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Introducing the P Corp – A Progressive Alternative

Ron Rivers~October 22, 2018 /Human Experience/Politics/Technology

If the Progressive project within the United States hopes to build a lasting movement that enhances access and agency for all individuals, it must develop systemic alternatives beyond the limitations of the existing regimes of thought. These visions must be bold and creative enough to inspire the imagination of real change within our collective populace while at the same time avoid being so utopic that they are dismissed as impossible.

Modern politics is a struggle between ideologies focused on the wrong question. The Right argues for more market and less state, while the Left argues for more state and less market. The Progressive project recognizes the shallowness of these two choices, instead demanding we answer the question, what kind of market? An economic system based on free labor supported by a vital suite of protections is the long-term vision for the Progressive project, but we must complete certain steps before that vision may be manifested. In this article, we will explore one such program, the Public Corporation (herein P-Corp). A new type of corporate structure designed to allow people to opt-in to a new vision of economic cooperation.

 

Existing corporate structures

Before diving into an alternative vision of our shared economic future, understanding of the existing legal structures offered to businesses may provide useful for comparison. If you’re already familiar with corporate structures, please feel free to skip this section, the summary will be brief and factual. Note that there are some structures I am omitting as the following is intended as a brief overview.

Sole Proprietorship

Sole Proprietorships are made up of an individual or married couple running a business alone. In the United States, they are the most common entity and used by many small businesses. The benefits are that these organizations have fewer taxes and legal obligations in exchange for the owners being personally liable for debts incurred by the company.

General Partnership

General Partnerships are formed by two or more persons who agree to provide capital, labor, or talent to the business. Partners distribute profits, losses, and responsibilities. All partners are personally and equally responsible for the debts incurred by the partnership.

Limited Partnership

Limited partnerships are formed by at least one general partner and one or more limited partners. General partners typically manage the business and share in profits and losses. The limited partners share in the profits, but their losses are limited to the extent of their investment.

Limited Liability Partnership (LLP)

See General Partnership – the difference is that the partner doesn’t have personal liability for the actions of another partner.

S Corporation

S Corps are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. This means income and losses are recognized on their personal tax returns and are assessed tax at their individual income tax rates.

C Corporation

C Corps act as separate tax-paying entities. You may hear that they are “double taxes” – that means that they pay taxes when profits are earned and when they are distributed. C-Corps are generally designed for larger corporations receiving outside investments and not an ideal setup for a small business.

B Corporation

B Corps are a C Corp structure with additional responsibilities to adhere to that keep the company focused on its non-financial interests as well as the financial. Think of them as companies that want to intertwine community giving and enrichment into their actual corporate structure.

Nonprofit Corporation

Nonprofits typically serve the public interest but are still able to generate revenues. The main difference for nonprofits is that there is no dividend distribution if the company has capital exceeding expenses it is expected to use that money to further its mission and purpose. In exchange for the removal of capitalization, opportunities nonprofits benefit from a suite of tax exemptions.

Limited Liability Company (LLC)

LLCs are a hybrid structure benefiting from limited liability while having pass-through income taxation. Typically used for single-owner organizations.

 

Concept

The P Corp is a new business structure concept developed to attract business innovators and investors to an alternative market order. The core imagination behind the idea is that through the enhancement of cooperation within verticals we can achieve exponentially more than is possible under the current independent competitive model. We deepen the connection of participants working within a specific vertical to provide a more fixed base of support while at the same time empowering the individuals to experiment and innovate within the direction of their choosing.

An attractive suite of benefits is provided to participating organizations in exchange for a growth structure that furthers innovation and the creation of access for new participants at the expense of personal profits beyond a certain level. The P Corp is designed for people and firms whose primary desire is to create change, placing the value of collective transformative efforts over the accumulation of vast swaths of personal capital wealth. It’s a corporate structure designed for the new generations of Global Citizens arising within the United States and around the world.

 

Direction

Determining the ventures that would receive support could be facilitated in numerous directions depending on our will and historical data. There is the technocratic solution, where the elected board members during a given period within a vertical determine the areas of most significant interest. The concentration of power and industry could be checked by a rotating board structure with term limits. The benefits of this solution are that the industry experts are guiding the research and growth of the vertical in a data-driven and strategic approach.

Alternatively, we could have a more democratic process. Instead of making final decisions, the governing boards would be required to produce multiple format media to explain the potential directions, the potential benefits, and the risks and rewards of pursuing said direction. Content would be made available to the public in the form of detailed whitepapers, summary articles and videos, and a more extended format podcast discussing the opportunity. Ideally, the content could be translated into multiple languages so that all Americans would have the ability to take part in the process. By providing information in various mediums, we radically deepen the agency of the average citizen to understand the possibilities of national economic direction and investment. After a period of time, votes could be cast by the collective populace. The democratic methodology creates the real but intangible benefit of deepening civic engagement and raising the temperature of democracy within the United States.

Time structures on the selected direction of investment could be implemented to avoid wasteful direction shifts during board member rotations. We would want to ensure that the firms have adequate time and opportunity to produce results – perhaps five to ten years depending on the relevance of the projects presented initially. Revisiting the directional decisions above, this could also be determined by a technocratic board or democratically. The P Corp is designed to maximize experimentation and innovation and will likely attract big ideas that need time to complete. By setting minimum time limits before directional shifts in public investment, we can allow the individuals working on solutions adequate time to realize their vision without the pressure of production from day one. This offers a distinct advantage of C Corp structures as there is no need to focus on quarterly growth for stock performance, freeing time and effort towards the organizations ultimate purpose.

 

Enrollment

Enrollment in the Public Corporation could be done within a set timeframe, for this exploration we will say a yearly basis. Organizations would apply to be a part of the program within a specific time frame during the year; we could hypothetically imagine January through July. Applications are processed on a rolling basis throughout the year and evaluated over many criteria.

The first aspect we consider is to define the vertical the applicants would be classified within. Depending on the number of applicants within a vertical more specific sub-classifications could be given, but to begin, we could determine the general categories. An example category tree could be Medicine > Cancer > Experimental Drugs. Classification is important because organizations will be grouped with others working within similar classifications for both identity and information purposes.

Next, we would evaluate the merit of the applicant’s idea. This evaluation would be void of the input of politicians, instead of empowering rotating citizen boards formed of academic and professional experts within a given vertical. Business concepts would be evaluated by board members based on their potential to pioneer genuine change within society beyond revenue generation. We enter into the selection process understanding that some ventures will fail and that collectively society deems failure acceptable in the light of experimentation. In choosing this belief, we unlock the potential of access for future change makers. Beyond ideas, the board members will also evaluate the research, planning, strategy, existing capital, and current implementations to determine the viability of an applicant.

The participants and outside investors could provide existing capital for P Corps. In both cases, P Corps would come with a preset definition of possible returns for specific investments. P Corps benefit from the ability to raise private equity with the hope of gain, unlike a Non-Profit structure. The difference is that these returns would not grant permanent control over the organization and its direction as currently available in a standard C Corp structure. As an arbitrary example, we could use a 25% return on investment realized after a particular time frame of profitability. This 25% return could be extended to grant funders and non-profit accelerators as well, opening up access to start-up capital that would traditionally not be mixed. We can imagine that this structure may turn off institutionalized investors, while at the same time attracting more small-dollar crowdsourced donors excited about the opportunities that P Corps create.

Once applicants are accepted, they would agree to relocate to the location selected within a specific time frame. Upon transferring, they would gain access to funding and therefore subject to the requirements outlined above for the P Corp structure.

 

Location requirements

Accepted P Corp organizations would be required to relocate to take advantage of the benefits offered. By centralizing firms in a single location, we reduce costs while enhancing cooperation and sharing of talent, ideas, and technology. Supporting the over-arching P Corp theme, by deepening collaboration each firm is empowered to compete in different directions.

Locations would be determined by numerous factors such as the location of applicants, existing industries that have geographic concentration, access to raw materials needed for the firms to produce, and the intended distribution of their innovations. States and the federal government would facilitate this program by can procuring “innovation locations” and renting them out to these emerging firms slightly above cost (with the additional profits going into a building trust to pay for future repairs – the goal would not be rent-seeking). States would exempt these locations from property tax as states already do concerning government properties [2], further reducing the financial burden on the site and therefore the participating firms.

By concentrating these firms in a single location, we are better able to create a structure designed to reduce costs and waste. Centralization allows for the consolidation of purchasing and resource acquisition, driving down the costs of material as well as logistical costs. It also provides for the reduction of overhead expenses, allowing for collective bargaining for tools such as high-speed internet and office assets and amenities. Most importantly, talent can be pooled and shared across organizations when needed.

 

Deepened cooperation

We could imagine a scenario within the biomedical vertical as an example. Imagine that ten biomedical organizations applied for the program and were accepted. Within existing market arrangements these ten firms would operate independently, renting space, purchasing lab equipment, hiring staff, etc. Under the P Corp, these ten firms would relocate to a single location with access to a shared, state-of-the-art laboratory. Cooperative operational structures could be created to ensure that space and equipment were available to the firms to avoid bottlenecking and the slowing of research and experimentation.

P Corp structure also creates greener organizations. Because we centralize the firms in specific locations based on industry verticals, we open up opportunities to introduce cooperative travel efforts. Ride-sharing, carpooling, public transportation, are all methods that help to reduce the energy required for people to travel to work can be utilized to coordinate transportation among the firms’ workers. Reducing congestion and vehicle emissions, helping to shift our corporate models to more green methods.

The cooperative structure extends beyond materials and travel. The P Corp seeks to make collaborative competition among firms at the human level as well. Rotating members of the P Corp would be required to attend a shared monthly meeting among all of the existing firms. Each session would have a specific agenda focused on utilizing the collective talent to solve problems that could be suggested and voted on by team leads across organizations. Meeting attendees would be chosen based on their expertise and their capacity to learn from the subjects being discussed. In structuring cooperation into our legal model, we build a more collaborative approach to experimentation and innovation both in practice and in paradigm. Raising the level of collaboration among firms deepens our access to one another. It allows us to further advance our transformational efforts on shared problems but in potentially infinite alternative directions.

 

Accelerated Access

P Corp implementation goes hand-in-hand with other aspects of the Progressive project as suggested by Roberto Unger, specifically the increased access to credit and resources for these small and medium innovation firms. Firms accepted into the program will be supported by a fixed amount of seed funding generated by tax revenue. Attached to this funding will be a set of requirements outlined later in the argument.

P Corps structure empowers individuals who lack access circles of wealth to attract seed funding. By opening up access to more people, we create an opportunity for more solutions to problems that exist beyond a sales number. We want to support the best ideas while at the same time redefining the language and meaning of the word best. We remove the association of profit generation from best, replacing it with impact generation. What type of change will the firms create, who will they benefit, and how will it happen? If applicants can answer the first two questions but lack the experience to define the third, the P Corp has attributes built into the structure to help ideate solutions.

All accepted P Corps will operate under a unique patent structure that awaits future creation. The objective of the P Corp model is to push experimentation and innovation beyond the limits imposed by the existing laws relating to property and contract. Innovations in technique, research, and technology developed within the P Corp vertical will be shared with all of the other member firms before product implementation. Through this cooperative structure, all firms dedicated to problem-solving have access to the most advanced forms of productive at any given period. By continuously raising the floor from which all firms operate, novice and veteran alike, we radically expand the rate of potential innovation across all participants.

The Progressive project is about transforming society to expand the horizons of what it means to be human for every individual. Paying further intellectual debt to Professor Unger, another core objective of the Progressive project is the dissemination of the most advanced forms of production. We envision the P Corp as a solution to a world where the most advanced access belongs to a small few in the fringes of every industry. The P-Corp is an opt-in structure that can begin to crack the calcification of our imagination on how we view technology and progress. Under the proposed framework we begin to envision progress not as the property of a select few, destined to be hoarded, but rather as another brick in a foundation of common access.

 

Success and plurality

What does the collective populace gain from the P Corp structure? In accepting the benefits, structure, and support offered by the P Corp firms agree to a redefinition of success.

Salaries and bonuses would be determined by an agreed upon amount from the public board. We want to reward people for their efforts, while at the same time abandoning the ideals that capital reward is the ultimate value of future endeavors. We want to ensure that all people providing labor are compensated adequately as well, not just the founding members. No policy exists in a vacuum. If we could imagine the implementation of a vital suite of protections that included necessities such as housing, food, and healthcare existing outside of the P Corp we would also empower organizations to spend less capital on salaries and more on research and development.

Successful organizations would need to drive profits to further research and development towards existing problems, new problems, or if the organization has wholly exhausted its potential, the assistance of other P Corp firms within the shared location.

In addition to additional R&D at a determined point of economic stability (profits exceeding expenses), the firms are required to develop educational programs and become schools devoted to their specific vertical. The best firms become the best schools. These schools are free to all applicants, funded by the excess profits created by P Corps. In opening up access to the most advanced knowledge, technology, and talent to the public, we empower any person to come to learn about this growing sector of production and research. People applying would not require previous experience – our objective is not to further support the insular practices of existing advanced firms. Instead, we seek to extend access to the resources needed (both educational and opportunity) for all members of society who are passionate about changing their ability to transform the world within the selected vertical. Applicants would be evaluated on numerous factors, with preference awarded to underprivileged and underrepresented individuals. These educational firms would not limit participation to those with innovative ideas, instead supporting both innovators and future roleplayers. Once accepted they would be relocated to the centralized hub to begin their education.

Curriculums could be developed at scaled levels – from beginners to very advanced continuing education. Participants would be judged on merit, assuming that in the right environment the capacity for every person to learn is vast. Upon completion of their training, the students would have the opportunity to join one of the existing hub firms or to go off and innovate and experiment in their own direction. This program of open, free, and continuing education reinforces a core value of the Progressive project – the empowerment of all members of society to continually grow, learn, and transform the world.

 

Competition and failure

The capitalist model has demonstrated that competition does create innovation, so we should not discount its value within future production models. Competition between firms under the P Corp model takes form in implementation. All of the information and technology sharing in the world could never surpass the most significant resource any human has, time. The combination of a vital suite of protections, increased access to credit, capital, and technology will significantly alter the capabilities of all organizations, but creative methods of delivering value will be limited to the infinite present. We want to break up the rent-seeking of many monopolistic organizations today, innovating ever so slightly to justify charging for upgrades. Instead of focusing on pushing boundaries to disrupt at a more rapid rate than possible under the current single market structure.

These suggestions do not come without risk. Firms fail all of the time and under the P Corp structure that is unlikely to change. As P Corps are geared toward experimentation and innovation, we are likely to see tax dollars spent on efforts that do not come to fruition. This is OK. We must break free from the dogmatic beliefs that our existing structures imprint on us – success cannot always be measured in profitability. We accept that every organization that attempts to innovate either succeeds or teaches us a method and practice that does not work. Both outcomes drive us closer towards our ultimate goal, defined by either the technocratic board or democratic process that decided to fund the verticals.

As the existing P Corp structure facilitates cooperation across competitive organizations, the participants of a firm that fails to develop the solution intended would be given preference to move their efforts to one of the existing centralized organizations. Recognizing that the skillsets of individuals in the failing firm may not be directly applicable to the other more successful firms they could participate in the training programs required of the successful firms as mentioned above. If there is no opportunity or the individual is demonstrably poor fit for the firm, the aforementioned socialized bottom would allow them to re-enter a relevant training program of their desired field or to take time to consider alternative forms of work if the vertical no longer interested them.

This approach towards failure within the P Corp structure helps to redefine our humanity. In pursuing work we are passionate about, in contrast to working a job we dislike so that we may survive, we are preventing a slow erosion of our existence. Work we dislike binds the majority of our waking time towards efforts that do not fulfill or expand us. By creating a structure where new people can enter and exit verticals of interest, we open the door towards pursuing passions. These efforts extend our humanity, igniting passion and, to an extent, slowing time. When we decouple lively hood from the dogmatic capitalistic model practiced today we release the potential of individuals to create change which might otherwise be destined for a slow, living death of human experience dictated by circumstance.

 

A single example

Transformation is piecemeal. At times the shifts may seem sudden, but our efforts to shift society must be broken down into digestible projects that continuously move the expand our spheres of influence and understanding step by step. By introducing the P Corp as an alternative option to existing structures, we supersede criticism by loud market fundamentalists – no one is being forced to participate in the vision of the Progressive project, but for those who do the benefits are apparent. The information presented should be viewed as a potential framework, not a blueprint.

The P Corp is a single example of the potential of the Progressive project. By recognizing that there is no legal or historical precedence for a single form of market order, our democratic ideology empowers us to experiment with and innovate within our existing structures. In doing so, we move one step closer to the ultimate vision of the modern Progressive – increased access and agency for all individuals to transform the world. This effort further humanizes our existence, as contained within the transformation of the world is the transformation of the self. By redefining what is possible within our institutional structures, we redefine what it means to be human. Each innovation bringing us closer to realizing the infinite potential contained within every individual.


[1] Internal Revenue Service https://www.irs.gov/businesses/small-businesses-self-employed/business-structures

[2] Government Property and Property Taxes by Chris McLaughlin UNC School of Government https://canons.sog.unc.edu/government-property-property-taxes/