Property means several things to people. It has at least three meanings:
- Personal safety and dignity: My clothes, my house, my money, my computer. These are mine in the sense that I need them to go through life and I need reassurance nobody will take them away from me. Actually I don’t own my house; I prefer to invest on my skills. But it’s the same idea.
- Control over resources: My project, my team, my blog, my plan. I want to control these things. If I had a business it could be my business in this sense of controlling what the business does. These things are controlled by me and I want them free from interference so that I can pursue my goals.
- The right to exploit: My shares, my invention, my song, my contract, my land. These are artificial rights that let me exploit resources, or the activities of others. If the thing is mine I can take any profit I can extract from it as mine to keep. This type of property is an exemption from the duty to share.
Only the first two are natural. The first is needed to have a society with human rights, although the boundary could vary. For example some people feel a strong need to own their house, and some don’t. But a desire for security of your immediate needs is universal.
The second right, right to control resources and keep them free from interference, is needed to form an advanced economy. You can’t build any kind of elaborate production or a complex technological product like a plane if you can’t control the resources and the activities that bring it about. This type of property is the necessary foundation for firms. Even things that appear to be free are based on property as control. Google services are free, but they control the site and it’s designed so that you keep visiting it rather than take the data from it and go your own way. Linux is free in the sense that someone could copy the bits and start a rival project, but the actual Linux project is well controlled.
Property as the right to exploit is different. There’s nothing intuitive or natural about it, except perhaps that it formalizes feelings like “survival of the fittest”. Normally, if you have an idea that is successful or as a group you produce valuable things, you share. When nature yields oil or fish again the normal thing is to share. Perhaps in these cases we have yet to discover how to do so in a controlled and equitable way. To these productive activities, property is an overlord. Property claims what would otherwise be shared among the people directly involved, on behalf of one or a few people who are distant. It’s no accident that most property of this type is indeed derived from lordship over land.
Property for exploitation scales to really unintuitive extremes. While there are giant firms, which are large-scale structures of control, there are even bigger banks, funds, or other structures of abstract ownership. The ability to own for exploitation has long surpassed the need to own for control of production. The distribution of ownership varies between people in a way far more extreme than the variance of control. An investor can own a greater proportion of a firm than any human CEO can realistically control a proportion of its activities. This is unnecessary.
I think we’ve lost our relationship with property. We started with personal property and the need to control, but ended up slaves to a system of rent extraction. Our conception of the economy is completely preoccupied with the extractive and concentrating power of property. The more that this grows, the more it places a burden on society.
In their aspirations people confuse the first kind of property with the third. I once asked a startup CEO what motivated him to create and grow the business and he said something like “I want to provide the best security for the future for me and my family”. Now that is striking! I suspect Bill Gates and every multi-milionaire thinks the same. Wealth concentration is insurance against risk for the individual. Yet for society this is wrong at such a deep level. It creates a competitive arms race, where the security of those who succeed externalizes as relative insecurity for those less fortunate. It’s also a breathtakingly inefficient allocation of resources. Doubling the wealth of Bill Gates might make him feel a little more secure, but the money would buy much more subjective security if shared.
Allegedly, property as the right to exploit has a social function. Two in fact:
- It motivates the entrepreneur, the inventor, the farmer, the creative professional, or the crafter to do best by promising that they will reap the full benefits of their efforts.
- It allows inter-temporal consumption, in the sense that a group can buy property and extract income, and this can be a mechanism to implement for example pensions.
I dispute those. I think they have some truth in the small scale but they’re are mainly insincere fantasies of idle wealth and exploitation. Farmers and tech startup entrepreneurs alike are motivated by personal dignity, control over their means of production, a sense of duty to create a better tomorrow, and a sense of sharing among those involved in the work. I don’t think either want the very risky all-or-nothing outcomes that come from a competitive market with very strong property rights. The market fetishizes entrepreneurial success after the fact, for people who crave idle richness. It’s not how the people who make startups actually feel – and I speak as one.
As for inter-temporal transfer of value, this is a concept that merits deep examination in politics and society. We shouldn’t just accept it, or accept the formula presented at the present time as policy. How much inter-temporal transfer of value should there be? Should value inflate, deflate, or be retained? Is there a limited return or an expiry date? If not, how does the system remain equitable rather than degenerate into structure of concentrated privilege?
Inter-temporal transfer of value over long periods doesn’t exist. Real value such as commodities or equipment has a short expiry date (buildings have a long life, but their value is mostly extractive as land rent). The only inter-temporal construct is the artificial right to extract rent. At the scale of publicly capitalized companies, share ownership is equivalent to taxation but private. The implications of this need to be fully recognized. For example, a pension policy may be based on taxation or on share holding as inter-temporal means to transfer value from surplus producers to some rightful beneficiaries. In either case, the actual transfer of value takes place in the present. The distributional effects and economic impact of each method need to be fairly compared. What is wrong is to conflate stock ownership with real inter-temporal value transfer; the latter is a fiction.
There’s too much of property as a right to exploit. It needs to be wound down by limiting rather than expanding property rights, and by reconsidering what we as a society want for corporate governance and the distribution or corporate surplus. There are lessons to be learned from the age of capital, but I think a unified concept of social-distrubuted ownership and taxation is due to replace it.