Property 101

Teal Deer

TL;DR

I lay out how property is an engine of inequality in society, and why property ownership, tax law, and inheritance law are critical to fighting inequality and oppression in society.

Note: This is an edited transcript of an educational segment I did for a meeting of the Pittsburgh DSA. It is basically a primer on property, how it translates into power, and the importance of breaking the connection between property and power, which is central to the struggle of socialism. I’ve also included a PowerPoint version of the points of this post at the bottom, which might be easier to read.

This segment is mainly informed by casual observations from my life and reading I’ve done for personal interests (in particular, I’ve done a lot of reading on copyright law because I became randomly interested in it, and that is reflected in the examples I use here). Because of that, it is jargon-less and accessible to a general audience.


For this educational segment, I want to focus on property and how it generates power differences in society. Private ownership of certain types of property is a central part of capitalism (in contrast to socialism). By reading this post, I want to get people thinking about different types of property, how property is a way of generating income without work, and how that property of property becomes an engine for inequality in the world.

First, types of property: in this post, I’m going to separate property into two types: Property that is in use by its owner (or personal property) and property that is used to generate profit (or capital). Personal property is the stuff you use in your daily life, like your phone, computer, food you eat, furniture you use, cash you spend or plan to spend, and so on.

Capital (that is, property that is used to generate profit) includes tools/materials used to make stuff that can be sold (for example, art supplies that are worked on by an artist to create a painting). Land that is rented out for others’ use is also capital. At a bigger scale, types of capital include industrial equipment used in factories, and tracts of land containing natural resources. Capital also includes the intangible, like money that is invested (i.e. not used) in order to increase its value. This money is called financial capital. Intellectual property such as patents and copyrights are a form of capital as well.

It’s important to distinguish between personal property and capital. Both are important to socialist goals. Personal property is strongly tied to meeting people’s needs for shelter, food, fun, and personal identity, which socialism has a goal of ensuring. But the private ownership of capital — which people call private property — is strongly tied to inequality, which socialism has a goal of impeding and dismantling.

Regardless of the type of property, property is tied to power. Owning property allows people to engage in rent-seeking behavior. The classic example is this: imagine “a feudal lord who installs a chain across a river that flows through his land”. He then hires a collector to charge a fee to boats to lower the chain. Neither the chain nor the collector have added anything valuable to the world, and the lord hasn’t created any improvements to the river. All he did was find “a way to make money from something that used to be free” (from Wikipedia).

This example shows how ownership of property can create power, because people who own stuff can withhold it or control how people use it. Not only that, this control can be exploited to get more money (which is both property and can be used to acquire more property of other types). So owning property generates power, which generates more property, and more power and so on. Sometimes it does this while also adding value to the world, but sometimes it doesn’t even do that, as the river chain example shows.

So property creates profit and power. In particular, property has the ability to create profit without work, which I think is a particularly dangerous scenario. Here are some examples: First, renting houses. Of course, the landlord has to put money and work into maintaining the property. But the money they collect from rent gives them profit on top of that, which they are entitled to collect by virtue of being the sole owner of the land.

A similar situation plays out in companies as well. Each employee provides value to a company and is compensated for it. If a company is profitable, however, then even accounting for all the employees’ payrolls and other expenses the company incurs, the company makes money on top of that. Some of this profit is reinvested into the company, while a portion of the profit is given as dividends for the owners and shareholders of the company. Like with the landlord case, the ability to collect profit is a function of ownership, not work. In other words, the people hired and the equipment bought generate more resources for the company than are spent on them. The owner(s) of the company collects that gap as profit. (And notably, under this system, more profit can be collected by driving down wages wherever possible i.e. for the more precarious employees for whom leaving the company is risky. Therefore, employers are incentivized to squeeze profit from their own workers, and it’s the ownership of the profits and the power differential between employer and employee that allows this process to happen.)

One final example of how property creates profit without work: copyright. While copyright is one way to ensure artists can benefit off of their own work (which is arguably a good thing), the current length of copyright lasts life + 70 years. This allows the inheritors of someone’s copyright (descendants or companies) to benefit off it for roughly three generations after the original author dies. It was not always this way — copyright in the U.S. initially started at the length of 28 years (in 1790). In 1831 it was changed to up to 42 years to match European law. In 1908, the international standard became life plus 50 years. The current length has been in place since 1998, and was lobbied for by copyright-holding companies who served to benefit from the extension. Again, a way in which money (property) translates into power and more property.

The length of copyright and the way it allows people to benefit off of other people’s work means it forms a kind of inheritance. Let’s think about inheritance and the longevity of the profit-generating property passed from parent to child. It is understandable to want to provide for one’s children and leave them more secure and better off than their parents, but I would argue that once your children become adults, it becomes their duty and their life’s work to provide for their children, not that of their grandparents or long-dead ancestors. It may seem like an obscure thing to care about, but inheritance law is absolutely critical for limiting how much descendants can profit off work their parents or grandparents did i.e. profit without working. It is for this reason that figures like Thomas Jefferson and Alexis de Tocqueville opposed the practice of primogeniture as an anti-aristocratic measure and, in Jefferson’s case, argued that the interests of society generally could trump dead people’s preference in how their property should be distributed.1 They recognized that the choices we make about inheritance law can accelerate the accumulation of property and power or slow it down.

The ability to make profit without doing work has strong implications on power dynamics. People have a limit of how much work they can do every day, so if profit is tied to work, there is a limit to how much profit every person can make. However, when you can profit without work, which is something that a notion of private property allows for, then your ability to collect money (property) is not limited by your human capacities. In this situation, people can greatly consolidate power and more property.

Taxing the rich is a per se good because it forms a check on the rich and powerful

Disrupting this reinforcing relationship between property and power is a core goal of socialism. Key to this goal is having the awareness of how profit-generating property (capital) is owned; how private ownership of capital affects how profit is distributed; and how this setup affects power relationships. People often talk about taxing the rich in order to fund high-priority social programs such as universal healthcare or jobs programs or retirement funds. The humanitarian good that these programs do is huge and extremely important. But the case for taxing the rich goes beyond these benefits — even if not a single needy person benefited from wealth redistribution, taxing the rich is a per se good because it forms a check on the rich and powerful. A program that redistributes from the wealthy to the poor is the most effective way of safeguarding a democracy.

Property has two sides: on the well-meaning side, personal property is tied to comfort and meeting needs. We accumulate property so that we can leave our children with a less precarious life, and for security for unexpected life events. The darker side of property is when there is runaway property accumulation for the sake of accumulation; when mediocre people live off the work of their parents; and when the rich use their vast amounts of surplus money to buy governments. When inequality is high, we fail to provide for the former and fail to prevent the latter. In short, I call on people to think of ways we can restructure society to stop people from using property to consolidate power while also ensuring people have access to property that meets their basic needs.


1 De Tocqueville on abolishment of primogeniture as an anti-aristocratic move (including how it affects the psychology of people who leave an inheritance): https://www.marxists.org/reference/archive/de-tocqueville/democracy-america/ch03.htm Jefferson arguing that society has the right to impose its will on the property of the deceased: http://press-pubs.uchicago.edu/founders/documents/v1ch2s23.html

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2 thoughts on “Property 101

  1. Interesting article. I think one of the main things that would have to change in society is that society would have to go from an everyone looks out for themselves society to one where everyone is selfless. A couple of other points to consider. I’ve heard people make the argument that increasing taxes on the rich or companies just leads to increased prices – since the rich are in power and selling something, they can just raise prices to compensate. You said that taxes on the rich are good. How does that assumption stand up this case? Also, why is creating profit without a work a bad thing? You could consider programs like Google or robots that build cars as something that builds profit without work. Are they bad? Also what about people who do investments and market making. Are they useful in this case? If we limit people to only personal property, would we remove the incentives from our system that cause people to innovate and take risks?

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  2. Sorry for the really late reply! I definitely agree a society where people are more selfless or communal (i.e. looking out for other people not necessarily out of *lack* of self-interest but because taking care of other people and knowing they will take care of you when life is hard is actually *in* your self-interest) is part of what we’d need.

    Regarding your first point, I don’t really have a good answer here. The reality that the rich can jack up prices to keep their profit margin high is part of my issue with the system of private property which entails private profit. I don’t think it would be sufficient to merely tax high-income people more — you’d also need to check their power to set how much they profit in the first place. There are many ways to do this — for example, pay caps; a system where the workers in a company collectively own the profits and can decide how they would like those profits to be distributed or reinvested in the company (i.e. collective ownership, which entails collective profit); regulation that limits monopoly power that allows people to set prices with impunity; etc. I think some of these options are better than others but undoubtedly there are a lot of possible options here.

    Regarding your second question (“why is creating profit without work a bad thing”), I think we need to make a distinction between “creating profit” and “creating value/productivity”. Technological progress is something that allows us to do more (be more productive) with less work — this is good! The ability to accomplish a lot with little effort is wonderful for society and is why living standards increase over time. If by “creating profit without work” you mean that the tools of society help us do more for less (I call this increased productivity), I don’t have an issue with that at all. I view profit to be a very different concept than productivity, though. Productivity is the useful things that the robot or other tool makes possible; profit is converting those useful things into material gain. Creating more stuff for more people seems like a win for humanity overall, but it’s not clear to me what allowing people (especially a very small group of people) to monetize that increased productivity does for society. If you think about how people use technology a lot today (roads, advanced farming, gadgets, internet, electricity, household appliances, computer programs, robots, and so on) very few of them actually monetize the labor produced or saved by these devices. So who actually is able to “profit (like, in the sense of monetary profit and not the sense of “receive the useful benefits of”) off of automation and technological advances” in our society today is something worth thinking about.

    Regarding your last question (incentives to innovate), in the case of forming a start-up, for example, I do not think removing private ownership conflicts with the ability to make a profit. The way I envision companies is to make them democratically run and collectively owned. When the company is starting up, the team is small and has a lot of control and a large slice of the profits; as it gets bigger, the profits are distributed over a larger number of people, but there is still the ability to profit even without private ownership. When it comes to intellectual property (in particular, patents), people have often discussed that limiting the period of time that someone can exclusively profit off their innovation is actually important for encouraging innovation. Allowing people to benefit too much off a single creation is bad for innovation as well. So yeah, I do think that people will continue to innovate even if the material benefits of innovation are cut down.

    I’m not sure what your question is regarding investment and market making. Is this related to your question about whether this is bad because it’s profit without work, or is it related to your final question about affecting people’s risk-taking and innovation?

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