Property as power: A theory of representation

Inequalities in wealth are a major concern in societal debates today (Atkinson, 2015; Piketty, 2014). Economic analyses abound showing that wealthy individuals and corporations can achieve commanding heights in the economy. They dominate more vulnerable parties, such as workers, consumers, members of less developed countries, the natural environment, and democracy itself (Christophers, 2019; Eeckhout, 2021; Mazzucato, 2018). How to respond to private owners imposing widespread negative effects on non-owners? Liberal-democratic theory and practice responds to this problem of ownership power by subjecting owners to the power of the state. The state apparatus is called upon to regulate owners in the public interest. Through state regulation imposed on owners, the interests of non-owners are represented indirectly. I call this “the regulation model.” The main claim of this paper is that liberal-democratic theory and practice should end its exclusive reliance on the regulation model and expand its toolkit of representation with an “incorporation model.” Under this model, non-owner interests are represented directly, by those who are owners, when they make decisions about how to use their assets. In most cases, this requires that property is incorporated, that is, transferred to a corporate legal structure, in which owners are held to account by non-owners. Representation is a key notion in political philosophy, expressing the demand that political rulers should rule in the interest of citizens, who can hold them to account for doing so. The present paper offers a systematic application of this concept to the powers granted with ownership. After an introduction of the regulation and incorporation models (Section 2), the first step is to identify the non-owners whose interests merit representation. Here I argue for a representation imperative: when the purposes determined by owners lead to structural effects on third parties, then these have a claim to be represented. This is an application of the all-affected principle, similar to the principle's application in the context of the boundary problem (Section 3). In the second step, I argue for an incorporation imperative: where non-owners are affected and state regulation is unable to represent their interests, then an incorporation structure should be imposed, through which non-owner interests are represented (Section 4). As a third step, I argue for a power-sharing imperative: to organize accountability, owners and non-owners should share power within the incorporated structure. Owners should not operate as independent trustees who can decide how to represent non-owners without any checks and balances; but nor should they be mere delegates of non-owners (Section 5). In Section 6, I respond to an egalitarian objection to my proposal, that is, that redistribution, not representation, is needed to tame ownership power. Finally, I reflect on some further questions about the relation between the incorporation and regulation models (Section 7). In this section, I contrast two models for taming ownership power; the regulation model and the incorporation model. The regulation model is the standard model in liberal-democratic theory and practice. I argue that it has its shortcomings, which leads to a regulation gap. The incorporation model can help representing the interests of non-owners whenever there is such a gap. The core of “liberal-democratic theory,” as I use the term in this paper, is that a legitimate political relation is a democratic-representative one. This has become the standard view in political thought and practice.1 I will follow Urbinati and Warren in their definition of democratic representation. Democratic representers “(a) must be authorized to act; (b), they must act in a way that promotes the interests of the represented; and (c) people must have the means to hold their representatives accountable for their actions” (Urbinati & Warren, 2008, p. 393). Under this definition, representation is summarized by the first two conditions. Representation becomes democratic through the addition of the final condition. In the political context of the relation between rulers (persons holding political power, like government officials and parliamentarians) and citizens, representation is a solution to the exercise of arbitrary power. Without representation, rulers can negatively affect the lives of their citizens without the latter being able to prevent this or object to it. The solution in liberal-democratic theory is to establish a relation of representation. Rulers are to rule on behalf of their citizens. This changes their merely causal power into a normative power, based on law. The relation between rulers and citizens becomes a reciprocal one. Liberal-democratic theory also has implications for thinking about property. Owners receive their normative powers from the state, which legislates and enforces property laws. These powers enable owners to “rule over” the objects over which they have an ownership claim. However, given that this is an enforceable claim, ownership power also shapes the relation between an owner and all others, who are, with respect to the same object, in the position of non-owners. Non-owners have a duty to respect the owner's right over their things. State empowerment of owners vis-à-vis non-owners hence also gives owners causal power over non-owners.2 The owner of the only water well in a desert area can determine whether the thirsty person lives or dies. Owners of crucial resources have potentially vast powers over the fate of non-owners. Through the management of resources, owners can shape the lives of countless citizens. This is potentially as much an exercise of arbitrary power, as the arbitrary power of political rulers (tyrants and dictators). Should it also be turned into a normative power, by being subjected to effective demands of representation by citizens? In the liberal-democratic model, the only way to ensure that ownership power is not exercised arbitrarily, is by subjecting it to regulation (see the left-hand side of Figure 1).3 Non-owners are deemed to mobilize their representative relation to political rulers (the state) to press their demands. Owners can do the same. The democratic state then arbitrates these demands and formulates the public interest in question. Where non-owners' claims against owners are deemed to outweigh owners' claims, the state regulates the owners' exercise of their property rights. 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