Community Capital Markets (CCM) remove the cost of transferring Capital from one party to another by combining the transfer of Capital with the payment for using the asset. Organisations, including governments, with financial relationships with many parties, are in an ideal position to promote Community Capital Markets and the savings they bring.
All Service Providers to a CCM should be funded with a separate Community Capital Market. This allows CCMs to scale to any size.
How does Community Capital Work
Profits from Capital are necessary for a thriving economy. Without profits, economies stop. However, the way profits arise is critical. Bad profits come from unearned income — like interest on interest, rent from exclusive ownership of community assets or the commons. Good profits come from providing a service for lower costs than “do-it-yourself” or profits from expertise and knowledge.
A Community Capital Company operates the same way any Company works except that when a buyer purchases something from the Company, the Buyer purchases the product and 50% of the profit from the sale as shares in the Company. The seller is an existing shareholder who must sell a designated percentage of their shares each month.
The shares in the Company have a known value, and they can be traded with any other shareholder through a permanent Community Capital Market. The Company profit is shared equally across all shareholders, and the profit is taken as a discount on purchasing Company Products. The shares can be traded for products from the Company or sold to other buyers/investors.
Community Capital benefits the shareholders because shareholders have a way of disposing of shares by purchasing products or selling shares to other buyers and investors at a known price. This eliminates the need for other Capital Markets. They can still exist, and shares can be traded on them, but all Companies using Community Capital have a way for investors to sell shares that costs little and is available to all.
Because every sale results in the transfer of Capital from an investor to a buyer, Capital moves quickly and is available for other investments. This reduces the accumulation of Capital in overpriced assets and the speculative holding of Capital like land banking.
Because buyers become investors and have a say in Corporate governance, buyers will favour investments that reduce the price of goods and services. Because buyers acquire Capital with each purchase, they — in effect- get a discount on goods, so the Company becomes very price competitive, particularly in markets with high Capital Costs.
The approach works well for commodity products like accommodation, energy, water, transport, education, health and other necessities of life.
Community Capital is self-regulating and Cooperative.
The legal principle of Buyer Beware is difficult in a modern economy with vast numbers of products and complex chains of supply. It is difficult because buyers have limited or often too much information on the products they purchase. Their best protection is to be involved in the decisions on production and investment. Community Capital automatically creates Property Owning Democracies.
Because the boards of companies have stakeholder representatives, there is a more significant opportunity for self-regulation and compensation for buyers unaware of all the ramifications of a purchase. There are also more avenues for redress and more ways to regulate with graduated sanctions against those who harm the Community.
Communities using Community Capital are local and relatively small. Because they are local and small and because people can move freely between them, there is no imperative for a Community to expand beyond an optimal size, and scaling happens fractally with the development of Communities. Communities of communities are interested in spreading innovation improvements because they gain by sharing more than competing, and they scale by sharing improvements and rewarding innovators by paying them to maintain and develop their improvements.
Mutual Banks and Community Capital
Mutual Banks can use Community Capital as security for loans with entities. With Community Capital, all the Capital resides in the Community Organisation, and the Bank provides a service of holding and transferring money and so has visibility of the state of the Community Capital assets. Alternatively, the Bank can loan money to the Community Capital financed business. If the Bank handles all the transfers of Cash for the business, it will have real-time visibility of the business finances.
Networks of Community Capital Markets
A Community Capital Market creates small communities of people dealing with the same businesses. These small, highly connected networks offer security and trust without losing privacy. The network nodes are people who connect to other people via businesses and community projects. The networks are virtual networks that continually change as the needs of the person change.
Community Capital Markets are zero-cost
The Capital Markets are zero-cost because they reuse networks and systems for payments. They add no extra cost to those networks and save costs as they eliminate the need for cookies with businesses that use them. Individuals are known by their context and the previous history remembered for each connection.
Because the Markets are zero-cost, the transfer of Capital is zero-cost. It means we can use other measures to evaluate projects. We know financing is minimal, and there is no renting of money hence measures such as well-being, fairness, sustainability, and reduction in greenhouse gases, become the criterion for choosing projects — not discounted cash flows.
Summary
Community Capital Markets transfer capital from one party to another by combining it with the payment for using an asset. The method benefits shareholders and the economy by providing a way to dispose of shares and reduce capital stagnation in overpriced assets. The approach works well for most people's goods and services, like education, health, energy, etc.
Investors agree to sell a certain proportion of their shares each month. Buyers of products purchase shares offered by investors. The amount is approximately 50% of the profits from sales.
The shares can be traded for products or sold to other buyers/investors. The Community Capital model creates property-owning democracies and is self-regulating and cooperative.
Networks of Community Capital Markets are small, connected communities that offer security and trust and are zero-cost, allowing for measures like well-being, fairness, sustainability, etc., to be the criteria for Capital expenditure.
