Getting funds from large firms by 'swing-purchasing'
Keith Hudson
Adapted extracts from an e-mail to the Institute.
I have proposed the formation of a Consumers' Alliance. The purpose of this Consumers' Alliance is to negotiate funding from large firms by means of a strategy of 'swing-purchasing'. The specific objectives will be to start permanent projects benefiting jobs, community and environment.
Basic strategy
Sooner or later, most firms find themselves in a competitive situation vis-a-vis another with respect to a particular product or products in particular localities or regions. As competition becomes more intensive, marginal changes in sales volume up or down can produce much larger 'leverage effects' on profits or losses. The leverage effects are becoming greater from year to year and are crucial in the survivability of the individual large firm.
The strategy of a Consumers' Alliance is to facilitate marginal effect on sales in well-chosen competitive situations between companies supplying very similar products in which the choice of products is of little moment to the consumer but crucial to the firms concerned. This 'swing purchasing' of a relatively small proportion of the total number of consumers is analogous to 'swing voting' at elections. Initially, we will make an impartial offer to all the firms concerned: that we will increase the profits of one of them in exchange for a royalty on their profits. The level of royalty will be by mutual agreement and for a fixed period. We will conclude a deal with one firm only and, in exchange, we will give a commitment that our members will purchase the particular product or products from that firm only for the duration of the agreement. It will be the responsibility of each member of a Consumer Alliance to support the current purchasing strategy whenever possible and thus to maximise the attainment of their chosen objective.
The royalty will be used to fund a permanent employment, community or environmental objective chosen by a Consumers' Alliance. In other words, large firms will be forced to start entering social costs into their balance sheets.
Rationale
One of the most salient features of modern times is the vigorous growth of large multinational firms. In most mass consumer goods' and services' sectors, competition is becoming fiercer from year to year. In their narrow obsession with survival, scant consideration is given by large firms to the much wider destructive consequences of their commercial activities. Among these are: (a) loss of jobs due to increasing efficiency; (b) the fissioning of communities; and (c) the continuing degradation of the environment and even of its overall stability. Nation-state governments are increasingly unable to cope with these complex problems. Also, conventional taxation methods of both income-earning individuals and profitable firms are no longer sufficient to bear the spiralling social costs. The latter include: adequate welfare benefits to the jobless, costs of health care, quality of education, relevant skill-training, old-age pensions, community infrastructure, social security, crime, pollution, maintenance of natural environments, etc.
Some other form of taxation must be adopted in order to pay for the ever-growing social costs that firms do not so far include in their balance sheets. We suggest that the most powerful democratic method available is the purchasing power of the mass consumer. In situations of intense competition, which large firms themselves produce, even the 'swing-consumer' can be king.
An Internet-based version
I have thought and discussed this further, as a possible future Internet-based strategy for funding community and work projects. I have been invited to join The River (a new Well-type Californian co-operative starting up soon on the Internet) which has some pretty clued-up people on it (the founder of Lotus, a senior Microsoft person, a consultant to Oracle, Howard Rheingold, and several more), and the Consumers' Alliance will soon be a Web-page within The River.
Keith Hudson, 6 Upper Camden Place, Bath BA1 5HX (tel 01225 442377; e-mail: <k.hudson@bbcnc.org.uk>).
Previous / Next / Table of Contents