Share and Share Alike

“Thou shalt not steal” being the Seventh Commandment, it follows that there are things that one can steal, and people from whom those things can be stolen; in other words, it follows that there is property. But what sort of thing is property? And how did it originate?John Locke’s answer was the labor theory of property, which holds that labor exerted upon nature was the original means of acquiring ownership. Now Mr. Locke is highly unpopular in some respectable circles, and I will own that treating his writings as Holy Scripture would be a misplaced loyalty indeed. But I would beg such partisans to give him the benefit of being at least no less than the proverbial broken clock, and to treat his property theory as one of his twice daily moments of accuracy. I believe the request is justified, not only because the theory was adopted by Pope Leo XIII in Rerum Novarum,[note]http://w2.vatican.va/content/leo-xiii/en/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum.html[/note] but also because there is a compelling intuitive basis for the doctrine.If a person picks an apple from a tree owned by nobody, few would argue that he hasn’t acquired a right to the apple in ordinary circumstances. The unconvinced might consider the alternative. If he does not have a right to the apple, then there is no wrong in someone coming along and taking it from him. Violence, then, would be a justified method of acquisition, and it would be hard to find many who would espouse such a theory. It is true that governments have arisen, exercising various levels of coercion as to human property rights, but we submit to them gladly if they competently make us secure in the continued possession of a sufficient residue of the things we claim to own. It is also doubtlessly true that some real estate initially came to be owned by first occupation, buttressed by sufficient violence offered to anyone who came along to remove the occupier. But occupation itself involves a kind of labor, such as travelling to the place to be occupied and mentally staking out the area to be defended.In the end, the labor theory of property is the result of reasoning about how the right to property comes into the world, reasoning that inexorably leads to the conclusion that any other foundation would be ridiculous. If there is a right to property that precedes society in the manner of natural law it is a right that must arise through human labor, since the only other method available would be violence, and the right to property wouldn’t be much of a right at all. But if there is no right to property as a matter of natural law, if it is only a societal convention, then there is no natural right to life either, since, as Pope Leo XIII pointed out, it is only by means of property that a human being can sustain himself. What’s more, if there are no rights such as these, existing prior to society, then there can be no wrongs in any absolute sense either. In that case murder would only be wrong in a society that said it was wrong, and the same would go for stealing. But we really do know better than that.It should be noted that the labor theory of property is not intended to be descriptive, but normative. It is a natural law theory that establishes the basis of ownership, and explains why property ownership is a natural right rather than a social convention or a right granted by a sovereign. Deprivation of ownership rights obtained by labor, then, is an objective wrong, regardless of positive law or social convention.But some property is still obtained through labor in modern society, only in a more attenuated way. Once again we can turn to Pope Leo XIII who made the observation that when a working person receives his wages, and with those wages purchases land, the land is his wages in another form. What has changed is not that property is no longer acquired by labor, but that the laborer is no longer restricted to the part of nature he is working on as the property he will obtain by his labor. Money paid in wages represents the abstracted value of a portion his labor that he can apply to purchase whatever he can afford. A working person does not, however, get the entire value of his labor in wages.In a typical business enterprise ownership shares are determined according to the amount of money invested. Employees who make no monetary investment do not, generally, receive any share in the ownership. But this practice does not take account of the labor value reflected in the business’s revenue. While money investment is certainly critical to bringing a product or service to market, the labor involved is equally necessary. Hence, Leo XIII’s maxim: “capital cannot do without labor, nor labor without capital.” Without labor, capital will be idle; without capital, labor will have nothing to do. Thus, when ownership shares are awarded only to the money investors in capital, the employees who do the work have the value of their labor expropriated from them to the extent that value is not covered by wages or salaries. But no business can pay its employees, in money, the entire value of their labor if it hopes to make a profit. So in every business where there are employees who have not invested money there is going to be some level of expropriation in the manner described.For justice to be realized in this situation it is necessary that the employees be adequately compensated for their loss. Leo XIII wrote that this can be accomplished by ensuring that a working person receives no less pay than what is necessary to support his family, and, with frugality, set aside a portion for his own investment purposes. But this would involve a major change in the United States.According to the 2010 census, the average household size in the United States is 2.58 people.[note]https://www.census.gov/prod/cen2010/briefs/c2010br-14.pdf.[/note] Now since there is no such thing as .58 people, let’s round up to 3 persons per household. The MIT Living Wage Calculator determines that in Polk County, Iowa, the county where Des Moines is the county seat, the living wage for a family of two adults and one child with one adult working is $20.40 per hour.[note]http://livingwage.mit.edu/counties/19153.[/note] If this seems shocking, I can only offer that exploitation of labor has become such an endemic feature of American economic life that a society where it does not exist seems strange and unreal. Consider that $20.40 is the same as $2.54 in 1960 terms,[note]http://www.bls.gov/data/inflation_calculator.htm[/note] when the minimum wage was $1.00 per hour.[note]http://www.businessinsider.com/the-real-minimum-wage-falls-every-year--heres-how-to-fix-that-2013-12.[/note]Certainly there would be loud protests in establishing an actual living wage as the minimum wage in the United States. One need only observe the response to paying fast food workers a mere $15.00 per hour. But there is an alternative. In Quadragesimo anno,[note]http://w2.vatican.va/content/pius-xi/en/encyclicals/documents/hf_p-xi_enc_19310515_quadragesimo-anno.html[/note] Pope Pius XI said it is advisable “in the present condition of human society that, so far as is possible, the work-contract be somewhat modified by a partnership-contract,” whereby workers and other employees “become sharers in ownership or management or participate in some fashion in the profits received.” Here is one suggestion for making that work:A business will have revenue for each fiscal year, and the productivity of each employee can be denoted by the revenue per employee, which is the total revenue divided by the number of employees.[note]http://www.investopedia.com/terms/r/revenueperemployee.asp.[/note] The difference between an employee’s individual revenue share and his wages or salary is the amount of expropriation, as described above, which has occurred in his case. But it would be highly difficult to determine his individual revenue share, especially if he was not a production worker or a salesperson. Thus we would use the average revenue per employee, subtract from that figure the average employee compensation in the business, and the difference would be treated the same as a money investment by each employee for purposes of distributing ownership shares.We would subtract the average employee compensation rather than an individual employee’s compensation, because using the latter method would result in lower paid employees receiving higher ownership shares, which would likely be less reflective of the value actually added by each employee. The method of assigning portions of revenue rather than profit would be used because it is the revenue that actually adds value to the business, which can be utilized for such things as wages or purchases of equipment, while the profit is what is left over after the value is added. Besides, the amount of profit can be easily manipulated by such means as paying exorbitantly high salaries at the top end. The consideration of a just distribution of profits would require the same level of management power generally enjoyed by general partners or owners of common stock, in proportion to ownership shares, except that some restriction on that authority would be necessary in professional corporations and partnerships where only professional expertise should be employed in reaching many pertinent decisions.By this method we could come close to resolving the disparity between the value added by people working for a business and their wages and salaries. It would represent, perhaps, the closest we could come to implementing the labor theory of property in a complex modern economy. Whether we ought to have a complex modern economy is, of course, an entirely different question.