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The limits of ownership

Market-based ownership models have damaged the public and social interest. Innovation is inevitable.

The recent transfer of the ownership of Liverpool Football Club from two unsuccessful American millionaires to another group of Americans tells us something about the state of English professional football, but led me to more interesting questions about how and why societies should impose limits on ownership. This goes far beyond football, and the answer seems to be when the value generated by the organisation is primarily social; this value should not be open to private appropriation. It seems increasingly clear that ownership is going to become one of the contested issues of the coming decade. In this post I am going to try to take some case studies to tease this out.

Football is a fairly straightforward case. Most of the value in a football club is located firmly in its location. A club is made by its fans; players, managers, and chief executives come and go, but fans are forever. Support is about identity. In the days when they were small businesses, they used to attract small town sharks (car dealers and the like) whose sharp practice was kept in check, to some extent, by strict League rules preventing directors from taking fees from the club, a structure which tried to align the commercial interest to that of the supporters. That was swept aside when the creation of the Premier League combined greed and deregulation to familiar effect, but with one proviso: even now most football clubs are not significantly-sized businesses.

Football, of course, could sort this out quite easily. In Germany, teams are controlled by their supporters, and the European body, UEFA has significant authority to impose controls on clubs and structures. Just as it is currently setting limits to the debt a club can carry, and the composition of its squads, it could simply set a deadline by which ownership models had to change.

Corporations can’t bind their successors

The second case is the Google Books Settlement (disclosure: I opted out). Google’s view is that it has done people a favour by digitising all of these books (in and out of copyright) and I would have been pleased to have my own book (a co-written history of the BBC and its battle with Thatcher in the 1980s and 1990s) available to students and researchers. We could have set a zero price to ensure that it stayed accessible. But in the end, the public interest had got lost in the process – a globally available digital library, the Alexandria of our times, should not be the property of any one company, even one that claims not to be evil.

No matter who owns it now, or what undertakings they give, even if we don’t mind the privatisation of our cultural history, it’s a well-known corporate principle that boards can’t bind their successors. The Google digital archive should not be locked into a private interest.

Pubs as community hubs

The third case might seem odd, and it’s less clear cut than the other two, and that is the British pub, which continues to close in vast numbers (2,400 in 2009). While it is easy to regard this as the inevitable outcome of a long social change, it is also partly the effect of tampering with the rules and regulations governing the sector. As much to the point, since pubs are hard to re-open once they’ve closed, we might regret this if new trends re-emphasise the need for localness and sociability. We might then regard the loss of the pub as an unintended consequence (but not an unexpected one) of the application of a narrow view of competition economics and competition law that stops at the point at which it has calculated the price of everything.

The social benefits of pubs are well-rehearsed in a report, ‘Calling Time On Pub Closures’, by Ed Mayo and Julian Ross:

The importance of fundamental hubs like shops and pubs in rural and urban communities cannot be overstated. As well as providing the service that you would expect of a shop and a pub, they also offer a vital social environment where members of the community can come together to meet and socialise.

Their solution was community-based co-operative ownership, and the last government offered some financial support for this idea late in the day, only to find the Coalition withdrawing this months later. But this is not just about money; it’s about re-drawing property rights to give communities some power over their shared social assets, no matter who they happen to be owned by. There is a useful precedent in Scotland’s recent land legislation, which enshrines in law the Community Right-to-Buy: the right for small communities to state their intention to buy their land freehold when it comes onto the market, and to get first refusal as a result. It appears to have changed the dynamic of the rural land market by re-balancing the rights of leaseholders, tenants and landowners. More importantly, it has the immediate effect of shrinking the perception that these assets are for trading.

The Big Society and the community right-to-buy

And at the moment, there’s a political curiosity here, which is that the Conservatives made noises before the election about a Community Right to Buy scheme for local assets, a promise which was included in the manifesto, although it doesn’t seem yet to have got as far as proposals for legislation. Indeed, the rhetoric about the ‘Big Society’ is largely hollow without meaningful and effective legal change to protect community assets, which are otherwise open to asset-stripping by corporations or councils, as they have been in Hammersmith and Fulham in London.

At the end of a long pro-market boom, it’s easy to imagine the only type of ownership that exists is a form which gives owners absolute rights of discretion over the thing owned. The point is that forms of ownership can be subtle, and can protect different interests. Both rights of way, for example, and the right to roam, give people protected and limited access to land without removing it from the possession of the owner. Barbara Heinzen has made a valuable distinction between column rights and mosaic rights in land ownership. Column rights are those framed by economic rights, where an owner has access to all the rights associated with a piece of land (including the air above and the minerals below, and can dispose of the property as they choose. Mosaic rights, instead, give different groups rights of use and access to the land. (Sometimes the land has no owner; in the UK it would necessary to hold this in trust in some form).

Innovation and resilience

It’s clear that our market-led property systems have failed to give enough enough protection to other groups and communities who are affected by the use, or not, of assets which they have an interest in. We will see innovation in ownership models, even if it is only so that society can reduce the external costs to others of property owners’ narrow economic decisions. And we’ll need that innovation if our communities are going to be resilient enough to survive the coming economic and environmental squeeze.

The picture is of The Old Crown in Hesket Newmarket, Britain’s first co-operatively owned pub, and it is used with thanks. Julian Ross, co-author of the ‘Calling Time’ report mentioned in the post, led the bid to buy the pub and turn it into a co-operative.

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