The Unfair History of Property Ownership: Our Non-Zero-Sum Solution

Daniel and Gareth discuss the history of property ownership, how concentration of wealth caused significant inequalities and how ColivingDAO solves this problem.

Transcript

SPEAKER_03: 0:10

Hi everyone, welcome back to Co-Living Down Insights. This is Daniel, and today we're gonna be talking about the history of private property. Something that could be considered quite controversial. On one end of the spectrum, we have socialism, we have people that believe that there should not be private property altogether. In fact, that's what causes inequalities. And then on the other hand of the spectrum, uh we have people that believe that it's uh a fundamental human right. So we'll be discussing all that uh throughout the history and we'll be analyzing what could be a way forward as well. And I'm joined today by uh my co-host and co-founder, Gareth. How are you today, Gareth?

SPEAKER_01: 0:51

Hey Dan, yeah, it's great to be back. I'm feeling good, and this is a really interesting topic, so I'm really motivated to dive deep and see what we can discover.

SPEAKER_03: 1:03

That's awesome. And uh yeah, so when we talk about private property, one thing that comes to mind immediately is that it's considered a right, a fundamental human right. However, when you look at different rights such as the right to free speech and the right to live, uh these are rights that don't really interfere with other people's rights, because you living doesn't prevent other people from living. However, when it comes to private property, if someone owns something, then other people cannot own the same thing. So there's already an argument here, uh, and some people may argue that private property inherently creates inequality. What's your take on that, Gareth?

SPEAKER_01: 1:42

Yeah, there's loads of interesting controversy around the notion of private property, and it's something we kind of just we don't really think about it anymore, right? We just assume that this is the way things are done. Um and and my take on it is there's a lot of, as you said, resource sharing uh implications. So, you know, we only have one planet, we know that there is limited space and limited resources, and we somehow have to all get along together and find a way to share this planet. And and that really links into some of the environmental sustainability concerns around the world. But it also links into notions of power and control, and how much power should private property owners have. There was a lot of power associated with owning land in the past. Becoming a landowner meant that you could um become very wealthy potentially just because you owned a plot of land. And so the power and control element is also a really big part of the controversy around private property. And uh Dan, I think we we looked at some of the ancient history of property to get a really clear idea on how this has developed through the history of human civilization. And we know that you know human beings used to live in caves, right? Never used to have houses, we didn't own land, and that was the case for thousands and thousands of years, tens of thousands of years. So where did where did property actually start? Where where did it all begin?

SPEAKER_03: 3:20

Exactly. That's a very good point. Private property was not always around, uh, especially in the form that we understand it right now. In the beginning, uh, there was uh even in hunter-gatherer societies, for example, uh, there was a very different structure. Uh it was uh an um uh a form of egalitarianism where all resources were shared equally among peers. And uh in fact, when people think about that, most of the time they think uh about some sort of happy go-lucky society where everything is shared, everyone's happy, uh, and there's no inequality, and therefore life is simpler and easier and more enjoyable. Uh, however, that's not necessarily the case. Um, even egalitarianism can be enforced sometimes very violently. So the lack of private property doesn't mean that uh there's no fights. And in fact, imagine being uh the best hunter in your village and being forced to share everything with the village. Uh it works out, but what if you see everyone else being lazy and no one else wants to really hunt and you're the only one hunting, and then you you're still forced to share everything, and then people that don't do anything still get the food. Uh, there's pros and cons, however, what's important to understand is that each system has got some advantages and disadvantages. And this was the system that was used in the beginning. Now, the limitation of the system uh is that it really prevented the ability to specialize. So when the type of resources limited, when the type of tasks is limited, uh it worked quite well to share everything. Uh, but actually, as soon as the type of resources varied more, the people had more and more needs, more and more tools were created, uh, things started changing. But the biggest catalyst for the introduction of private property uh was the introduction of agriculture, and that was approximately 11,000 years ago. And when that happened, for the the first time in history, there was effectively a very clear way uh to generate surplus that could be stored. Now imagine a hunter hunting uh big game, small game, whatever they find, and uh of course that cannot be stored for too long, so sharing makes a lot of sense. I can't really keep my game for generations, uh not even for my near future, because it would just no longer be usable, no longer be edible. When it comes to storing resources, now that um let's say 11,000 years ago agriculture was introduced, humans had the ability to store resources, everything changed. So, on one hand, we had this opportunity uh of accumulating wealth that was not possible before, and the second thing is now land has got a big, big value because it's possible effectively to farm and get value from the land itself. So that's literally why this happened. And uh this introduction of agriculture uh effectively brought a lot of different shifts, but this is literally the number one catalyst for this uh shift. And uh what's your take on this, Gareth?

SPEAKER_01: 6:37

Yeah, so uh I mean for me we we were hunter-gatherers and living in the wilds of of the ancient earth and people were roaming freely, but then discovered hey, we can actually grow plants and keep animals. But to do that we need to kind of stay in the same place and protect our little plot of land. So just to bring it back to the notion of shelter, shelter being you know an essential part of human survival people realized in the agricultural age that if they protected a small piece of land where they could grow crops and keep animals, then they had an enhanced form of shelter and they didn't need to necessarily keep moving around. And so th th the concept of land ownership appeared um purely by the need to defend a piece of land, right, or keep a piece of land. And and that was the beginning of property as we know it. Um so where did it go from there, Dan? Where did it go from the agricultural age? How did property actually become a thing at that point in time?

SPEAKER_03: 7:45

Yeah, you made a very good point here. Uh protecting the land uh effectively is uh one reason why private property um started to exist, having this property, and uh all of a sudden, if we have owners or or simply farmers that want to get the most of that land, they need to make sure that they can farm uh without any disruptions. And uh uh in the beginning it was quite a straightforward process, sometimes peaceful, simply the farmers that were cultivating the land, farmers that were uh utilizing the land, they effectively um claimed that as their own, and there was no violence involved, but in many cases there was violence and uh empowered dynamics where uh some people can argue that a lot of private property has been uh unfairly assigned, and uh this is uh uh a general argument, but we can say that sometimes uh some methods involved abuse, sometimes they did it. Regardless of that, that's how effectively people started owning uh land and uh the the houses, the homes that went with it. Uh and this continued throughout history, and it's it's quite interesting because um, again, because of these power dynamics, power was concentrated uh into fewer and fewer hands. And uh gradually what happened is rather than just the farmers owning the land, uh it was wealthier individuals or families owning land uh and letting farmers farm the land because they couldn't farm all the land they owned. Uh and there were also different types of agreements so that a farmer could live on a land and also farm that land. Um and uh some agreements involved share cropping, meaning the farmer would pay a percentage of uh the harvest to the landlord. So that was one of the uh very ancient and uh um still around to some extent, I have to say, um, type of agreements where farmers effectively can live in a place and uh all they have to pay is a percentage of uh what they they harvest. Uh and there's different systems as well. For example, in the Roman Empire there was a very common system that was called amphitusis. It means that effectively the farmer could live in a property and it could treat the property as their own effectively. So they they were also on one hand, you you may argue it's actually even more demanding than the current system because they also had to make improvements to the property and just maintain that. Uh on the other hand, the uh rents were relatively low, um, starting at 10% of the harvest, of the produce that they could make from that land. So starting from 10%. And uh there was a very interesting um dynamic, very interesting opportunity. Usually, after uh about 20 years, uh the amphituda, which uh is the the person renting through amphituses, that person could literally buy the property outright by paying uh 15 times the yearly rent. Uh so it's actually quite similar to a lease uh and uh some sort of mortgage without involving uh any any debt, of course, but it's an interesting concept. So um, over the course of 20 years, making rental payments and then a lump sum of 15 years uh to buy the property outright. So that was a possibility. Uh with share cropping, especially later on, um, the percentage of produce became higher and higher. In fact, uh it was very common to uh have systems such as uh Metag in France, uh Mezzedria in Italy, and uh in similar concepts in different countries as well, where the the share, the split was usually 50-50. So the the farmer would get 50% of the produce and the landlord would get the other 50%. Uh and that stayed true, especially through feudalism. So the feudatory, meaning that the landlord had the opportunity to own a lot of land and get a lot of produce. So again, because this produce could be stored, that's where this uh accumulation of wealth became possible. And uh that's literally why private property uh took the form that we can see nowadays. But it's still a few steps before we get to the modern day uh with mortgages uh and uh the new concept of being homeowners, which in the past being property owners was something that was reserved only for really the ultra-wealthy or the monarchs and so on, um, even though that doesn't mean they had full control over the properties, because it's still still it was never easy to evict someone, even if you're the king. Um but nowadays uh owning where we live is something that is considered that pretty much everyone can do, uh, as long as they can afford it. That's a different conversation that we can have. Uh but what changed? So, Gareth, what happened when mortgages were introduced?

SPEAKER_01: 12:52

Yeah, so I guess just to recap, Dan, you've basically covered up till the Middle Ages, and the Middle Ages is a strange time, right? If we talk about between the 10th and 15th centuries, roughly. Um bear in mind that most of my knowledge of the Middle Ages probably comes from the Monty Python movies, so I'm not an expert in this by any means. But um in the Middle Ages there were some concepts of property and feudalism, as you mentioned, where sometimes in the UK, for example, um peasant farmers would be on the land and they would be uh basically paying all of their produce to the land, the wealthy landowner, or the aristocratic or the royal landowner, uh, in order to survive and get their shelter. And the the the la the feudalist landowner was the one that had effectively ownership of the property and the land. And so the turning point in this was really the transition to capitalism and the industrial revolution and the enlightenment, and these all kind of happened at the same time, right, from the 16th century onwards. And this is where it gets really interesting because things accelerated. This is modern civilization as we know it, from the last, you know, 350 years or so. And uh what that meant was the transition to capitalism, we still had wealthy landowners, often they were aristocrats, but now there was a pathway for people to generate money and be a bit more independent and get away from the feudalist system. And so if we go back to the sixteenth century, the concept of a mortgage actually emerged in England. And these early mortgages were typically used for land in the beginning. And an interesting um source of the word mortgage comes from gauge or gage uh and mort. In the old French mort means dead, and gage or gauge means a pledge. So it was effectively a death pledge, and if the borrower failed to repay on the property, the property then died uh to the lender. So that's a really interesting source of where the word comes from. Um and then mortgages really evolved more in the eighteenth century. This is where things really started to change. And if we look at again the United Kingdom, which was um the source of of the Industrial Revolution and capitalism, arguably, it actually became possible for a working class regular person in the eighteen hundreds to become a property owner. It was still very difficult and it was mostly reserved for the wealthier segments of society. But what happened was that the pr the development of building societies or mutual organizations happened. And these were the first institutions that provided loans for property purchases, and a property loan is a mortgage. And so it was possible but very difficult for a working class regular person to save up money over many years and then buy a property and become a property owner through the use of these new building societies and organizations. And so, yeah, for the first time in history it became possible maybe for people at the lowest level of society to actually own land and property and start to climb up the social mobility ladder. What what um personal experience have you had from that point of view, Dan, or have you observed before?

SPEAKER_03: 16:44

Great analysis, Gareth, and uh by the way, I like the reference you you made about the word mortgages uh with death. Uh something interesting along the same line is uh uh in the amphithouses contract, effectively the ability for the amphithota to buy the property outright was called enfranchisement, which is a word enfranchisement that literally means liberation of a slave. So there was a really connection with uh feeling like a slave or lack of freedom by not owning a property. And once they own the property, there's a freedom element involved. Uh in it's uh intrinsic in uh in the language used as well. Uh but yeah, just to answer your question regarding personal experiences, what we notice is that if you look at this very um old contracts where people only had to pay 10% of the produce sounds a lot more reasonable than what nowadays we're paying. And uh we notice that uh a lease or uh a mortgage or rental payments usually are much, much higher in terms of percentage of what people earn to live in a specific place. So all of a sudden we live in some sort of the job market where in order to be present in a certain job market, uh we have to pay a price, and therefore uh for many people it uh it just prices them out completely, whereas for other people it just uh takes a lot of value away. So uh there is a little bit of a of a dynamic going on right now because of the fact that landlords effectively can buy property in uh in multiple countries, uh, and uh by being wealthier they could price out other people that actually wouldn't live in a property, whereas the landlord never intends to live in a in a property altogether. Uh and therefore uh this could create some inequalities. But I want to have a conversation a little bit more in general about uh the fact that private property uh should exist or not exist and so on, because I hear very often a point saying, why don't we just um abolish private property altogether and just uh go back to socialism? However, that also presents a lot of limitations. Uh in fact, if no one owns anything in particular, uh first of all, uh no one is gonna uh protect land, protect certain specific dwellings and so on. Okay, maybe you want to say the government does that. Fair enough. Uh that creates a big element of centralization though, which uh could potentially become an issue because then we let the government do all that. Uh on the other hand, um it's already been demonstrated that uh in a purely socialist system, uh innovation, incentives to really uh improve property and so on, uh can lack, can just not be there. So if we want to grow as a society and uh uh if we realize the need for innovation, then uh potentially private property has a very big role and a very big importance. The other thing I want to mention is specialization. So in a society that is so refined when people really specialize uh the ability to acquire private property uh can also help. Uh what's your take on all this, Gareth?

SPEAKER_01: 20:09

Yeah, there's some big concepts you've introduced there, Dan. So um just to recap the the the idea of of should we not have private property uh to prevent this huge concentration of wealth. And just to go back to the history there and talk a bit more about what happened in the 20th century, it was just after World War II when it became a really big turning point in many developed countries because of economic growth and after the war soldiers returning home, huge population booms, there was a big demand for new housing and so government policies in the in the West changed and made it much easier for people to buy their their houses and actually get mortgage products. And so it really took off in the second half of the 20th century. And then in the 21st century that trend continued but of course then we hit the financial crash which was triggered by the property market, the subprime property market in the US and this led then to the collapse of house prices temporarily and a lot of people losing their homes. And then after that in the most recent decade or so we've seen another boom in property prices after the financial crash and pre-COVID and now we have a situation where property prices in the West are sky high in many places such as London where the the price of a property is many many multiples of a person's salary and and and increases in salary have not kept anywhere near the same level of increase as the increase in property prices. So now we have a situation where again it's very difficult for young people to get into the property market and wealthier landlords owning multiple properties and then renting them out and maintaining their wealth through effectively the ownership of land and property which was acquired in the past when it was easier to do so. So we have this huge concentration of wealth and power and it's now becoming more difficult for people to own their properties again or buy a property. And so as you rightly said some people are saying well is this right should we have this concentration of wealth and power? And maybe the answer is to go to public property where nobody has private property but then that has all the problems of the government then controls all land and property and that would be fine if the government was competent and able to do that and also benevolent and have the interests of of the population at heart. So really controversial and and obviously moving to an entirely public property system would be a huge transformation, a political transformation that people are not really they don't really have any appetite for that right now. So yeah it really comes into some really intense conversations and intense energy around this this issue right now of property. And so we're we're we're at a stage now where it's like well how can we change the way that property ownership and and land ownership and wealth and power are distributed? Is there some way to do this in an in an innovative way? And I guess at the margins governments have introduced buy to help schemes where you can put down a very small deposit and then own part of a property for example to make it easier for young people to get on the property ladder. But we think there's a much bigger space for innovation here right Dan we think we could really go to the next level.

SPEAKER_03: 24:14

Exactly and uh of course as uh everyone knows by now what we like to do here at Living Dow we don't look at utopias we look at uh what's the next step in order to significantly improve the the current system and uh what we've identified is uh the number one reason this um concentration of wealth and power has been a problem is because it's been primarily a one-dimensional understanding of what capital is so right now uh if someone has a lot of money they can buy a lot of property and and get 100% of the voting rights of what should happen to the property. So in my view that's the main problem it's not the fact that there's an imbalance in uh what people own and I'm not expecting everyone to own exactly the same amount of property uh because if any everyone owned exactly the same amount of property it wouldn't make a lot of sense we would completely lose incentives in um uh doing things producing and generating value in life however the problem is when there's this wealth that is accumulated and many cases been accumulated through history so not even in in one lifetime and it can be utilized to control uh entire lives of other people so what we've identified is the opportunity uh to shift from a one-dimensional understanding of capitalism where the only capital that is considered is the financial capital to a multidimensional capitalistic understanding of society where there's actually multiple capitals at play so imagine a society where all the money in the world could not buy all the governance rights in the world or all the property in the world and that could be an interest or stake in a property so with money I could buy a stake in a property but still no amount of money could buy the the majority of the governance rights for that particular property. What this means is that all of a sudden we start recognizing different types of capital such as human capital. Now living in a property and doing work for a property improving that property has a lot of value as well so why should we simply favor financial capital over all these other types of capital. So by utilizing this paradigm shift we envision a society where all of a sudden we're not completely removing the inequalities because that's not the point. The point is to make society fairer and to make society fairer we can shift to a multi-capital type of society where all of a sudden there will not be one person or just few people that have most of the capital and therefore they can control everything. Now what's interesting to note is that not every capital can be accumulated in the same way. So for example financial capital is very easy to accumulate very easy to pass on to the next generation generation and so on. But when we look at human capital or labor capital so to speak we can't really accumulate that and store it and and pass it to different generations and with all the different types of capitals that are available this is a dynamic that is shifting the the concept of power and therefore power can no longer be accumulated in the same unfair way that we've seen throughout history so far.

SPEAKER_01: 28:03

What's your take on this Garth Yeah this is where it gets really uh exciting for me Dan so when we talk about when you talked about the concept of multiple capitals beyond financial capital I can probably hear some of our listeners going what what is he talking about? This is crazy right but this is where it gets really interesting because if we think about social capital and that sounds like a strange phrase but bear with me social capital is mostly recognized in the form of human connections right so when we talk about social capital think about your friends and your family and then extend that to your community and your neighborhood the most obvious example of social capital is in your local community and that is the connections that you have with people in your local community you might go to the same shop for example and to buy buy your bread ever in the morning if you're lucky enough to have a bakery on your doorstep and the conversation you might have with the shopkeeper there is a form of community social capital. You may have some friends in the area as well and and those friends are part of your community capital. Your community effect in effect is social capital and so a building is not just a structure that you paid for. A building is in a place and a building is in a local community in a local neighborhood and the current system of property ownership does not recognize that these community links have value, the social links have value they only recognize hey the building's made of brick and steel and glass and the material is the only thing that has value. And this is a really strange way to look at the world because if you go all the way back to the hunter-gatherers they didn't look at materials as as the primary form of wealth right when you go back to agriculture and the agricultural societies that started to build farms they didn't look at bits of wood and and brick as the only form of wealth they were looking at their crops, the plants they were looking at the people who were going to help them to build the farm and so if we really step away from this narrow view on money and materials and look at what is wealth and what is what makes life good, right? And then apply that to property and private property what how does private property play the a role in how we make our lives and our communities richer and better and wealthier in every multi-dimensional aspect and that's where it gets exciting for me.

SPEAKER_03: 30:56

So how do we build a private property model that brings in those elements of wealth absolutely and uh in fact I can argue that by living in a certain property I am being a good person a good neighbor and therefore I'm raising the value of the property and the neighborhood in in general and if every neighbor is doing the same then why shouldn't we be rewarded for that because we are effectively adding value just like the bricks add value to the property and the location as value to the property and being a great neighbor adds value to the the entire area as well. So it's really critical to reward all this value that the people are um adding to uh a particular property just by living in there and all the other types of of capital involved as well and this is something that uh we are doing utilizing a company structure uh that is uh the fair shares commons uh gareth how exactly is this company structure enabling all this yeah so at Co-Living DAO we're we're using the FairShares Commons and it enables first of all in a simple sense you allows you to own where you rent from day one and have a real voice to shape your community and how is that done?

SPEAKER_01: 32:18

Well the FairShares Commons enables multiple types of shareholders and so quite simply if you live in one of the co-living DAO co-living communities and you pay rent every month you actually then get shares in the company that owns the building and so you become a shareholder as a resident and that gives you a legal voice and a share in the voting power of how the community is shaped and how the building is managed. And having a voice if all residents have a voice when they get together and talk about how to make the community better they are able to shape the community because they have power they have shareholder power they have voting power and the investors and the property managers or the community managers also have voting power and this so there's a balance of power and that enables the community to become more valuable because the residents have a say and the building managers and the investors have a say and other stakeholders have a say too and what that does is the community then evolves according to the interests of all of those stakeholders. So when we talk about social capital and living in a community that's valuable you can imagine what happens if the residents are cooperating on what kind of theme do we want in our community? What kind of events would we like to hold here? What would we like to do in the local neighbourhood to help the local neighbourhoods what does that look like and so you get this really strong social connection and uh and social sort of missions and also just uh the fun of living in in a place where people are have like minded interests and they want to make the community better in whatever way that looks like. And so the Fair Shares Commons is a new legal structure that enables multiple stakeholders to to own shares and have a balance of power in the voting held by those shares. So it enables decentralization, decentralized power and decentralized wealth sharing and so this is a kind of it's kind of the same as private property as we know it but it brings in a new way of looking at private property because you have multiple owners and multiple people who have a say in it. So it becomes kind of like a hybrid between public and private property. Is that the kind of uh angle you were looking at there Dan or is there one bit you want me to focus on more in the fair shares comments?

SPEAKER_03: 35:06

Absolutely I actually really like this expression that you use the balance of power because what we're looking to do here we're not trying to eliminate power altogether in doing so we probably eliminate the incentives that people have in maintaining and improving innovating property and so on which means that that could very likely stifle innovation stifle progress stifle growth but that's not what we want we don't want to go backwards we want to go forward. And in order to go forward what we're looking to do is to balance power and um uh align the incentives so in this particular legal framework we see how everyone's incentives are aligned therefore we no longer have these fights between landlords and and tenants where effectively they have a completely contrasting goals and ambitions and they have to fight each other in this sort of a zero sum game where the more one gets the the the less the other one gets in this way uh we are playing a non-zero sum game where uh we can create more abundance and create a society where everyone can cooperate so this is why uh this structure is uh completely completely revolutionary and uh we can definitely see how a lot of things can change in fact uh the key elements here are first of all uh detaching the financial capital uh from the the voting power meaning the landlord only has a limited voting power uh just because the landlord owns uh a big chunk of the property um financially doesn't mean that the landlord should get um even even the majority of the voting power and that is something that is uh is a big game changer um at the same time just like you mentioned decentralizing wealth decentralizing governance rights uh can effectively lead to better decisions and this is why the fair shares comments is uh extremely powerful and the word commons in there is very interesting because if we think at the concept of commons as something that is not owned by anyone and it's just public but we've seen what the limitations are for something that is purely public. Right now we have a new concept of commons where it's not privately held by one individual but it's also not completely public but it's a commons within the frame of a number of people a number of stakeholders and therefore everyone is incentivized in making sure that the best happens to uh that particular property that is uh what I consider very very innovative and uh uh a massive massive game changer so this is why we are working along those lines so any final thoughts Gareth on uh the direction that the world is taking that we are taking and uh what we are looking to create yeah that brings it back night back nicely to where we started actually when you talk about the commons Dan as um public property that everyone has an interest in like the air we breathe and the water that cycles around the planet we all share those resources and so Co-Living DAO has created a new way a new blueprint for private property that brings in the commons that public property element and sharing and cooperation around the resources the resources in a community in a building and in a in a strange way that takes us all the way back to the hunter gatherers as you said right at the beginning Dan when they go and hunt together they then share the food even if the best hunter captures the most animals or even the best forager captures the best vegetables and fruits they then share it with each other.

SPEAKER_01: 39:11

They're sharing the commons so what we have now is a situation where how do we combine the best of the most modern technology and the most modern ways of approaching things and bring back some of that sharing and cooperation from our ancient ancestors and this is the recipe that we've put into the DNA of Co-Living DAO bringing the best of modern world and the ancient world together and the concept of shelter and sharing which is what all humans need in the fairest way possible. And so this is really exciting for me. We're taking private property ownership with Co Living DAO and we're bringing it back into a sharing cooperative model but keeping all the benefits of power control Innovation and yeah, having having a place to call home that you have real power and control over and a wealth-building aspect, but you're sharing it and cooperating with the people in your community too. So that's really exciting for me, and I can't wait for us to continue in this path.

SPEAKER_03: 40:22

Absolutely, and that's a very big leap forward, which we're all uh working hard to make a reality, and uh we're looking forward to it. So just to wrap it up, thanks everyone for being here. Gara, thank you so much for your insights. And this is Daniel signing off. Uh, everyone, subscribe to this podcast, and I'll see all of you in the next episode. Thanks, folks.

SPEAKER_01: 40:46

See you in the next one.