An Economy of Ownership

Some long time ago I found myself becoming more and more obsessed with understanding the workings of economic systems. Growing up in the early 2000's my formative years were flooded with debates about war-spending and corporate lobbying against the public interest, the 2008 financial crash, ballooning public deficits, the rising student debt bubble, stagnating wages, debates about the necessity/catastrophe of public healthcare, etc. The impact of developing in that environment is likely extensive but the salient outcome here was that the interplay between economics and human social systems became a god of sorts to me; one that promised to both explain the world and put me on the right side of history, so to speak.

Looking back I'd say my early thoughts (when I was old enough to falsely claim them as such) were fairly conservative, leaning toward libertarian. Capitalism was historically proven superior to socialism, feudalism, communism, barter, etc. by simple fact that it had out competed them. To the extent a nation was "advanced" and powerful it was equally capitalistic. As well it was the natural outgrowth of democratic ideals of freedom, independence, hard work, and rights to property. Government oversight was a necessary evil often abused to funnel money or secure political power for the unsavory. Generally speaking the problems around poverty could be explained by laziness, institutional corruption, or temporary eddies, with a variable potion set aside for bad luck. All-in-all though no better system had been or could be devised--the logic of supply and demand all but proved it mathematically--and we had reached a point where we were mostly tweaking for effect than debating competing models. It was simply a matter of time.

Some time later, with a bit more experience and a broader set of influences, I fell pretty firmly on the left of things. Having seen the fallout of the housing crisis, and more familiar with the intractability of inequality, the raw calculation of capitalism seemed both fundamentally flawed entirely devoid of empathy. The fact that, played out over a few centuries, such a system led inexorably toward a competition between those who owned marketable things and those who had to literally sell their lives to feed themselves seemed inescapable. Regulation could not work because wealth held so much influence in spheres of power that no intelligent politician would even consider legislating in favor of the ever-depreciating masses. Even the fundamental laws of supply and demand prophesied that profitability would reward those businesses who most quickly and successfully deflated their workers' wages and automated them out of a job. There was certainly room for a lively debate on the details but there was no argument that any real improvement was predicated on a total overhaul of the system.

Given time this too proved insufficient. The first blow came from the people I was making common cause with. I was always struck by the fact that nobody ever seemed to really understand what they were espousing. There were plenty of slogans and an awful lot of feelings but nobody really seemed to understand the "why" of any particular "solution" beyond that people were suffering and the enemy of the day was to blame. Even the theoretically well read seemed to just be memorizing a particular curriculum of literature and manufacturing comely turns of phrase. What was worse though was the absolutely violent rejection of perspectives or thoughts outside of the agreed upon rhetoric. I'd never met people so quick to turn on former friends or allies for questioning a idea or allowing space for nuance. The whole scene felt driven by rage, disgust, and tribalism in a way I grew increasingly uncomfortable with. One of the great insights of psychoanalysis was that a person's motivations often put the lie to their rationalizations. You can tear down with rage, but what were we planning to make on the other end? No one ever had an answer that held up to scrutiny in the end and I became desperate to find some solution to all this. Things are complex and there was no easy answer to anything, in my mind the historical fact that almost every "glorious revolution" on the books had been co-opted toward some atrocity was reason enough to tread very carefully in that real. And so I ran still further to philosophy, history, psychology, economics, and literature for perspective. Perhaps if I could understand the ideas and critiques of every model I'd finally have what I was looking for. My god demanded an even deeper theology.

Which brings us slap-dash and helter-skelter right up to the present, more or less. I was caught in between a series of paradoxes. On the one hand the logic around capitalism seemed fundamentally broken as an element within a society. By turning everything into a commodity it transformed a person's life into an element of trade, it was inherently undemocratic in that some small subset of people were given discretion and freedom but the vast majority of workers had no real say in what they did or the direction of the company or in how they were rewarded, the underlying motive of profit led to a necessity for infinite expansion that was environmentally unsustainable and required a massive apparatus of advertising and marketing to persuade people to buy ever more unnecessary things, it drew divisive lines between groups of people and over time stripped the utility out of education while simultaneously making it an expensive necessity of self-marketing, it allowed for rampant corruption within the political sphere, and within its own highly competitive rationality guaranteed that as many people as could be made obsolete would be made so and offered absolutely no recourse in how they were to survive let alone thrive after the fact. The list could go on.

Opposed to that, though, were a number of competing problems. Given the size and complexity of the world no other system had so effectively expanded our ability to produce food, medicines, clean water, or tools of communication. No system as intricate as ours could possibly be centrally planned without becoming so slow and inaccurate that it would collapse within a few generations. Most competing models (communism for example) had led in every significant instance to a state of human suffering so profound we can't even really grasp it to this day. Taken as a whole the level of access to basic necessities around the world has gone up steadily across the board even despite the shameful hoarding at the highest levels. Again the list could go on. The problem: what a system could be built that maintained the gains acquired up unto this point while simultaneously b recognized basic human empathy and iterated successfully over time? How do we build something in line with human nature, aware of the facts of the universe, with space for our aspirations, and that encouraged an upward and positive feedback loop?

The shortest and most honest answer is that I don't know.

What I do have is an idea I haven't been able to quite get around. I'm not sure I'll ever hold an thought as true with the same faith I have in the past, and perhaps that's a sign of improvement. These days I think more along lines of dynamic equilibriums and propagations across generations and I pray that's a sign of improvement because its certainly more exhausting. Still, with that fallibility in mind, I've found myself returning time and time again to the idea of an ownership economy.

In rough sketch an ownership economy is one in which the basic market structure we have now is maintained, and even the fundamentals of business play out in a similar manner. The real difference comes in the relationship between the company and its employees. In the current dynamic a company has its plans and resources, and a pool of employees are hired on to act as cogs of one sort or another within that plan. A deal is worked out in which a person who could be doing any number of things agrees to sell some portion of their life to the company in exchange for the means of continuing to live. In an ownership economy though the workers own some portion of the total company and are active participants in its decision making process. Fundamentally you are bringing the principals of democracy into the economic sphere; and while in many ways its a small change I think it incites some pretty profound effects.

Let's discuss the Pareto Distribution for a moment. Above is a generalized example for visual reference but in the broad strokes its a description of systems or relationships that obey the Power Law. I won't get into the details but much like the more familiar Normal Distribution its an artifact that emerges consistently out of certain kinds of interactions. An appropriate example of this is wealth inequality; anyone who tracked or participated in the Occupy Wall Street movement or noted the disparity between salaries in modern companies should feel this graph in their bones. What's interesting is just how many systems other than finance conform to this trend. For example, if you look at the total number of researchers in a given field compared to the number of research papers published you'll find a similar trend, in which a minority of individuals account for a disproportional amount of the published works. Kleiber's law describes a similar pattern between metabolic rate and animal mass, Zipf's observation about word frequency in texts follows the trend, even the intensities of wars within a given period conforms. Setting aside potential deeper mathematical truths, and keeping in mind that there is a vast amount of space for debate and nuance in this discussion, I would like to offer an interpretation of the trend useful for this topic.

Truly random data doesn't conform to power laws for obvious reasons, but only interactions with particular constraints. I would argue that systems constrained by "preferential" outcomes that iterate over time are more likely to do so, such as trading games or any system bound by the rules of natural selection. The reason for this is that in any such system there are options which are "better" and those that are "worse" and that over time some will out compete others. To use the research paper example the interpretation might go something like this: there are X number of researchers trying to get published at any given time but only so many journals. Certain topics within the field will be more in vogue than others (for a host of complex reasons) and so research in that field will be more likely to be looked at and there will be more data accumulating to draw from overall. Those researchers who get published are more likely to be cited in other papers (increasing their visibility and name recognition) and this will increase the likelihood that they will be contacted by peers for collaboration, thus increasing the number of papers they appear on and their experience/knowledge within the field as a whole. Simultaneously their growing influence in their domain begins to open up more and more opportunities to direct inquiry and to dictate how they spend their time. Over time a kind of momentum is built up naturally and that individual becomes a kind of hyper productive node within that network while the vast majority of their peers become "trapped" in the white noise at the other end of the distribution. In economics this can be understood in the truism that its nearly impossible to turn $1 into $10 but comparatively simple to turn $1,000,000 into $10,000,000. You simply have more options and the sorts of misfortunes that can absolutely ruin a poor person don't impact a wealthy person at all.

The idea that I had to grapple with was that perhaps the massive inequality that came out of capitalist systems wasn't unique to that structure but was indicative of something deeper. I want to be clear, I think that by design capitalism accelerates these outcomes in historically unprecedented ways. In fact I think that is exactly why its other most dependable outcome has been technological and material development so rapid and all encompassing as to be functionally incomparable to any other historical period. Much good has come of that, and its exactly that good I don't want to throw away. I truly have trouble grasping another circumstance in which a handful of individuals could wield the resources and specialized training to create a vaccine for polio and so quickly manufacture and distribute it around the globe as to almost totally eradicate the disease in a matter of a few decades. Still, if you'll indulge an appeal to emotion for a moment, I cannot accept that an architecture which inherently leads to the vast majority of people living in servitude on the edge of their means while some small percentage controls the sum total of human production as just. There is something deeply immoral in its irreverence toward human beings.

Beyond that, I think it has built-in social instabilities that remain unaddressed. I'll assume up front that, whatever structure it is we may want to design, a key marker of success is that it remains stable over time. It may be immediately beneficial to design a society of bandits, lets say, but if doing so leads the surrounding peoples to form an army to wipe you out 6 months later then it was not a "successful" design. I think a similar situation exists here. The relationship between inequality and violence is well documented in the literature. More specifically that between relative inequality and violence. There are many theories behind why this may be the case, and each has a useful angle to offer, but for our purposes here we can safely look only at the relationship and leave the explanations for another time. Generally speaking though, if you have some group of people who have more than another group in their vicinity there is a documented and predictable increase in the amount of violent crime perpetrated upon the former by the latter. Moreover, as that gap increases the violence will increase in kind. This is not so hard to understand but it is essential to keep in mind given the premise that our current survival of the fittest Pareto-bound economy will naturally and inevitably lead to an ever expanding gap between those who have everything and those who have nothing. To the extent that both premises hold, then any society founded on the latter will have to design ever more draconian institutions just to hold itself together. Moreover, that same dynamic of forced cooperation will lead to a greater and greater sense of distrust and animosity between both sides which each will develop rationalizations for that can quickly become the rhetoric of massive social upheaval. Once a group has been designated as "the evil other" it is a small step further to justifying their murder; and both sides will have plenty of evidence to support the "truth" of their ideology.

The difficulty is this. If the Pareto Distribution is in fact the inevitable outcome of any complex trading game, constrained by limitations and containing preferential solutions, and iterated across a large number iterations then simply dispensing with capitalism will solve nothing at all. It will solve nothing because what was just described is any human society you might imagine building. In short, whatever details you may want to work in you will have to account for the fact that a large number of people will need to negotiate their desires in multiple fields across a large amount of time and successfully distribute a large variety of resources successfully in a dynamic manner. Ultimately then, the most likely outcome would be that you would institute something that would undue much of the things free-market economies have achieved and to replace it with something that will ultimately end up just as unstable or worse.

Milovan Djilas lays this out very well in "The New Class." A full discussion of the communist system as manifest during the 20th century is well beyond the scope of this essay, but in broad strokes his observation is this. While on paper the socialization of property removed the ills of capitalist exploitation, in practice it simply moved the game into a smaller arena. The new oligarchy became one of bureaucrats and the levers of power became centralized within the communist party itself. This led to rampant corruption, mismanagement of resources, and an ever increasing need to obfuscate these facts; all under the banner of the greater good and a promised utopia. In the context of our Pareto problem what was done was to alter the system from a trading game between corporations and individuals but one revolving around political favors and bureaucratic standing. Moreover, it lost one of the great advantages of a true market economy in that it is functionally impossible to make the necessary calculations and forecasts for a nation sized economy from the top down even if you could trust in the wisdom and best intentions of those in charge of its management. That is no small issue when the price of bad information may be famine on an enormous scale.

So both of the 20th Century's ideological titans lead to various flavors of violence and instability, and the data suggests that any system we design will tend toward this no matter how clever we are. So why is an ownership economy preferable?

The benefit I see in pursuing an ownership structure is that it maintains much of the flexibility of capitalist market systems (we maintain the same basic model of companies striving for success within a pool of potential customers) but it has an inbuilt mechanism the naturally spreads much of the accumulated wealth around. As each employee is actually part owner of the company their wage is based directly on the total success of the company. While certain decisions may be made by an individual or particular arm of the company large scale decisions are made based around democratic vote. If the company makes profits X the company as a whole determines what portion of that goes toward paying its workers and it is divided proportionally. The logic is that vested interests can no longer accumulate the lion's share of success in a few hands and that the success of the company as a whole truly does become the success of those who work within it. This also serves to preserve the basic functions of unions in ensuring proper working conditions and benefits without establishing an inherently antagonistic relationship in the process. As I see it this accomplishes much of the work promised by various wealth redistribution ideas without empowering some administrative entity to forcibly take it and distribute it based on bureaucratic rationality. That is, we have achieved the goal of socialist reforms without once raising the specter of government corruption or bureaucratic inefficiency. The autonomy and wealth remains with the people throughout.

There are more complex issues this system may alleviate as well. Yanis Varoufakis is an economist and was the Greek financial minister during the catastrophe Greece experienced after 2008. The full scope of how and why Greece found itself in that particular position is beyond the scope of this essay but I would recommend his books to anyone interested in that event. Firstly, the general reliance of the modern world on finance and banking has lead to a contradictory logic. That is, to maintain the flow of money through the circulatory system of the global economy we have had to (often in tremendous quantities) prop up institutions with public money at every turn. In his own words from Adults in the Room "the Darwinian natural selection process was stood on its head: the more insolvent a banker was, especially in Europe, the greater his chances of appropriating large chunks of income from everyone else: from the hard-working,the innovative, the poor and of course the politically powerless." The roots of this particular trend run deep for sure and we could talk for many books about the interlocking spheres of politics and economics but what I would like to indicate here is the massive damage caused when our current institutions fail and the near impossibility of making sure our great financial sacrifices actually pay dividends when it comes to real economic recovery and health. Simply stated we take money we could have spent on infrastructure or grassroots economic improvement and dump it down the drain in desperate attempts to keep the game going. What I am not arguing against here is the existence of government interventions or stimulus packages. Instead I'm arguing that the system is top heavy and poor at pushing funds downwards to initiate growth because the voices at the top are the loudest. If the share holders can be paid then it was a success.

In his Ted Talk Varoufakis also drew attention to what he referred to as the "twin peaks" problem, which described both a large total debt number and an enormous mountain of un-utilized capital. By his numbers (in 2015) there was 3.4 trillion dollars between Britain, the U.S., and the Eurozone invested in wealth producing goods (such as the machinery a factory may use in its production) but an even greater 5.1 trillion sitting idly in financial institutions being shifted around to push around stock prices. Money that could be used within the actual economy for any number of reasons instead ended up sequestered outside of it in the name of vested interests and the right quarterly reports (fundamentally). Now for the brevity's sake I'm obviously being pretty reductionistic about all of this but that's because what I want to indicate here is a pattern of behavior. The job of the company is the success of the company through time and that means it will spend it's money in those areas that best accomplish that goal, and while the logic of the system indicates that the best way to do that is to funnel funds heavily away from actual innovation, wages, infrastructure, etc. and into elaborate investment schemes in the name of keeping the right investors happy then we cannot simply fire a number of CEO's and tell the next one's to be better. Much like the earlier Pareto distribution this is a force that needs to be accounted for and undercut.

A common answer to the problem historically speaking has been various levels of government oversight. I think that the atrocities of the late 19th century provide sufficient evidence that no oversight at all is a disaster. I also believe that the actions of the EU after the last financial crash is proof that government oversight is insufficient. That and entire nation was driven near economic extinction by the European Union based around political strategies and necessities never discussed openly by a single leader or candidate provides elegant proof that the marriage between representative democracy and wealth-holders is too established to allow for real change. Again, to really get the full picture of this I can't recommend enough his own books but in short: Politicians made promises to their constituents about how they were going to end the crisis while keeping the bailouts small, those promises proved laughably short sighted but the economic stability of the entire region depended entirely on keeping certain banks from failing, an economic policy was set by institutions run by administrators instead of elected officials but how held so much power in the actual political arena that no politician could really argue with them, that policy required forcing Greece to take on ever larger piles of debt in the form of bailouts they were then forced to spend almost immediately as repayment to the banks in question, and Greece became the moral and political scapegoat for a great money laundering scheme in the name of preserving certain people's authority and the status quo in general. In other words a shell-game played with the lives of millions.

Much as with my points around the Pareto distribution I believe the benefit of an ownership model in this circumstance comes down to natural wealth redistribution. On a fairly broad scale the increase in wages leads to less reliance on debt tools by the populace as a whole, meaning that the is a reduction in incentive to build, invest in, and rely on such debt tools while simultaneously buffering the economy overall against the sort of cascading debt crises that can arise when these bubbles burst. At its core it accomplishes the goal of Keynesian economic policy (utilizing public funds intelligently during downturns to stimulate growth and preserve economic circulation) without the reliance on bureaucratic institutions to implement or manage them. It happens more naturally within the structure itself and leverages the same distributed decision making that allowed capitalist systems in general to accomplish so much. It has the added benefit of making financial circumstances as a whole much more transparent. If a company is going to be run democratically it needs to be highly open about all of its policies and decision making if only because the employee/owners would need/demand it when voting on new policies or company directions. Perhaps two can keep a secret but 20,000 seems unlikely. I'll get more into that point in the next section though. For here the logic works basically as such: keeping larger portions of the wealth generated in the hands of the populace as a whole keeps personal debt lower while simultaneously decreasing the amount of public debt necessary to keep the system propped up. This begins to de-incentivize directing huge amounts of labor power and capital into financial institutions as a whole and elaborate lending operations specifically which helps to take the razors edge off of our reliance on these institutions as a whole. While its unlikely to end the famous boom-bust cycle present in our current market system it may go a long way to buffering it against the incredible highs and lows we've gown accustomed to and lead to a more resilient and adaptable economic fabric. Finally, given that a larger portion of the decision power and the economic might inherent in companies is now in the hands of the populace as a whole the natural inclination of elected officials becomes to court the good will of the people rather than to simply gild their policies on camera while playing to the vested interests of the incredibly wealthy and influential.

My final point is easily the most broad, but also perhaps the most important long term. I've thought a lot about the various means of governance and come again and again to the conclusion that, long term, democracy is the model to build from. My arguments for this are fairly lengthy but I think I could sum it up around an evolutionary model. Given that the world is constantly in flux and the problems a society needs to address are both complex and every changing the problem of stagnation is constantly present. Even were one to build a perfect utopia in an instant it would become more and more outdated with every passing moment. A static structure cannot withstand a changing environment forever. The levers of power attract the unscrupulous and over time the system becomes corrupt. Laws that once held the peace become walls against progress or cannot account for changing technology or circumstance. Even shifting population size can make a hell out of a previously well oiled machine. What democracy brings then, fundamentally, is variation across time. The great problem that confronts a living organism is how to successfully react to a world too complex to grasp that never stays static. The tactic arrived at seems to have been to create a wide array of variations within the constraints of a particular model and those that best adapt propagate. This is the power of democracy.

Now I do not want this to be lumped in with the arguments around social Darwinism or any quasi-evolutionary justifications around economic disparity. Trust, empathy and sacrifice are so fundamental to success even game theory has demonstrated their necessity. Instead I want to use that as a model because what humans can do, better than any other creature we know of is abstract. That is we can model in the mind and implement through our bodies modes of being that never were before. At root the political system is simply the meeting ground of this ability and the rules that mediate it. The great strength of democracy is that, when healthy, it leverages pits the widest possible array of imaginative variations against each other and against the environment and keeps those most adapted to the circumstances. Given that we cannot predict the future we must take what has worked up until now (the species model) and find those variances that lead to the most beneficial outcome (genetic mutation). The are many high minded and often beautiful arguments for the "rightness" of democratic processes, and many of these are likely true. Regardless of elegance though the laws of the universe are both intractable and unforgiving and many a lovely idea has broken against their cliffs. That this political model takes notes from solutions maintained for billions of years though seems a strong point in its favor.

Still, I believe that any person living in the United States right now is aware that the right to vote is no magic salve to society's ills. In fact that same demos seems to (over time) naturally throw itself into the extremes of political turmoil again and again without any real sense of their own actions. Without a doubt there are reasons for this, some structural and others psychological, but a key part of the issue (as I see it) is that democracy takes work and investment; and we do not take that seriously in the least.

A vote is only as good as the thought behind it and we have done nothing to train our citizens to think politically. We've taught them to memorize facts, and we've taught them some political narratives, and we've trained them to become interchangeable workers in a competitive market economy. In short we have trained them to think ideologically and even then only when prompted to. Part of this is an inherent danger in representative democracy itself, and part of it is tied again to the commodification of individuals and information. This aside for now though any democracy will only be as strong as its members are. This means they need to be legitimately invested in the good of their society (not simply their pet causes or personal needs), they need to be informed and motivated to stay informed, they need to participate in actual debate and dialectic on levels small and large, and they need to be able to judge both the merit of an idea upfront and its efficacy over time. Anything less, no matter how well-intentioned, leaves open the door to those who are both willing to learn and willing to lie about the world they are voted into.

I am uncomfortably aware of just how monumental a task moving that particular needle is. Most of our "political education" is either so toothless as to be meaningless or unconcealed propaganda. However, given that, by and large, the better part of a person's conscious life is spent at work this may be a good place to begin. To bring the democratic process into business means giving people access to and a reason to focus on the intricacies and road maps of the company. Individuals are able to actively engage with the issues their company is facing, manage the ways money is divided and invested, discuss the level of involvement the business should have in things like benefits and childcare, and grow more familiar with issues around negotiation and trade. Moreover, while the actual impact of these decisions is not played out across an entire national infrastructure over the course of years or decades and communicated by pundits through statistics and rhetoric but is felt in the present and directly. That actual democracy is difficult is not in question, but outsourcing it cannot be our best answer to its improvement.

In addition to all of the above there is still the added psychological benefit of allowing a sense of purpose and agency in people's lives. Humans are goal directed creatures and staggeringly social. So much of our mental health relies on building strong relationships, our sense of accomplishment, and the positive recognition of our peers. That most people's jobs are simply a set of rote tasks performed at the direction of a company's perceived needs leaves little room for any of this and likely has untold negative impact on our collective mental health. That opioid use has increased dramatically, and that such use is tied heavily to mood disorders, is no longer in question; and while the reasons around our current mental health crisis are certainly complex I do not see a society built to foster resiliency. Instead I think we build a nest we will never live in comfortably, that encourages us to live isolated and ponderous lives with most of our relief coming through some form of consumption. And Sisyphus rolls the rock up the hill once more.

We require real meaning to buffer us from life's difficulties, goals and relationships that make struggling and back-sliding feel worthwhile. Without agency we court a collective learned helplessness that is anathema to solving the myriad difficult problems we face. Cultivating this, though, means pitting yourself against a challenge and seeing some kind of change occur and this is all but impossible in the corporate structure and labor market we have today. Life cannot be legislated, nor can it be commodified, it must be experienced and performed at every level.

I do not think that an economy of ownership is the solution to our problems. I don't see it as some final economic utopia or the harbinger of great revolution. The world has never stayed so still as to allow our plans to remain unassailable, and has never been so simple that we can foresee the consequences of our actions even a few years into the future. I do think though that we have reached a kind of Khunian paradigm point and that the flaws and anomalies in our model have hit a critical mass. If implemented a democratized market economy would itself be replaced (I hope) when it had run its course. As I see it we need to begin moving forward and to take count of what is worth keeping and what needs to be discarded, and I think this is a good first step.