The Ownership Crisis
It’s getting harder to remember life before, but we’re still in the early, “in it together” phase of this crisis. Barely. The stratification of society that was already here is becoming clear again. The gap between who has power and who doesn’t — already big — is getting bigger.
The economy has been divided into a kind of caste system. At the very top are the owners of technocapital — Bloombergs and Bezoses and whatnot: they’re a tiny class of mega-billionaires. They have more than they can ever spend — and a single one could have bought all the ventilators America needed. Just beneath them is a larger, but still very, very small class of their seconds and thirds and fourths in command. “Product Manager” here? “CFO” there? “Fund manager” here? You’re doing very well: you’ve probably got at least a mil or several in the bank, or in home equity, and you’re pulling down multiple hundreds of thousands, if not millions, a year.
Beneath them, though, isn’t the broad, expansive middle class of the 1950s American Dream. There’s just a vast, vast pool of the new poor. They can be divided up into the downwardly mobile former middle, and the abandoned working class — but that’s splitting hairs, really. Life in this class is about technological neoserfdom. The app, the platform, the algorithm is your boss. It tells you what kind of work to do, how much it’s worth, when to do it, and even monitors you to make sure you’re doing it fast enough, and with a smile on your face.
This class is the vast, vast majority of people — about 80%. It’s a class that already exists — the 80% of Americans who can’t make ends meet, live paycheck to paycheck, can’t raise a tiny amount for an emergency, and struggle to pay basic bills like healthcare and housing. The pandemic, though, made all that much, much worse — and it destroyed any hope that people beginning to be trapped in this class of neosurfs had of ever escaping it.
As the world hardens into an uber-wealthy top 1%, the next 19% serving as their lieutenants, and the remaining 80% stuck in a day-to-day with a downward trajectory, we’ll find ourselves in an unsustainable situation. Especially if the top 20% are unwilling to provide a safety net that makes upward mobility possible.
This hardening will reveal the root problem. Despite many people contributing to the tools and services that now dominate our lives, most people have no stake in them. To cite just one example, the four million people who drive for Uber probably own less of the company combined than a single dentist in New Jersey with Vanguard in their portfolio.
People with ownership — virtually all of whom are already wealthy — will become increasingly wealthier. People without ownership — everyone else — will become increasingly not. Soon it will be hard to see anything else.
The Ownership Crisis
As companies and their owners reap massive rewards (Uber’s valuation is up $30 billion since March), the rest of the population will be acutely aware of how un-rich they’re getting (36 million people unemployed right now in the US). News like Jeff Bezos becoming a paper trillionaire further fans the flames.
The media may end up calling this the next Great Depression. That’s missing the trees for the forest. This is an economic catastrophe for most people, but not for those with ownership. In the same way that the 1%/99% language became commonplace after the 2008 financial crisis, the ownership gap will become how we come to understand the Great Disparity of this one.
Ownership is inaccessible to most people. It’s either bought (through stocks/investments), created (starting something of your own), inherited (born lucky), or earned (employment-based equity). None of which are easy to attain. Few families have extra income to invest. Starting a business is harder than ever (entrepreneurship rates in the US are half what they were forty years ago). Jobs that offer stock options require expensive credentials.
The “essential workers” we’re relying on to provide our food, move goods, and handle the infrastructure of life right now? Their jobs don’t come with ownership. Ownership is reserved for those on top. Essential workers get applause at 7pm instead.
This moment is revealing how unjust this system is. It’s going to provoke a values crisis the longer it goes on.
As we’ve previously discussed, values function like a tech stack. At the root level are moral beliefs. Those moral beliefs are then expressed as rules and incentives that shape how that value is expressed.
At the root moral layer of the Values Stack of ownership is belief in private property. Ownership is something we think of as individualistic. Something is either mine or yours. Rules dictate how ownership can be acquired and exchanged (the pathways I laid out earlier). The incentives are the financial returns ownership provides.
The ownership Values Stack is functioning as it’s meant to based on the moral beliefs that underly it. It’s also creating unjust conditions for an overwhelming amount of people at the same time.
A values crisis can’t be solved by tweaking the rules or incentives. Crises require a deeper moral response. This crisis will produce a new value: collective ownership.
Collective ownership can take a number of forms: unions, Employee Stock Ownership Plans (ESOPs), and stock options are all related. But the most important means of collective ownership will be the resurgence of an old model: the co-op.
Co-ops are businesses owned and controlled by the people who are employed by them and depend on them, rather than outside investors. Because of their focus on self-sufficiency rather than growth, co-ops have higher survival rates than normal businesses. Even now. According to a report last week the Park Slope Food Co-op in Brooklyn is proving to be especially resilient during the pandemic thanks to its structure.
Co-ops haven’t had much online impact even though the internet offers the potential holy grail of collective ownership. Imagine Instagram where all the users collectively own Instagram. Or Tidal except not mostly bullshit. This month a startup called Ampled launched that does exactly that. (I’m an advisor to the company.)
Ampled is a Patreon-like subscription service for musicians structured as a co-op. As a co-op, Ampled is completely owned and controlled by the musicians who use it and the workers who built it. Ampled is initially funded through debt instruments that give investors zero equity and that cap financial returns at 3x their investment (you can see the deal structure here).
Ampled’s competition is Patreon, a service with more than $150 million in venture funding. Based on traditional metrics Ampled looks like a lesser version of the status quo. When the value of equitable ownership (or lack thereof) is factored in, however, Patreon isn’t even in the ballpark.
That’s the crazy thing: if the value set expands to include equitable ownership, the existing players can’t compete. They’re locked into the old paradigm the same way they’ve locked us into their services. If a new social network launched with collective ownership core to its offer, Facebook’s ownership structure would prevent them from copying it. Because Facebook, Patreon, and others are wedded to the previous paradigm, their structures are fundamentally incompatible with a world where the values of ownership have changed, as Ampled cleverly lays out in this blog post.
This is all a very big if. This only happens if ownership becomes a critical value. While some artists resent being neoserfs on the land of corporate giants, others are grateful for the traffic. A model like Ampled’s can reach mass adoption if ownership becomes a key value in the public consciousness.
That’s a long road but it’s not just Ampled paving it. Stocksy pioneered the web co-op model and are still going strong. Savvy, a health care co-op, recently announced funding from prestigious early investors. Thanks to work by these organizations and an attorney specializing in co-ops named Jason Wiener, there’s now a playbook for future co-ops to follow. This guide to starting a co-op is a great place to start.
There’s a bigger reason to be bullish, too. The desire for ownership is a place where the needs of the bottom 80% — locked out of the existing system — and the 19% — deputies to the bosses of that system — can meet. When ownership is more evenly distributed, everyone wins. Only the 1% lose out.
The Growth of Non-Growth
By the end of the decade, every category will have a co-op player. Some of these will fail. Others will replace the existing “do-gooder” players in their category with a “do-better” offer. Many more will break up larger markets into smaller, more directly owned ones. After globalization is Balkanization.
We’re moving towards the return of what Foreign Policy calls “the natural economy.” An economy that strives for self-sufficiency rather than growth. This is exactly what the co-op model enables. This is also exactly what our existing system considers irrational. Co-ops don’t motivate with the mirage of potential lottery-ticket growth. They fulfill our deeper need for resilience and reliability. It’s hard to imagine what could be more valuable during times like these.
The transition to self-sufficiency will lead to a decline in top-line economic growth. Because people will be working for the wellbeing of themselves and their communities rather than increasing the wealth of stockholders, GDP and other metrics will decline. A period of conscious economic degrowth will begin. The wellbeing of many communities will start growing instead.
This will be messy. Especially as it marks the end of an empire, as Foreign Policy notes:
[This moment is] similar to the unraveling of the global ecumene that happened with the disintegration of the Western Roman Empire into a multitude of self-sufficient demesnes between the fourth and the sixth centuries. In the resulting economy, trade was used simply to exchange surplus goods for other types of surplus produced by other demesnes, rather than to spur specialized production for an unknown buyer. As F. W. Walbank wrote in The Decline of the Roman Empire in the West, “Over the whole [disintegrating] Empire there was a gradual reversion to small-scale, hand-to-mouth craftsmanship, producing for the local market and for specific orders in the vicinity.”
When frayed social bonds make operating at a collective scale impossible, people turn inwards instead.
The economy has been all about scale over the past fifty years. But we’re about to think about scale and ownership very differently. The next great organizations won’t be the ones with the shiniest bells and whistles. They’ll be the ones that share equitable ownership based on a wider set of values. Collective ownership is a next step towards a more generous world.
Picture two potential paths for an entrepreneur:
- Path #1: Have an idea, raise venture capital, blitzscale to get as big as possible as fast as possible, attract bigger players to buy you, cash out.
- Path #2: Have an idea, implement it as a co-op with a community of people who share your vision, decide from the beginning how big the organization/service will be, operate within those margins with your community for the foreseeable future, survive good times and bad.
- Before COVID-19, Path #1 was the socially valid path. Path #2 was derisively called a “lifestyle business.” Now these two paths look very different.
How to Start a Cooperative by Ampled cofounder Austin Robey.
Great essay by Rutger Bregman: “The neoliberal era is ending. What comes next?” Very closely echoes many of the ideas in my book.
Reddit introduced community-owned cryptocurrencies, a blockchain approximation of a new ownership model. This might be how established platforms experiment with quasi-distributed ownership.
The entire Foreign Policy article “The Real Pandemic Danger Is Social Collapse” is worth reading.
As rent payments dry up, home buying activity is picking up. Another sign of the Great Divergence. For the wealthy, a potential depression means the world is on clearance.
Half-baked theory: In the future there will be 100 companies, 10,000 countries, and 10,000,000 co-ops.
“To tear down the walls of the state is not to create a world without walls but rather to create a thousand petty fortresses” — Henry Sidgwick