This deserves a separate topic because it's an important issue to consider.
In another topic, we were discussing industrialism & capitalism.
Here we should be careful to distinguish between free-enterprise systems generally, and capitalism as a specific case thereof. Capitalism as such involves the public trade of equity in incorporated entities where owners' liability is limited by law.
However there's more to it than that. Capitalism is also a set of legal, economic, and social norms that are adopted to establish a hierarchy of valuation of the various inputs to a production/consumption process.
Those inputs include financial capital, plant & equipment, raw materials, labor, and market demand. A free enterprise system involving profit incentives and tradeable equity instruments can be developed in such a way as to utilize any number of potential hierarchies of value and control among those inputs.
Under capitalism as currently practiced in the US, financial capital is the controlling factor. Under a "green" form of free enterprise system, raw materials in the form of "natural capital" are the determining factor. In a "consumer cooperative" such as a food coop, market demand is the key factor, i.e. the consumers own the shares in the corporation. In a "producer cooperative" such as a farmers marketing coop (e.g. dairy coops, Welch's grape products, Ocean Spray cranberry products), the owners of the plant & equipment own the shares in the corporation. In an "employee-owned corporation," the employees own the shares.
In fact, the employee-ownership model has much to recommend itself, in terms of extending the incentives of ownership and profit more widely. Where it's practiced properly it's highly successful, e.g. Stone Construction Equipment (USA) has 51% of national market share in its key product lines.
For the best working example of the employee ownership model, check out the Mondragon Cooperative Corporation in Basque Spain. Go here:
http://www.mondragon.mcc.es/
This is a large industrial conglomerate of over 125 companies in every field from raw materials production to shipbuilding to cybernetics, including a central banking institution and various secondary, postsecondary, and graduate educational resources, R&D labs, etc. Each employee owns a share in his/her enterprise. The overall pattern of governance is similar to a republic and in fact has significant resemblance to our own (US) constitutional system.
Interestingly, MCC is a world-leader in industrial automation systems. They beat Siemens for the contract to build a fully automated assembly plant for VW *in Germany*. Raw materials go in one end, cars come out the other. Their automated machine tools are used by global companies including General Electric.
The point of this is, here we have an example of a corporation that is highly successful in heavy industry, which still meets the requirements of private ownership and profit motive, but which uses a different organizational model.
The intrinsic benefit of that model, which is highly relevant to all of our discussions, is this: where control of a company is vested in those who are directly affected by its everyday operations, there is a great reduction in the incentive to "externalize" costs (e.g. pollution, waste of energy and resources, etc.). That is to say, people do not willingly "crap in their own nests."
The reason this model hasn't taken off in the US is simply that the capital ownership model was able to establish itself as successful early on, and then organize the legal, economic, and social systems to support it to the exclusion of all else.
We can see examples of that today, where corporations are able to lobby for and obtain tax benefits and other preferential treatments. But at an earlier stage, the benefits obtained included legal and economic structures that stifled the growth of competing business models.
What I'm suggesting we need right now, is to apply the principle of competition to the issue of *business models.* There needs to be a truly level playing field, so that new types of business models can develop which are viable in the post-peak world.
The truly fatal flaw of corporations operated on the finacial-capitalism model, is (as many have observed here) that this model depends absolutely on continued growth, and will crash and burn miserably once that growth ceases. It is viable for certain categories of enterprises, but not for those that will be operating in steady-state markets.
However, the financial-capitalism model has become what in agricultural (and lately cybernetic) terms is called a "monoculture." Like a farm planted with genetically identical crops (or a computer network whose workstations all use the same operating system), it is enormously vulnerable.
We all recognize the nonsense of statements from various corporate officials and economists to the effect that unlimited growth will continue forever. But the cause of such nonsense is a teleological fallacy: these entities *require* the unlimited growth for their own survival, therefore they *have got to believe* it is possible. Entities operating under a different economic model will not have their objectivity compromised in this manner.
A free-enterprise system populated by companies and corporations that use a variety of different economic models will be inherently robust, much like a farm in which crops are genetically diverse, or a computer network that supports multiple types of platforms and operating systems.
If we want to create the preconditions for the adaptation of human societies to a world of post-peak oil and other resource shortages, one of the key ingredients will be to introduce the legal mechanisms that will place diverse types of business models on a level playing field. Having done so, the profit motive and other personal incentives will make good use of the various business models, and each will seek out the niches in which it is most viable. Thereby we can retain a strong economy through the transition ahead.