However, while shareholders own shares – the equity in the company – it has been argued that the do not in any meaningful sense “own” the company. As the economists John Kay and Aubrey Silberston put it:No one owns, or could own, BT or Marks & Spencer.Many individuals and groups have rights and obligations around these companies – customers, shareholders, lenders, employees, directors – but none of these claims could plausibly be described as ownership.
Using the legal theorist A.M.Honoré’s classic exposition of the nature of ownership, Kay and Silberston show that shareholders have neither the right of possession nor the right of use, nor several of the other rights we associated with ownership – unless they happen to own every single share.The divorce of ownership and control, they suggest, follows on inevitably from this state of affairs.
And I’m also pretty much in tune with the conclusion – the idea that investing in equities is a form of ownership is inaccurate, but usefully so. Certainly invoking the idea of ownership is a good way to get lefties interested in capital markets!
Ownership may not be the best way to talk about investment in the legal sense, but it can be a useful heuristic – what evolutionary psychologists call an “adaptive fallacy”. In other words, it may be inaccurate, but it is helpfully inaccurate. This is the conclusion of the Tomorrow’s Company report Tomorrow’s Owners:“Ownership”,while technically inaccurate or only partially accurate, is an excellent word to convey the stewardship dimension because it carries with it layers of meaning accumulated over centuries, relating to rights and responsibilities such as the duty of care.
And yep, there’s behavioural stuff in there too…