For budget-type issues, a penny vote is used. Each voter is given 100 pennies. Each penny represents one percent of the total budget to be decided. Voters are charged with distributing the pennies among the various options, as they see fit. Traditionally, the pennies are actual physical pennies, placed in labeled containers. However, the Common Good Bank budget pennies will be virtual pennies on the internet, to accommodate the bank's representation system.
For example, voters use this method to decide what the bank's lending priorities will be, in the coming year, or how the bank's profits will be disbursed to advance the common good. A voter might put in 10 pennies for disaster relief in Sri Lanka, 6 pennies for an educational initiative in Montana, 23 pennies for alternative energy research, and so forth.
Voters may also VETO any option they feel is wasteful, immoral or unethical, at the cost of a few pennies. Any item that is vetoed by over 5% of the voters will not be funded at all.
When all the votes have been cast, each (direct) voter's penny votes are multiplied by the number of people the voter represents, before totaling the amounts for each option. Each budget item will be funded in proportion to the total number of penny votes it received.
Some additional complexity comes into play when budget items have a minimum or maximum amount. However, this complexity is easily handled in the counting, without requiring any further action by the voters:
Ratchets. Every item that receives at least its minimum percentage of votes (that is, any item that isn't "under-voted") will be funded with at least its voted percentage of the funds available.
Over-votes. Nothing actually gets overfunded, so anyone who voted for an over-voted item is refunded some of their penny votes for that item. This refund is automatically distributed proportionately among that voter's under-voted preferences (or ALL their remaining preferences if none of their preferences are under-voted). The fully funded over-voted items are then set aside and the vote is counted again, subject to the ratchets. The tentative budget for the ratcheted items may go up, but it can never go down.
Under-votes. Similarly, items with insufficient votes are not funded at all. Beginning with the most under-voted item, pennies are refunded to the voters, distributed proportionately among their remaining under-voted preferences (or ALL their remaining preferences if none of them are under-voted), and the votes are counted again, subject to the ratchets. This procedure is followed for vetoed items as well. Voters who voted FOR the vetoed item get a refund; voters who vetoed the item do not.
This system of refunds is inspired by Instant Runoff Voting (also called "Alternative Vote"). However, the penny vote does not suffer the shortcomings of Instant Runoff. In the penny vote, there is no incentive for voters to abuse the system with dishonest "strategic" votes, because there is generally more than one winner and the size of the majority is just as important as which items win.
As you continue to evolve the organization, or if problems arise, it might be helpful to look through the book called Workplace Democratization: Its Internal Dynamics. Though it's out of print, you can find it in these nearby libraries:
What happens when there is a loop in the graph? What policies, processes, etc will be used to help voters understand when loops exist and what to do to break the loops?
Large loops will not be a problem in practice, and should be expected. Voters will be alerted when they choose proxies that they are creating too small a loop. "Too small" here, means small enough that everyone in the loop might fail to vote at the same time, so that no one in that group would get represented. How small that is will vary by community.
However, we have not yet decided on a policy for how to handle that case. This is one of many situations where we will probably set a default policy, but allow individual community divisions to handle it differently. Here are some possible ways to handle small loops:
Require every member to choose a proxy or first alternate proxy or second alternate proxy etc. which does not create a too-small loop. You are not a member until you choose appropriate proxies. This is the current default plan.
Allow members to create small loops and warn them that they might not be represented sometimes unless they choose an additional proxy or always vote.
Same as #2, but also charge the member a small fee for not voting.
Assign the member an arbitrary additional proxy based on who has voted similarly in the past.
What happens when there is a loop in the graph? What policies, processes, etc will be used to help voters understand when loops exist and what to do to break the loops?
I was just giving another specific example, as I've always found specific examples help people understand something more than just general examples. It wasn't a call to adopt something, it's why I just left a small comment. However, Switzerland has a lot of systems in place that facilitiate local democracy and local economies so I like bringing them up a lot. Here though, I was just adding another example for food of the brain.
"penny vote" -- Can use "percent vote" to divorce $ from voting?
As a practical matter, we will likely be voting percentages. The amount of money being budgeted or distributed will probably appear only in the statement of the question (for example "How should the bank's $10,452,516 in profits this year be distributed?"). Then for each choice the voter will set a percentage (for example "15.7% to Our Local Job Training Program").
Jeff Said: "penny vote" — Can use "percent vote" to divorce $ from voting?
Considering that the penny vote is for how to allocate profits and loan priorities what would be the benefit to divorcing money from the votes about how to use money?
Ted Millich said:You need to find out about Dynamic Governance, or Sociocracy.
Sociocracy is a great way to govern an organization and we expect to incorporate principles of sociocracy in running the bank business. Depositors, on the other hand, will not be making decisions about an organization but rather about funding the common good; so some features of sociocracy would be unnecessarily cumbersome. Still, we expect that communities will use, in their in-person discussions, many principles of sociocracy and other disciplines such as varieties of Consensus, Deep Democracy, etc.
It can be difficult for people to really understand sociocracy because it is not in any way equivalent to "consensus, deep democracy, etc." If you don't understand that sociocracy is a complete system that is designed to restrict power centralization, you can make assumptions that are relevant to current domination-based methods, but not to sociocracy. Deciding to have depositors make decisions "about funding the common good" and not "making decisions about an organization" is perfectly compatible with sociocracy. I fear that your evaluation of "some features of sociocracy" being "unnecessarily cumbersome" is based on not really understanding it. Even people who have practiced sociocracy for years still find themselves thinking in terms of typical domination-based sometimes processes because we are all so conditioned to think that way. Every part of sociocracy was designed through trial and error and serves a purpose. If you leave "some features" out, you leave your group open to domination, even if it's unintentional, by one person or block.
I'm all for using many different techniques and disciplines. Sociocracy is compatible with that. My fear is that if you don't use all of sociocracy, you have problems (and might blame the method). It's like riding a bike and having only one hand on the handlebar. It may work for awhile, but you will not be able to use full capacities and will, at some point, fall down. I have never found any part of sociocracy to be "unnecessarily cumbersome" and wonder where you came up with that.
Perhaps the best benefit of sociocracy is not just a better functioning enterprise, but that fact that sociocracy shows us literally in front of our eyes how power works. It can be a long process. It sometimes takes years for a person practicing sociocracy to realize what
their own power is and to step forward and take it. Personally, now that I see so clearly how power flows, I am loathe to give up power by using consensus as the decision-making method (remember sociocracy is a lot more than just the consent decision-making method).
Sociocracy is not just a "discipline" or tool. It is a whole system that has been designed to do something no other social system in history has ever succeeded at (restrict power centralization) and that is no small feat. In fact, I believe it is key to our survival.
I would love to correspond with whoever is involved with Common Good governance - more for my learning than for more plugging of sociocracy. I would like to find out how you went about learning about different governance concepts and where you found out about sociocracy. teddidread at earthlink dot net
Even the concept of running the bank democratically was questioned: “If Joe has enough friends to vote funding for Joe’s business which will eventually fail, what good does for the community” or “Democracy is good as an oversight mechanism but operationally… how would be the army to operate democratically?”
The democratic process maybe can be changed from an active involvement, which is also very time consuming, to a passive way. I am thinking to ask members to allocate their money over a given set of areas of lending as they join. They can change the allocation as they want but at their own convenience thus avoiding a periodic voting process that can be very counter productive. The actual lending decisions will be left for lending professionals, trained to the bank rules.
We do not plan to make business (operational) decisions democratically. Depositors will set lending priorities, but will not decide on individual loans.
Depositors always have the choice whether or not to be actively involved in decisions that are in their domain. Taking away that choice would decrease democracy with no benefit to the depositors. It is important that SOMEONE think again about the lending priorities from time to time, because the situation in the community is always changing. The depositors should be allowed a voice in those discussions and decisions.
Post edited 8:21 pm - February 22, 2010 by wspademan
Ted Millich said:You need to find out about Dynamic Governance, or Sociocracy.
Sociocracy is a great way to govern an organization and we expect to incorporate principles of sociocracy in running the bank business. Depositors, on the other hand, will not be making decisions about an organization but rather about funding the common good; so some features of sociocracy would be unnecessarily cumbersome. Still, we expect that communities will use, in their in-person discussions, many principles of sociocracy and other disciplines such as varieties of Consensus, Deep Democracy, etc.
Philip Beard said:It's unclear how the multiple-choice preference example given (A+ABCDFNo) relates to the Condorcet paired-preference method. Aren't you conflating the two here?
Multiple choice grading is a way of expressing preferences. Condorcet is a way of analyzing data and calculating results.There is no conflict between them.
If someone grades option #1 "A" and option #2 "C", for example, it is clear that the person prefers option #1 to option #2. Similarly, if the person grades two options the same, then we can infer that the person has no preference between the two options. This is all the information that is required for Condorcet calculation.
Grading gives more information with less effort, than having to compare each pair of options individually.
It's unclear how the multiple-choice preference example given (A+ABCDFNo) relates to the Condorcet paired-preference method. Aren't you conflating the two here?
You need to find out about Dynamic Governance, or Sociocracy. It is a governance method that has been designed over many years using trial and error, and knowledge of technical disciplines like cybernetics, chaos theory, electronics, etc. The most amazing thing about this method is it keeps people equivalent in power. It works well and you can find out more about it at http://www.beyonddemocracythefilm.com
Please reply to me if you're from Common Good Finance.
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I have never found any part of sociocracy to be "unnecessarily cumbersome" and wonder where you came up with that.
In fact, I believe it is key to our survival. 
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