trustee to act as a mediator and arbiter. He holds 1% of the stock but instead of having a vote that stock has a veto and the power to wind up the entire company. Thus the Trustee does not have any power to run the Company but he does have the power to prevent the Company going off the rails and to put an end to it if any governance problem becomes intractable.
This Hybrid Stock structure is encoded in the Company's constitution, the Memorandum of Incorporation in the UK, using carefully phrased 'Unalterable' Articles. Once formed the Company's structure is set in stone and is safe from attack by external forces.
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