Shaping a More Meaningful Economy — Part 5
Purposeful Investment
For Pioneers
Do you also believe that the current economic system is unlikely to solve the problems it causes? Are you ready to overcome old thought patterns and break new ground?
At One-X, we have spent the last few years working to develop a new, workable economic system. In our first article we have described the vision of this new paradigm, and we would like here to further introduce you to the concept and invite you to participate in this work.
We are seeking co-creators to bring this next economic system to life in larger contexts, where it can be further tested and create real impact. After two years of proof-of-concept, we believe that One-X is now mature enough to bring value to others.
Five Qualities to Overcome Our Challenges
The existing global economic system is plagued by pressing issues: growing social inequality and excessive exploitation of natural resources. One-X offers an open network where people and projects can come together to solve these challenges.
One-X’s long-term goal is to meet the needs of everyone in the world. While this may seem utopian at first, One-X provides the ideal experimental space to move closer to this goal through five key qualities:
- Voluntary Engagement
- Peer Empowerment
- Environmental Respect
- Purposeful Investment
- Fair Participation
These qualities are achieved through the consistent implementation of ten principles, two for each quality. After our article on Environmental Respect we now present the 7th and 8th principles to ensure Purposeful Investment so that everyone benefits the most.
First Things First
Within One-X, resources are consciously allocated to organizations and initiatives that hold the most promise in satisfying the collective needs of all participants. The allocation is based on the expected impact on these collective needs, rather than individual interests or personal advantages. By strategically directing available investments towards objectives that benefit everyone, One-X ensures that each participant receives more.
In the current economic system, organizations typically determine their investments based on the availability of capital and the expected return on investment, focusing on entrepreneurial aspects. However, explicit consideration and reflection on the alignment of these investments with the actual needs of the people are rarely carried out. This often results in redundant spending and the pursuit of less effective objectives. Furthermore, the drive to maximize returns for individual investors tends to hinder collaboration and squander the potential for synergistic outcomes.
Considering the magnitude of the challenges we face, wasteful utilization of resources on a large scale is not a viable option. By actively collaborating to pursue outcomes that genuinely fulfill people’s needs, we can avoid the depletion of essential resources while simultaneously achieving an improved quality of life for all.
There is no one-size-fits-all solution or individual with all the answers to guide our energy and resource investments. When engaging in discussions between parties with varying interests, it is crucial to recognize that the effectiveness of an investment is directly linked to its ability to meet the community’s needs. Therefore, initiatives that show the greatest potential for effectively addressing the community’s needs should take priority in accessing our resources. The next two principles address these considerations.
7th Principle: Invest for the Community
Thanks to progress, we can satisfy our needs better and better. To achieve progress, you need innovative ideas and the means to implement them. True innovation, however, is not a straight path. Behind every success that is celebrated, there are many failures in silence. In today’s economic system, every company looks for the most promising ideas and then weighs the extent to which the expected profit exceeds the cost. These considerations, as with all other investments, are strictly confidential as an essential part of strategy and are made from the perspective of the individual company rather than the community. This has several consequences:
- Many innovations are developed simultaneously in several companies and are often redundant
- The highest possible return on a company’s investment rarely reaches the highest possible return from a community perspective
- Crowding out competition, creating a monopoly, or manipulating buying behavior are also pursued as worthwhile investment goals
- The allocation of investments in the company is in reality often distorted by internal departmental interests
- Funds, once allocated, are usually fully consumed, even for investments that later prove to be unprofitable
Consistent, company-independent alignment of investments with community needs promises to significantly mitigate these negative consequences. At One-X, the potential benefits of an investment are constantly reviewed by a third party. Business performance, changing market needs, and overall available resources are all taken in consideration to periodically weigh and reallocate different investment opportunities in the community. Instead of individual companies wasting resources competing with each other, this allows more flexibility to meet the changing needs of all. Companies can make greater use of synergies and redirect available resources much more quickly and consistently when changes are necessary.
How have we implemented this principle?
In One-X, the Balance institutional entity acts like a community-oriented investment bank. Entrepreneurs can regularly apply for investment opportunities, which are evaluated by experts, with representatives from all companies, according to their potential in meeting needs. An investment budget, as part of the total budget, is set and divided by Balance among applicants, with no expectation of repayment. The allocated budget is the only source of investment for entities in the community. It is restricted to a specific purpose and may only be used up to the next period. Revenues from the activities of the company are collected by the institutional entity Balance and redistributed in the subsequent period as described above.
Critics argue:
- “Then companies can waste the means given to them without entrepreneurial risk”. We answer: On the contrary, companies immediately get less financial leeway from Balance if they perform poorly, up to and including closure. No capital protects them from this.
- “Companies then cannot plan and invest for the long term”. We answer: Long-term investments are coordinated with Balance and further allocated to the company, but only as long as it is deemed to be in the best interest of the community.
Imagine if investments were always targeted to address the community needs:
- Then companies would only invest where they can bring meaningful progress to the community and there would be less waste.
- Then our limited resources would fund meeting needs in a balanced way. We could deliberately avoid redundancy and make progress in multiple directions.
- Then we would simply be able to reallocate investment funds as soon as the situation requires instead of continuing to invest in hopeless projects.
8th Principle: Allocate Resources for Impact
In our current economic system, products and services are offered on the market and allocated to the highest bidder. However, when this mechanism fails, allocation is often controlled by ad hoc defined rules and laws. The more often markets fail, the more often people resort to this kind of centralized control.
Large market players have various ways of influencing their market space to their own advantage. One way is for sellers to form monopolies in order to artificially tighten supply in segmented and opaque markets. One example of this is the practice of forcing smaller competitors out of the market by offering at prices below the production cost. On the other hand, large purchasing powers can use their influence to force suppliers to sell below their actual value. An example of this is the practice of large companies to impose long payment terms and unfavorable terms and conditions on smaller suppliers.
These market distortions take place both between companies and between countries. When the effects of this become particularly striking — as in the current energy crisis — governments intervene, imposing legal requirements, tax breaks and bans. These regulations undermine confidence in the markets and often fail to deliver their intended effect because they come into force only after the situation in the market has already evolved.
In One-X, we rely on a market in which it is structurally impossible to offer below one’s own costs and in which no special conditions can be enforced for individual market participants. The decision on the price is determined by a neutral entity, and the offers are open and valid for all market participants. This new type of market leads to a highly efficient allocation of resources without the need for further external control.
How did we implement this principle in concrete terms?
At One-X, all members have access to resources, products and services through an internal market that is transparent and easy to navigate. Similar to auctions, all members are given equal opportunities to purchase them on the same terms. Without any further action on the part of the sellers, the institutional entity Market offers buyers the opportunity to bid on the good for their own benefit within a specified time frame. The monetary value generated by the good is ultimately attributed to the supplier and is decisive for the amount of his future investments. In this way, markets can perform their function effectively and without distortions or additional controls.
Some believe that would not work well. They tell us:
- “Scarce goods nevertheless lead to the monopoly position of those who offer them”. We answer: This is another reason why resources are offered by the institutional entity Market, rather than by the producer. The revenue generated is attributed to the producer.
- “It’s way too much work to offer everything in a huge, global market”. We answer: Ebay shows that this can be automated. In addition, submarkets can also be integrated into the overall market, as long as they remain compatible with each other.
Imagine now, however, that we had access to the right offers for us at a glance and without restrictions, and that no planned economy would influence the markets:
- Then companies would not have the opportunity to gain advantages for themselves by manipulating the market. They would focus on improving their products.
- Under-price sales, promotional offers and special discounts to influence our buying behavior would then become a thing of the past.
- Then we would no longer be concerned with ever compensating for non-functioning markets, with great savings in effort and resources
Shaping the New System Together
In recent years, the value of the five qualities has become increasingly apparent, yet there is still so much more to explore. Can you envision this potential too?
If these topics resonate with you, we invite you to read the other articles in this series (linked below). If you’re uncertain about their relevance, take a moment for personal reflection. Also, feel free to contact us at info@one-x.org and we will respond promptly.
We welcome pioneers who are eager to share their principles, practices, and experiences with us, and work together to develop a new economic system for broader application.
We look forward to hearing from you!
Andrea Demaria & Tobias Bantzhaff
Articles of the series Shaping a more meaningful economy:
- Part 1: Toward a New Vision
- Part 2: Voluntary Engagement
- Part 3: Peer Empowerment
- Part 4: Environmental Respect
- Part 5: Purposeful Investment (this article)
- Part 6: Fair Participation
- Part 7: A Path to the New Economy
- Part 8: Fundamentals of One-X (to be published)