The Citizen's Share
The long American history of profit-sharing and broad-based ownership.
Summary
Joseph Blasi, Richard Freeman and Douglas Kruse argue that broad-based ownership of business assets by working people is an American tradition rather than a novelty, and that its erosion explains part of the country's inequality.
The historical argument is the book's distinctive contribution. They document that the founding generation, including Washington, Adams, Madison and Jefferson, held explicit views about the political importance of widely distributed property, and that early American policy including land distribution and the cod fishery share system reflected this. They trace share arrangements through the nineteenth century, including whaling voyages and homesteading, into twentieth-century profit sharing and employee stock ownership plans.
The empirical sections present their research on contemporary employee ownership: the share of American workers with some form of profit sharing, gain sharing or equity, the performance effects, and the interaction between ownership and participation. Their policy proposals concern the tax treatment of broad-based plans, which they argue should favour arrangements that distribute widely over those that concentrate at the top. The book is advocacy grounded in the authors' long research programme, and it shares the identification problems of that literature: firms that adopt these arrangements differ from those that do not in ways that are hard to control for. The historical material is well documented and changes how the argument is framed.
Key takeaways 7
- The American founding generation held explicit views about the political importance of widely distributed property ownership.
- Share arrangements in fishing, whaling and land distribution were early American mechanisms for broad-based ownership of productive assets.
- Broad-based profit sharing and employee ownership produce measurable performance gains when combined with participation in decisions.
- Concentrating equity grants among executives converts an ownership mechanism into ordinary compensation.
- The authors argue that tax policy should favour plans distributing ownership widely over plans concentrating it.
- Capital income has grown as a share of national income, so distribution of labour income alone cannot address inequality.
- Employee ownership in the United States is more widespread than commonly assumed but is shallow in most cases.
Who should read it
Investors, founders and policy readers who want the historical and empirical case for broad-based ownership as an American institution.
Where it sits in the reference 2
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