In 1829, James Madison predicted the size of America’s population in 1930. Dividing his estimate by the number of acres of arable land, he drew an unsettling conclusion: “there will, in a century or a little more, be nearly as crowded a population in the United States as in Great Britain or France.” His specific estimates proved inaccurate, but the basic point was sound. As the population rose, the country would eventually run out of land.
This was a serious problem. For many early American political thinkers, property ownership was the bedrock of political stability. As Thomas Jefferson wrote to Madison earlier in their careers: “[The] unequal division of property… occasions the numberless 3instances of wretchedness which… [are] observed all over Europe.” This conclusion did not prompt him to support total equality. “I am conscious that an equal division of property is impracticable,” Jefferson wrote to Madison. “But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind.”
Many of the founders saw a cautionary tale in this “wretchedness” caused by Europe’s unequal distribution of property. Thomas Paine perceived in the bloodshed of the French Revolution a clear argument for some redistribution of wealth. He proposed a tax on landowners that would fund a distribution paid to “every person, rich or poor.” Paine’s suggestion parallels modern proposals for a universal basic income. In contemporary thought, jobs function as the new land: a vast but not infinite resource that will contract in the future. For Madison, finite territory and a rising population would gradually concentrate wealth and create dangerous levels of inequality. Today, automation is invoked as the force that will decrease the supply of jobs, with similar results.
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As long as America had vast reaches of seemingly unclaimed land, the solution to many thinkers appeared simple: send the poor west. George Washington described the “opening prospect in the back country for adventurers… where an enterprising man with very little money may lay the foundation of a noble estate.” Thomas Jefferson claimed that America “opened a certain resource to the unfortunate and to the enterprising of every country and insured to them the acquisition and free possession of property.” The fact that Native Americans already inhabited these regions was given little moral weight.
Madison recognized that this strategy could not work forever in a democracy. If a few people own nearly everything, one way to protect this arrangement is to drastically restrict voting rights so that a majority cannot vote to redistribute the wealth of the minority. As Madison wrote: “The proportion being without property, or the hope of acquiring it, cannot be expected to sympathize sufficiently with its rights to be safe depositories of power over them.” Voter suppression campaigns, including recent attempts to restrict voting rights in America, suggest the truth of this view. It’s hard to reconcile pronounced wealth inequality with genuine democracy.
Rather than decreasing democracy, increasing the number of property owners is possible. Jefferson realized that if the security of property rights depends on how many people own property, the conclusion is clear: “It is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.” Even with massive territorial expansion, however, a rising population meant it would become mathematically impossible for everyone to own land if a few people owned most of it. Assuming some natural limits on resources, it’s not always enough just to let the poor have more. The rich may also need to have less.
This conclusion may seem radical, but it’s at the heart of the most influential defense of private property in the modern European tradition. In his Second Treatise on Government, seventeenth-century English philosopher John Locke, whose writings deeply influenced the American founders, argues that while the earth belongs to God, humans own their capacity to work. Our labor, when mixed with the fruits of the earth, justifies exclusive ownership of portions of land. Stripped of theological packaging, his argument captures a deep moral intuition: our capacity to work justifies some private ownership of the results of that capacity.
This places heirs and passive investors in a dubious position, but Locke further restricts his claim with what’s sometimes called the Lockean proviso. Private ownership of land is justified only so long as “there is enough, and as good, left in common for others.” One implication of this proviso is quantitative. We should accept some weakening of property rights as human population density outstrips the supply of land. A second implication is qualitative: if the remaining land is not “as good” as what is held privately, this also argues for some redistribution.
In the more agrarian economy of Locke’s age, the case for leaving “as good” land to others was bolstered by the fact that no one can farm marginal landscapes like deserts, swamps, or rocky wastes. Today, it’s tempting to assume that forces of technology and progress have freed humanity from dependence on anything so humble as water or soil. As the climate crisis shows daily, however, we remain vulnerable to the destruction of ecosystems. This justifies an extension of Locke’s proviso to cover the degradation of nature: when owners use their property to diminish or destroy what is “left in common for others,” their claims to ownership are undermined.
Locke needs updating in a second respect. Our economy revolves around capital, not land or real estate. In 2021, only 24 of the 400 wealthiest Americans compiled in the Forbes annual rankings owed their fortunes to real estate. Vast amounts of money are now made by investment in markets and private equity. Investors who control huge ownership stakes in corporations are functionally equivalent to the landowners in Locke’s day who controlled so much land that not enough was left for others. If a company’s investments or activities degrade the natural world, this also triggers the Lockean proviso, especially when “others” include future generations.
Henry Ford, John Rockefeller, and Andrew Carnegie supported to different degrees the establishment of profit-sharing plans that gave workers some ownership shares in the businesses they helped operate. Their motives were not altruistic. Ford saw such policies as a way to decrease unionization and boost productivity. Rockefeller established a relatively generous employee ownership plan at Standard Oil after striking coal miners, who worked for a company partly owned by Rockefeller, were massacred in Colorado. Carnegie claimed that “profit-sharing and stock-owning plans have been vindicated by unusual success from every point of view, particularly in improving the relations between employers and employees.”
The fact that contemporary conservatives—from Mitch McConnell to George W. Bush—have championed employee ownership may suggest that the rich still use it just to avoid revolution, regulation, and unionization. Some critics today regard the embrace of limited employee ownership by private equity firms like KKR & Co., the third largest in the world, as a ploy to divert attention from their destructive impacts. Yet securing a broader ownership of capital may require coalitions. Joining such coalitions does not imply unequivocal support of private equity or Mitch McConnell.
Arguing that such ownership plans only toss a few crumbs to the poor ignores the fact that “crumbs” of a certain size enable a comfortable retirement, ownership of a home, a debt-free college education for children, and much more. If these crumbs earn compound interest over low-wage workers’ entire careers, workers may retire as millionaires, as many employee-owners do.
Support for such plans need not imply opposition to other strategies for reducing inequality, such as raising tax rates on the rich. Because some percentage of every population at a given time is not working—children, retirees, the sick, the unemployed—employee ownership will never help everyone to build wealth and security. Nor does it address the extreme concentration of capital that a few plutocrats currently control.
But the economy would still look very different if major companies had even modest levels of employee ownership. If Amazon’s employees in 2018 had owned as much of their employer’s stock as Sears department store employees did in the 1950s, each Amazon worker would have owned shares worth $381,000.12. There were over half a million Amazon employees in 2018. By 2022, there were 1.1 million, and the stock price had more than doubled. This policy would not address the inhumane working conditions at Amazon or the company’s massive environmental footprint, but adding nearly a million dollars to the bank accounts of more than a million workers would be a real achievement. A similar level of employee ownership at the one hundred largest employers in the United States could give the country a broad middle class.
Current estimates put the number of workers at employee-owned businesses in America at around ten million. One mechanism to create a middle class already exists, has well-documented benefits, and enjoys relatively bipartisan support. A reasonable policy plank for both parties in the coming election year and in the coming decades is to boost this number tenfold–so that 100 million American workers own equity in the businesses for which they help to create value.
Excerpted and adapted from The Alternative: How to Build a Just Economy by Nick Romeo. Available from PublicAffairs, an imprint of Hachette Book Group, Inc.
Nick Romeo covers policy and ideas for The New Yorker and teaches in the Graduate School of Journalism at the University of California, Berkeley. He has also written for The New York Times, The Washington Post, National Geographic, Rolling Stone, The Atlantic, The MIT Technology Review, The Daily Beast, and many other venues.
