“We need a way beyond objective metrics, such as energy, of evaluating those things that seem priceless, such as care and creativity” Chris Cook

Photo by Annie Spratt on Unsplash

We were delighted to bump into an old friend of the Alternative Global at the weekend - economics radical Chris Cook. Chris’s thinking and practice holds out the possibility of trust-based systems for super-powered communities to manage and develop their own assets.

As you can read from the interview Cook has altered us to, from the Metadesigners blog, he comes from a deep philosophical position - that we often mistake “things” for “relationships” in our understanding of property and commerce. (Here’s more from Chris Cook on the Daily Alternative.)

Chris Cook: Ironically, although I am a pragmatist with a pretty shrewd grasp of financial market systems the only exam I ever failed was economics. This was because - deep down - it made no sense to me.

Of course, I buckled down, memorised the standard stuff you find in the textbooks and passed the exam. But what subsequently confirmed my suspicions about standard economic theory was reading Robert Pirsig’s book ‘Zen and The Art of Motorcycle Maintenance’.

Pirsig blamed the ancient Greeks for turning everything into absolutes such as quantities. He realised that part of the Greeks’ legacy was a ‘subject-object’ metaphysics and grammar, and he proposed instead a metaphysics of quality which is indefinable or definable only in relative terms..

Looking upon quality and value as two aspects of a non-dual reality, then in economic terms, if value cannot be defined, or is definable only in relative terms, we require a metaphysics of value that is qualitative, rather than quantitative. We need a way beyond objective metrics, such as energy, of evaluating those things that seem priceless, such as care and creativity. This is my ongoing mission….

My role [is] to envision a resilient financial system that is fit for today’s networked economy. Exploring at the micro scale my aim is to identify legal tools that can mobilise individuals and assist them in sharing risk, costs, surplus and asset use equitably.

While the conventional legal form is the ‘joint stock company’ this fails to mobilise people and resources to a common purpose. It isn’t working. How can you have a sharing society if the lenders, shareholders and landlords won’t share? We need different agreements.

John Wood at Metadesigners: You make your work sound very down to earth when you say ‘legal tools’, but isn’t it rather more theoretical and abstruse?

Chris Cook: Actually, I like action research methods which I see as ‘learning by doing’. When I started at UCL, one of my first projects was to draw up a simple two page “club” constitution enabling my local community to club together to save a historic and important pub from demolition. It had been burned down to a shell and then repossessed by a bank after insurers denied a claim.

The pub had always been a popular social hub and listed building which was potentially hugely profitable but it had got stuck in limbo. Everybody said that something must be done but nobody did anything. So I convened a core team of founder subscribers to the founding “club”constitution which enabled the community to unite around a common purpose.

Within 18 months it was a working pub again. Robert Pirsig talked about ‘stuckness’ and I have always enjoyed addressing what, today, we call ‘wicked problems’. Effectively, a small group of supporters had worked together and acted as a catalyst.

Over the years I have developed an armoury of tools and methods in particular the Linlithgow Natural Grid which was active over a period of five years. The single, commonly understandable aim of LNG was simply to achieve energy independence for my home town of Linlithgow in Scotland. LNG’s objectives were to bring together the people, assets and resources necessary to achieve this goal.

I soon realised that within the right mutual legal structure money was not essential. Once you have the people, land and resources with the will to make things work you just need accountancy and an appropriate agreement.

JW: So if there is nothing to stop us from ‘writing’, or ‘designing’ fairness and resilience into our financial markets, why are contracts currently failing us so badly?

Chris Cook: One of the main sticking points is the legal concept of the ‘corporate’ or collective ‘legal person’. Whether applied at a public level such as a State or municipality, or as a private entity, such as a Plc or an NGO - it perpetuates a legal fiction within which our actual personal identities are nullified or ignored.

For individual citizens this reduces our feelings of involvement in the system. Marx and others have called this ‘alienation’.

Another problem is that democratic systems favour certain groups rather than others. For example, ’shareholder democracy’ often excludes many individuals who actually have more ‘skin in the game’. When there is a large number of people involved we may adopt a form of ‘representative democracy’ but this can easily work as a ‘tyranny of the majority’.

The final problem with virtual entities that function as a collective legal person is that you still need individual human beings to act on behalf of the collective. These managers as agents or trusted third parties are known – as are Trustees acting on behalf of Beneficiaries - as fiduciaries.

Unfortunately, managers’ interests diverge from those of owners and this intractable conflict of interest is known as the ‘principal agent’ problem.

JW: Creating change at this level sounds like a tough challenge, given that the world’s richest and most powerful people presumably like things the way they are…?

Chris Cook: I think it was H.G. Wells who said that the only thing stronger than the Will to Power is the Will to Freedom. Of course, nobody likes to be told what to do.

About eight years ago I came up with an innovative legal design for a mutual multi-stakeholder agreement which I termed ‘nondominium’ and this has since become the basis for almost everything I do, nowadays. I’ll just give a brief background to the need for it.

It is usual to see ‘property’, or ‘money’ as ‘things’ and so everything gets commodified into objects. Instead, I reframe them as relationships rather than things. It is a systems approach in which everything is legally codified as mutual prose agreements.

By specifying certain rights and obligations we redefine the way we see ownership. We might specify, for example, ‘rights of use’ as the ‘fruits of use’, or the ‘right to exclude’ or ‘oversee’. These can be clearly written, designed, or defined and bundled together in a mutual or associative agreement.

As a result, instead of needing an intermediary or trusted third party (i.e. the fiduciary) it merely authenticates certain kinds of relationship among the interested parties. I have deconstructed the role of the agent into two separate and distinct roles, a custodian and a steward.

The custodian has passive foundational rights of veto (like a covenant, or golden share) in accord with the founding purpose of the venture. Although s/he has the ability to say what you cannot do, s/he cannot tell you what to do.

The steward may be the active developer, operator or maintainer of the venture’s key asset/s. Usually, it is the investors who tell the steward what to do.

However, in my nondominium model the consent of both the two parties involved in exchanges or swaps of value is required. By way of example these may be the land user and the land investor.

In systems thinking terms the result of this four party agreement is a ‘viable system’ which is recursive and non-hierarchical. In other words these agreements may be nested one within another from the most local micro-level via the meso-national level to the macro-global level without hierarchy…

Chris Cook: Designing better monetary systems is an important idea, but my work offers a more bespoke system that may not need to involve money at all. An Edinburgh lawyer once told me, when you peel away all of the layers of the onion there are only two things at issue - rights and obligations.

In my ‘nondominium’ approach, as long as we generalise the situation imaginatively and consensually, this somewhat reductionist approach will not compromise the parties involved.

But here, we need to be very clear about our terms of reference. For example, there are two types of right. A right ‘in rem’ (i.e. literally ‘in the thing’) is a property right that has no name attached to it. So it acts as an independent object until we create an instrument that links it with a subject through a relationship. In technological systems terms this is called a semantic triple.

This leads to the other type of property right known as ’in personam’, with a particular individual’s name linked by a relationship to an object. This is similar to the difference between electronic cash and electronic money. Whereas electronic cash transactions (e.g. cash debit cards) offer anonymous (‘in rem’) rights the banking network always knows who (‘in personam’) owns the money that moves via regular bank transactions.

Another ‘in rem’ example is freehold ownership, which you can buy and sell. In a leasehold, however, you only have the right to assign the lease, rather than exchanging it. The same applies to cheques and invoices. Although you cannot spend them directly you can still assign them to someone else.

Today, of course, we are living in an increasingly electronic banking system that perpetuates an inorganic legal fiction that is populated by inorganic objects that exist ‘in rem’. The problem is that these financial objects get between you and me.

My feeling is that building and sustaining trust is less expensive and painful than building contractual systems designed to resist every attempt to undermine them. These seem more common in less westernised cultures. Sharia Law is about consensus.

I am not sure whether your theory supports my findings, but the joke is that there are about the same number of Sumo wrestlers in the USA as there are lawyers in Japan. My approach is to design mutual agreements that encourage people to nurture relationships of trust, whether these are for risk-sharing, cost-sharing or surplus-sharing purposes.

More from the Metadesigners interview (with Chris’s background) here.