Partial Common Ownership
Description
"A better approach is to find a way to balance the demands of investment efficiency and allocative efficiency. We will call this approach “partial common ownership”—a halfway house between common ownership and traditional private property. Partial common ownership optimizes allocative efficiency and investment efficiency within a single property regime, as the common ownership can deter monopoly power while the private ownership encourages investment."
(http://assets.press.princeton.edu/chapters/s11222.pdf)
How-To
HOW PARTIAL COMMON OWNERSHIP WORKS
Matt Prewitt and Jack Henderson:
"Partial Common Ownership separates the layer of efficient use from other layers of responsible governance, by “splitting” a conventional asset into two new kinds of assets. The first is a PCO license, entitling a steward to act as a kind of owner for a period of time. The second is a PCO residual, entitling its stakeholders to exercise certain governance powers over the asset, and to receive fees from the steward.
The PCO license is an explicitly economic interest, with strong incentives for efficient use and management of the asset. It is a form of equity, making it unlike a rental interest. But unlike conventional ownership, it is temporary. At the end of the stewardship period, the PCO license returns mandatorily to a public or semi-public auction block; such periodic auctions serve as a check on economic power in the same way election cycles are a check on public power. The outgoing steward may bid in this auction and win it—thus retaining possession—or lose the auction, so that possession of the asset passes to the next steward. Crucially, the winning auction bid is paid to the last steward. This means that the steward is proportionately rewarded for any increases in the asset’s value during their tenure, and penalized for decreases.
At the time of each auction, a fee—a percentage of the winning bid—is collected and passed to the holders of the PCO residual. The residual is an explicitly political kind of interest, so it is strictly non-transferable; it cannot be sold. The residual holders’ identities could be defined in different, dynamic ways. For example, in the case of a land parcel, the residual holders might be the (changing) set of people who live near the parcel, since these are the people most harmed by exclusion from the parcel, and the people whose activity most affects the parcel’s value. They are, in a rough sort of way, the parcel’s demos or stewards of its “natural capital.” They would be able to make political decisions about the parcel, like determining what would be acceptable use practices and who would be responsible stewards (consistent with broader fairness considerations)."
(https://www.radicalxchange.org/media/blog/pco-a-new-model-of-ownership/)
Discussion
Matt Prewitt and Jack Henderson:
"Most other calls to rethink capitalism recognize as we do that important sources of value and productivity are “upstream” and non-marketized factors like physical and social infrastructure, invisible work within families and communities, etc.—which are much more distributed and networked than the wildly distorted and inequitable outcomes in capitalism lead us to believe.
But they do not question conventional ownership itself. Instead, they usually seek to either divide and fractionalize ownership (i.e., give more or different people a share of conventional ownership); or consolidate ownership (i.e., place it in the hands of some representative of the public, like the state). Both of these approaches often do good, but they are only band-aids. Fractionalizing ownership just “spreads around” the same old extractive incentives of conventional ownership, while consolidating ownership “puts all the eggs in one basket,” intensifying the risks of institutional capture and illegitimate representation.
PCO takes a different path. It is based on the idea that temporary use licenses, subject to community governance and what we call “self-assessed” fees, are both a fairer and more efficient way of distributing power than conventional ownership. This matters, because the most compelling justifications for conventional ownership rest on the supposition that it incentivizes owners to invest in the things they own. PCO speaks not only to social justice and environmental concerns, but also to the same efficiency concerns that are usually cited to support the status quo."
(https://www.radicalxchange.org/media/blog/pco-a-new-model-of-ownership/)
PULLING THE PIECES TOGETHER
Matt Prewitt and Jack Henderson:
"Partial Common Ownership is complex. It equips us with a new set of dials, such as the turnover rate, the period of time PCO licenses last, and the identities of the residual holders. But we’re not sure it’s much more complex than the ownership structures that already pervade society, and because those dials allow for a more efficient and fair political economy, we think communities will appreciate having them—especially now that AI can help us process much of the complexity in powerful new ways.
For example, AI can help communities set efficient tax rates; calculating turnover rates are data-intensive predictions. AI could also help define and represent the set of stakeholders that should govern and benefit from PCO residuals. Take a land parcel. Its stakeholders should certainly include the humans that live and work near the land, thereby supporting one layer of its value; and it may also include more general actors, such as the city (another layer of its value), or representatives of biospheric or ecosystem-level interests (still another). The set could be defined, challenged, and revised – with all due process – by a judicial test, an administrator, a democratic process, or some combination of those, being assisted by AI. And in negotiating over regulatory-style guidelines—such as what kinds of uses are appropriate, who is eligible to bid to be a PCO steward (while being consistent with broader anti-discrimination rules), and the fees and rates those stewards are subject to—all of these stakeholders could either actively represent themselves, or deputize AIs that they have instructed to pursue their abstractly-defined interests, so the system wouldn’t require any unrealistic degree of stakeholder engagement.
The likely role of AI in a system like this might make some uneasy. We understand that unease, but mostly do not share it, for the following reason. AI will improve and get deployed throughout economic life whether or not we transition from conventional ownership to PCO. And in a world of conventional ownership, it will enable the people with the best command of it to essentially hijack our outdated property rights regime and thereby accumulate an ever-greater share of economic and social powers. In a world of PCO, super-powerful AI might instead enable an ever-finer-grained assessment of who and what ought to share in assets’ passive gains. It represents a redirection of the affordances of the technology toward wise resource stewardship and an egalitarian distribution of power, instead of its compounding concentration.
The early stages of reimagining ownership relations cannot express every aspect of a big vision like this. But we have to start somewhere!"
(https://www.radicalxchange.org/media/blog/pco-a-new-model-of-ownership/)
More information
- More at [1], pp. 52+
* Article: PCO: A NEW MODEL OF OWNERSHIP. Matt Prewitt, Jack Henderson. February 20, 2024
URL = https://www.radicalxchange.org/media/blog/pco-a-new-model-of-ownership/
"In this piece, we step back and describe a broad vision for how PCO could help weave a fairer and better-governed society. We’ll begin by comparing conventional ownership and universal forms of communication, discussing how both oppress complex networks as much as they may connect them. We’ll then describe why PCO offers a gentler, less “noisy”, and more “layered” alternative to conventional ownership. We’ll conclude with a few words about how super-powerful AIs might make PCO more workable; and conversely, PCO might make a world of powerful AIs more just and livable."