On Economic Ownership

posted on Dec 1st, 2019

Should the bank be allowed to demand a proportion of my output because they gave me the money to purchase my house? I’m a remote software engineer and my house is my office, I use it to produce quite a bit of value.

If an investor gives me the money I need to buy tools and spend the time necessary to create a business, he’s allowed to demand a share of ownership of my output (of that business), in return.

A house - Attribution: Scott Webb (https://unsplash.com/@scottwebb)

When that business hires someone, it is allowed to demand complete ownership of the output of the person it hires, and return only a portion of it to that person as salary.

We’d all agree that the bank demanding ownership of my output in return for my home mortgage is absurd, but we take the other two relationships for granted.

A free market libertarian would claim that these are all voluntary contracts between free people, and I’d be free to tell any of them to go to hell.

But indentured servitude was a voluntary contract between free people, and we’ve all agreed that it was too abusive, too exploitative to be allowed. We’re not allowed to own people, even temporarily.

So why are we allowed to own their output?

Capitalism doesn’t mean “free markets”. Capitalism is an economic system where we allow investors and banks to buy the output of other people, in return for money.

And there is an alternative. One that doesn’t involve handing over control of the economy to government central planners.

Democratic socialism is an economic system where you own your output, and no one is allowed to buy it from you.

When you grant your output to a business, you gain a share of ownership of that business (for as long as you are a participant in it) and a voice in its governance. If you need money to start a business, you can get a loan and pay it back with (reasonable, regulated) interest. When you go to hire someone, you have to give them a share of ownership and a voice that matches their contributions.

This is Democratic Socialism: a democratic economy, where we’ve overthrown economic tyranny just as we did political tyranny.