Individual Sales Cluster
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Individual Sales Cluster
Examples: Family farms, most small and medium enterprises (SMEs), most manufacturing, agricultural plantations, mining, retailing and wholesaling, publishing, restaurants, theaters, cinemas, some legal services, some private medical practice, some consulting, airlines where there is competition between carriers.
Ownership may be by self-employed people, private owners, corporations, worker cooperatives, the state (state-owned enterprises). The organizations may be for profit or not-for-profit.
Context within NORA
Relationships to Needs
Organizations in this cluster mostly provide tangible goods, but also some services, which either fulfill a need directly (for example for food, clothing, shelter) or can be used in order to fulfill such a need (for example, tools or materials which people buy in order to improve their shelter). The needs most relevant in this regard are:
Relationships to Resources
Like all people and all organizations, organizations in this cluster make use of natural resources (air, water, land, energy, living things and minerals), and physical, human-made and intangible assets created by people, covering the entire range discussed in the Resources sections of NORA. In the case of farms and mines, the natural resource management aspect is especially direct, but it is at least indirectly relevant to all organizations.
Relationships to other Organizational Forms
Self-provisioning cluster: Some degree of self-provisioning occurs in many of these organizations. This is particularly obvious in family farms, but also pertains to restaurants (where employees may eat some of the food), and manufacturing (where employees may be given some of the goods produced for free or at a reduced price).
Community solidarity cluster: Businesses in this category may be tied into particular communities. This is sometimes explicitly recognized (for example, it has been extensively described in literature about industrial districts in central and northern Italy); other times it is more implicit (as when there are unspoken expectations of the business owners in a locality).
Natural resource management cluster: As mentioned under “Resources,” all these organizations use natural resources and thus are at least indirectly involved in natural resource management. Those that directly exploit resources such as land, water, air, and biological resources have to concern themselves with natural resource management issues directly.
Committed sales or service cluster: Many of the businesses in the individual sales cluster can be re-organized so as to have a continuing relationship with their customers and thus become part of the committed sales or service cluster. For example, grocery stores usually depend on repeat business by regular customers who live in the area, and can instead be organized as customer-owned food coops. Farmers can establish subscription services with their customers (community supported agriculture or CSA). There is considerable overlap between the individual and the committed sales or services clusters also in the sense that many businesses sell some part of their production by long-term contracts, and the rest in daily transactions.
Sharing/renting cluster: Any business or organization can engage in these kinds of transactions either to make use of things they need only occasionally or for a limited amount of time, or to obtain benefits from assets they own but do not use regularly. Renting or leasing can also occur over the long term if buying an asset would be too expensive. Cradle-to-cradle proposals would have manufacturing businesses lease the products they produce to their customers and take them back for recycling once their useful life is over; this would involve a shift from the individual sales cluster to the sharing/renting cluster.
Free knowledge cluster: All organizations depend on knowledge or information produced by others and thus benefit from knowledge commons. Some organizations in the individual sales cluster create knowledge or information as a secondary aspect of their business, and may or may not share it freely. Yet others produce copyrightable materials as a core part of their business, and usually feel threatened by organizations which freely share such content. However, in at least some cases, they can also potentially change their business models in order to become part of the free knowledge cluster.
Currencies and Markets: Individual sales implies exchange for some kind of currency within a market, though both currencies and markets may differ from the types that we usually associate with these terms.
Understanding current patterns of abundance and scarcity
Inadequacies of the "free market" model
Business in this cluster most closely approximates the “free market” models of economics. It is possible for many sellers to confront many buyers in the marketplace; a buyer can quit buying from one seller and easily move to another seller instead, though sellers sometimes need all the buyers they can access to remain profitable. This can potentially create the “customer is king” scenario. Widespread competition then is supposed to keep prices at a narrow margin above the costs of production, keeping production highly efficient. Only highly creative entrepreneurs will be able to obtain substantially higher than average returns, which is supposed to be a reward for their enterprise. At least, that is what the prevailing theory says. In fact, customers, workers, the general public, and other organisms may all suffer scarcity as a result of the activities of business in this cluster.
The customer may not be king, however, due to a variety of reasons. One is that customers may not be informed about key aspects of the quality of a product, that may reduce its useful life, or entail various hazards (such as toxic chemicals). People can also be pushed into consuming more than they need by means of radical monopolies (for example, the radical monopoly of the private car where alternative means of transport have been made almost inaccessible). Advertising can exploit people's weaknesses and lead them to believe that a product has qualities that it does not (for example, that a piece of clothing will make you desirable to the opposite sex). Furthermore, for consumers who are concerned about the social or environmental repercussions of the production process, it can be extremely difficult to find out how a particular product has been made; such consumers find it near impossible to express their will through buying decisions (except to stop buying whole categories of things).
It is therefore important to protect consumer interests in this cluster. However, it is difficult or impossible to make customers co-owners of most businesses in this sector, because most customers only have a very small interest in any business from which they buy (and hence would not want to take on responsibility of co-ownership). From the point of view of the business, it may be very difficult to identify even its regular customers, or to have a logical cut-off point between customers who might or might not be invited to be co-owners. Hence, the interests of customers in this sector will generally have to be protected not by giving them ownership shares, but through various kinds of regulations (e.g., to maintain certain quality standards and truth in labeling).
The desire of customers to buy products that have been produced with proper concern for both workers and the environment can also be satisfied at least in part by certifications. The most common such certifications certify that the products are organic, fair trade, sweatshop-free, recycled, or recyclable. This allows customers to exercise responsibility for the commons in their consumption choices. The products certified usually cost more than the non-certified competing goods because 1) environmentally or socially friendly practices that reduce production costs can be adopted by most producers anyway, because it is in their commercial interest to do so, 2) the less socially and environmentally conscious businesses externalize costs to the larger public and nature instead of paying money to avoid such costs, 3) the certification itself costs money, and 4) the distribution of certified goods is often less cost-efficient because of the smaller volume of trade. The higher price of certified goods usually means that they can capture only a small portion of the market. Only government regulation of all producers can ensure that they all use environmentally and socially responsible methods.
Businesses in this sector have employees, whom it is very much possible to identify. In a capitalist system where people are divided among “capitalists” (who own the means of production such as factories and agricultural land) and “workers” (who do not own those means of production and who can only obtain a livelihood by hiring themselves out for pay), the workers generally have little bargaining power because their alternative to an employment contract is likely to be destitution, while the alternative for the capitalist is to hire somebody else. This creates scarcity, especially for workers with few marketable skills. Although this imbalance has been ameliorated in affluent countries through unions and through social welfare, those advances have been to a large extent undermined by the relocation of manufacturing industries to low-wage countries with few environmental and workplace protections.
The most important commons-based response to this problem is to overcome the distinction between “owner” and “worker” by making workers into co-owners of the business, that is, to form worker cooperatives. However, other solutions may also be available, such as employee stock ownership plans (ESOPs) in which employees generally have less decision-making power than in worker co-ops, and various forms of worker co-management of a company, in which workers do not have formal ownership rights but do get to participate in management decisions. If all people employed in a business can participate in management decisions, it is likely that those decisions will lead to more equitable outcomes. However, even in worker cooperatives, not all workers may be co-owners, and decision-making may not be fully democratic. It is thus important to be vigilant that decision-making remains as inclusive as possible.
Businesses in this cluster may also cause huge environmental harm as a result of their use or misuse of environmental resources, imposing scarcities on the general public and on other living things. This aspect of their activities, however, falls under the natural resource management cluster and is discussed there.
Approaches to creating greater abundance
National Center for Employee Ownership. ESOP (Employee Stock Ownership Plan) Facts.
Sites focusing on information and awareness-raising
This is only a beginning of a list of links! Suggestions for more links are welcome!
Literature yet to be added.