Financialization, Private Property, and Democratic Citizenship

• In Event: Democracy and Economic Inequality

Abstract

This paper examines how financialization in the late twentieth century transforms private property as one of the foundational elements of democratic citizenship. It is common to understand private property in terms of individual dominion, as personal and tangible objects that individuals own and use to the exclusion of others. In fact, however, private property is a set of rights deeply entangled with social and political relations, and as such, endorses and reinforces hierarchies of honor and power. (The institution of slavery in which some people can own private property while others are owned as property offers a stark illustration.) From this perspective, private property is to be seen as an institution that evolves through complex interactions with historically changing social and political relations. And private property bears directly on democratic citizenship not simply at the individual level (by providing citizens with a minimum level of material resources for basic political freedom and equality) but at the systemic level (by shaping how honor and power are distributed among citizens).

This paper shows how financialization destabilizes conventional assumptions undergirding the prevailing institution of private property. Housing, which accounts for the bulk of most people’s private property, is an illuminating example. Most people do not own their housing in the sense of having complete sovereignty over it; they only have a conditional claim on it. Moreover, their "ownership" is dependent on the availability of credit, which in turn depends on a system in which credit is generated and allocated. In this respect, private property is embedded in relations of dependence (e.g., vis-à-vis lenders) and interdependence (e.g., vis-à-vis other borrowers whose debts, securitized, help create credit). This systemic and relational aspects of private property are not clearly reflected in the current institution of private property, however. The problem of differential credit access is treated simply as a matter of lenders’ business decision, and individual owners are given comprehensive control not just over possession and use, but crucially, over capital value and financial leveraging.

Based on these observations, I engage with the debate over egalitarian property-owning democracy (POD). Proponents of POD correctly recognize the increasing importance of asset vis-à-vis income and underline the need to think beyond the conventional welfare state to promote equality in the age of financialization. But I suggest that we should investigate more closely the relational and structural dimension of asset, especially the interconnection of private property and credit access, mechanisms of credit generation and allocation, and distinct inequalities created and amplified by those mechanisms.

Author

• Kyong-Min Son, University of Delaware