The bedrock of entrepreneurship is ownership. Yale law professor Henry Hansman argues that every business owner has two formal rights: “the right to control the firm and the right to appropriate the firm’s residual earnings”—in other words, the freedom to make decisions and a shot at the brass ring.

A lot of companies acquire others without much sensitivity regarding what they’re really buying. They think they’re getting physical assets or manufacturing assets or intellectual property (in some industries, that’s more true than in others). In most cases, what they’re really acquiring is people. In a creative business, that’s where the value truly lies.

15: The Myth of Ownership

“‘You are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.’

Jean-Jacques Rousseau, Discourse on the Origin of Inequality, 1761

As the economic historian Deirdre McCloskey has pointed out, we do not talk about waterism, essential though running water is to our personal and commercial lives. Or power-ism, although the new availability of first steam and then electric power may have been a more important contributor to the modernity of economic life than any change in the availability of capital. If the managers of a modern business do not want to succumb to the demands of their capital supplier, they can buy their capital services elsewhere. In fact, it is often rather easier for them to exercise that choice than it is to change their water or electricity provider. That these points seem novel, even disturbing, is a measure of the extent to which outdated rhetoric developed to describe the Carron Works and the plant at the River Rouge continues to frame our thought.

In writing this book, I have been repeatedly struck by the frequency with which discussion is clouded, not illuminated, by the imposition of false binaries where no clear-cut distinction actually exists. Just as there is no usefully sharp distinction between heap and not heap, between dry and wet, so there is no sharp distinction between market and hierarchy, between public and private sectors, between profit and not-for-profit organisations, even – and critically – no sharp distinction between capital and labour. The concept of ownership is often complicated, and the ‘badges of ownership’ may be divided among several agents so that the ‘owner’ is hard to identify. Binaries are the natural currency of both lawyers and economists because, for different but related reasons, both law and mathematics demand precision.