The new enterprise

Abstract

Our current economic woes have elicited a flood of analyses. These analyses have generally overlooked motives for investment as a factor in determining extent and kind of economic activity. Taken as axiomatic and self-evident is the assumption that profit is the prime investment motivator. It is here maintained, however, that people invest primarily for security reasons and only secondarily or incidentally for purely profit motives. It is further maintained that current investment vehicles are ill-suited for providing security. Instead of satisfying security needs, current investment vehicles generate ever intensifying pressures for the creation of further investment opportunities. Such pressures eventually lead to excess production capacity, increasing debt, recession, wasteful use of resources for superfluous products, obsolete technology, and even inflation. New kinds of investment vehicles are suggested as a means to avoid the ill effects of inappropriate investment institutions. The new investment vehicles are designed primarily to provide security for the value of invested capital and not to provide a sizable return on investment. More specifically, new kinds of corporations are suggested. The new corporations will be self-sustaining, low-profit organizations engaged in the production of useful goods and services. Venture capital will be raised by selling to the public unique kinds of shares. The value and rate of return to investor of these new kinds of shares will be tied to the consumer price index and not to return on investment or asset growth. To wit, the purchasing power value of the shares at the time of purchase will be guaranteed. It will thus be the purchasing power value, fured at the time of purchase, that will be returned when a share is cashed in and not the face value of the share. The rate of return or dividends, on the other hand, will be inversely pegged to the consumer price index, i.e., high rate of return in recessionary times, and a low or zero rate of return in inflationary times. The dividends, however, even in recessionary times will be relatively low compared to dividends given by ordinary type corpora-