Productivism: Closing Widening Wealth Disparities Without Socialism
What if you could own a piece of everything you leased? What if companies gave you small pieces of ownership in their companies when you bought their products? Blockchain technology is poised to potentially transform how we think about these new concepts of ownership going forward. Today is New Year’s, and what better way to usher in 2017 but with a new model for leveraging free market economics to shrink economic inequality? Sure, parties and New Year’s resolutions are probably appropriate, too. What is proposed here is a new concept: productivism. The full scope of productivism is a somewhat complex subject matter, which I plan to greatly simplify here, blog post style. I know you’re busy.
Productivism deals with tweaking the mechanisms driving how we own things, how we deal with wealth inheritance, and how we find mutually beneficial outcomes through independent preferences. In this post, we will focus on how people own things. This is like the sharing economy concept, but with equity. The name productivism stems from the idea of a production-valuing economy over a capital consolidation-driven one. The general theory underlying the concept of productivism is a simple observation. It goes like this: multi-property owners use monthly, passive income from tenants to contribute more capital to operations and get more tenants, while many of their tenants may never own income-producing property because their capital goes towards rent.
I would like to start with a few disclaimers. Giving credit to everyone to so that people can own more property is not supported here. People getting more ownership of property, non-socialist style, is. Okay. Let’s do this.
This post examines how a new technology can transform capitalism into something that works more for the rich, as well as the poor. Let’s start with a few phrases. Occupy Wall Street. Occupy Everywhere. The 1%. I attended, as a spectator, the Occupy movement when it started in New York City’s Zuccotti Park back in 2011. I always felt that the movement was missing implementable solutions and majority unity, while being acutely aware of particular problems, especially around wealth gaps. Identifying these kinds of actionable solutions has been a big part of my life since then, as I’m sure it has been for many people around the world. Many of the ideas I formed around finding solutions stemmed from recently reading Capital in the Twenty-First Century by French economist Thomas Piketty. For the record: I don’t agree with Piketty’s suggestion of a big, fat wealth and inheritance tax.
The aforementioned terms in this post around Occupy have marked the beginning of the 21st Century with a resounding sentiment of the proletariat: perhaps an alternative to capitalism is what’s needed to settle the unrest surrounding economic inequality. While figures like Bernie Sanders cry for systems like Scandinavian-style socialism, with others from capitalist upbringings suggesting communist solutions, let’s examine a system that does not involve government intervention and can potentially improve standards of living across the board. In short, maybe there’s not just communism, socialism, capitalism, and anarchism. And just maybe they are not all mutually exclusive.
Think about this: you voluntarily own a piece of everything you lease and are given an incentive, even in the poorest areas, to take care of your community because of your stake in society. Also, you can own as small a piece as .0001% for a two day rental, let’s say, while being assured a payout when the property is sold. Before some people cry disguised “communism” or “socialism”, this is everything but these, because, again, this concept requires no government intervention or laws to make it happen within a purely capitalist society. In fact, if the invisible hand of the free market works out, the system of producivitism can lead to the evolution of today’s American-style global capitalism, thanks to a little technology called the blockchain. If you don’t know about blockchain tech, here’s a quick 2 minute cartoon.
If you consider any of the following areas of my described solution around productivism too technical, I created this cartoon which you can use as a reference, especially if you are not familiar with blockchain technology. What can I say? I find cartoons are useful and entertaining simplifiers of new ideas. I use them a lot. Okay. Here it goes.
Let’s say I buy a 3-bedroom apartment for an equivalent of $300,000 in the heart of Seoul, South Korea. I upload the deed of the property to a distributed database known as a blockchain, along with a signed contract which stipulates that I can only transfer the deed of ownership and shares via an accompanying smart contract on the blockchain. I can then use blockchain technology to transfer shares of this house to tenants every time they pay the rent. Let’s say it’s a1% a year. After 10 years, my tenants will own 10% of my property. This is good for me. Some might laugh at this. Let me explain. Firstly, if other landlords are offering this kind of deal around me, then I must do it to attract tenants. It’s a free market after all. If other landlords aren’t offering this, then I’ll do it to attract a better price. Win for me. Secondly, giving people an ownership stake in the property will lower my risk of damage to the property: my tenants are going to get a percentage of the property sales price one, potentially higher than their rent expenses when I sell. Also, they have incentive to improve the community where the house is located, raising the property value. What works out great for my tenants, and their well-being, is that they can freely sell their shares in my property during or after their stay at my property. Meaning: they can create liquidity if there comes a time they really need it, while potentially still maintaining some ownership stake that will provide them with more liquidity in the future. Imagine if all your AirBnB stays, hotel stints, apartment rentals, Uber rides, and other leasing engagements added to your portfolio of ownership, if only by a little bit. After 5 years, every few weeks or so, when one of those pieces of property that you leased were sold, you earned a bit of money.
Before blockchain technology, in the most primitive of scenarios, you just weren’t sure that if you bought a small piece of a house from someone who owned a minority stake in that house that you would be a part of a future liquidation event. Also, you didn’t know with a certainty, or without spending a lot of money, that the owner had not sold more than 100% of their house away already. Then, there has always been the “rent-to-own” option out there. However, this has greatly depended on you renting for a certain period of time to get full ownership… not you renting for 2-days and still getting a small take that you could sell on the market if you wanted before the property was sold by the title owner. And for good reason. This model doesn’t work that well without a shared version of the true around asset ownership like blockchain technology provides.
Soon, the Proof Dashboard will allow asset owners to create these kinds of distributed liquidation events upon transfer of deeds. Currently, users can issue shares in property, their companies, and other assets. In the coming weeks, asset owners will also be able to leverage their pick of blockchain technology to issue dividends to their shareholders and transfer risk in other kinds of assets and contracts in whole new ways. It’s exciting stuff that could not have existed without expensive, third party intermediaries before the maturation of the blockchain. Also, even with those intermediaries, trust needed to be maintained, potentially across multiple legal jurisdictions… a paperwork and legal mess. With blockchains, no longer.
In conclusion (at least for now), this system is called productivism because it is moving us closer to gaining more from what we share and produce than the capital we hoard for ourselves. There are more areas of productivism which I plan to explore in future blog posts that can hopefully provide more clarification of how this works. I look forward to the feedback on this, as we explore new way for us to close the widening wealth gaps by introducing the renter capitalists to, well, actual capital, so all of us have the necessities and incentives to produce more.