cc: Customer Capitalism!

With so much talk going on about how to save capitalism from the global economic crisis, I like to use radical thinking and toy with totally unheard-of thoughts in my mind.

Here's a recent one that's been toying my head.

We know of shareholder capitalism. Shareholders buy stocks and own a company. Shareholders make a profit (or loss) when they sell the stock or when the company pays dividends out of profits.

Now how about this. Imagine for a moment there are no shareholders and no stocks to buy in a publicly listed, publicly owned company. The company is owned by the founders but the rules are that dividends are not exclusively paid to the owners. After the company's profit is taxed and some money is invested in the business and a portion of it retained by the owners, dividends are paid back to the customers that bought the services and/or products of the company.

In other words, only customers who bought the products/services of the company and are the source of the company's profit get to receive the dividends. Every receipt for purchase of goods and services essentially functions as 'stock'. It entitles the customer that holds it to a portion of the dividends the company normally pays out. The individual portion each customer gets is equal to the percentage of his purchase amount over total sales.

A customer who buys a product and is entitled to a portion of the company's profit will tend to be a loyal customer. He gets a stake in the company and its products because he can make money from it. This incentive will keep him busy consuming because he will get some money back from doing so.

At a time where the global economy and certainly the US economy could be plunging into a deflationary spiral where prices go down with no bottom in sight we need people to consume and buy to help us get out of it.

Customer capitalism in the sense I described it above could be a smart trick to use to get everyone buying again.

Of course the system I just described is a thought exercise, a brain game if you like. I find it very exciting and stimulating to imagine how the economy would function if certain rules are changed.

If you also share a similar passion, I look forward to reading your comments thoughts and reaction on this. Thanks!

http://www.thinkaloo.com