A Community Management and Accounting Protocol

The spectacular economic achievements of western civilization in the 19th and twentieth centuries have been attributed to the efficiency of modern business enterprise. This has set the standard of performance and has become the model in which almost all human activity has been patterned. Its methods, organizational forms and management practices have served as model and analogue even for non-business activities of human society. "Businesslike" has become an epithet for everything ordered, efficient, disciplined and rigorous.

In more recent decades, however, as humanity has become increasingly aware of the persistence of certain problems, like poverty, and the aggravation of others such as environmental destruction, the finger pointed to the very methods that had made business so potent and effective: its pursuit of profit as the overarching goal, its relentless drive for productivity and its utter lack of concern for either social or ecological considerations.

The socialist solution was to make the state the preponderant organization and state enterprise the principal instrument for the management of production. This resulted in the disasters of the USSR and the socialist regimes in Asia. Their record for achieving a reasonable distribution of incomes was somewhat better but productivity, efficiency and environmental preservation suffered horrendously.

This paper advances the notion that the trouble with both systems has not been in the ownership of enterprise -- private on the one hand or state on the other. Nor was it in the degree of freedom from centralist state controls that the enterp[rise and the market enjoyed -- relatively free in the one regime and subject to rigid command-and-control constraints from the state, in the other. The problem was that the preponderant unit of organization was enterprise and its profit as measured either in the capitalist or the socialist accounting method the paramount measurement of performance.

It poses an alternative possibility: the community as the paramount unit of organization and its net income and net worth as the overarching measurements of economic performance. This does not eliminate enterprise. It merely makes enterprise accounts subsidiary to community accounts, instead of, community accounts being subsidiary to enterprise, as in company towns.

This makes the economy a community rather than an enterprise system and would view national incomes as a consolidation of community rather than enterprise incomes. The shift has profound philosophical and theoretical implications.

But can such a system be made "operational"? Let us first understand precisely what "operational" means. The best way is to see in what ways the enterprise system has been operational for these several centuries. The operationality criterion requires that it be made up of constituent units, each with the following properties.

a)The unit must be an organization with a system of authorities and mechanisms for control.

b)It must have an operating technology that relates the control levers to the operating variables with predictable parameters, i.e. it must lend itself to rational management.

c)It must have a defined set of stake-holders and beneficiaries and a system of governance that gives the stakeholders a say in the primary and secondary goals that the unit must seek to accomplish and the tolerable costs and trade-offs and order of priorities that shall govern its choices.

d)It must have a suitable accounting system to monitor its performance, track its course and articulate for the information of its stakeholders how it is achieving - or failing to achieve its short- and long-term objectives.

e)It must have a set of professional managers trained in the technology of running the unit’s operating system.

f)It must be linked to other units in successively larger systems and a system of orderly transactions with other units to achieve gains from larger aggregations and benefits for the larger communities to which it belongs.