Why Both Absolute Ownership Regimes Fail

Why Both Absolute Ownership Regimes Fail

If the company owns all context, leaving a job becomes a form of professional forgetting. The employer becomes the sole buyer of the worker's productive capacity because only the employer controls the context needed to activate it. Workers who know that careful documentation will train an AI to replace them will rationally record less, share less, and provide less training. The company pays a salary once but may acquire a worker's judgment model, capable of being copied and operated indefinitely at near-zero marginal cost.

This is cognitive enclosure. The worker is separated not only from the product of labor but also from the means of production required for future labor. The enclosure is especially severe when the system preserves recognizable judgment, style, or identity after the person leaves. Under the 99% assumption, the enclosure is not a routine file-access rule; it is structural control over the worker's future productive personality.

Becker's human-capital analysis distinguishes general investments, which create value across firms, from firm-specific investments, whose value depends on a particular organization. An ASI-era institution should translate that distinction into a portable skill core and a nonportable company binding rather than forcing one owner to take the entire file. Grossman and Hart's incomplete-contract theory treats ownership as residual control over matters a contract did not specify. Giving all residual control to one party weakens the other party's incentive to invest. Workers invest in judgment, relationships, and reflection; firms invest in data, colleagues, brands, risk, and infrastructure. A durable arrangement must leave each side enough control to keep investing.

Polanyi's The Tacit Dimension begins from the proposition that people know more than they can say. One economic function of advanced AI is to encode, copy, and execute tacit judgment that was previously difficult to transfer. Lower copying costs do not decide who deserves the gains from copying. They make initial authorization, purpose limits, and collective bargaining more consequential.

A 2026 Harvard Business School working paper, still identified as preliminary, Labor as Capital: AI and the Ownership of Expertise, reports that when workers know their work data may train AI to perform similar work, they provide less existing data and demand a higher reservation wage for continued labor. The finding should be treated with the caution appropriate to a preliminary working paper and does not establish the response in every industry, but it illustrates the incentive problem: a rule intended to maximize company access can reduce the production and sharing of useful context.

Absolute individual ownership fails too. If every item of work context belongs wholly to the employee who touched it, companies will invest less in training and knowledge infrastructure. A key employee could hold a team's jointly built operational capacity hostage. The privacy of customers and colleagues could be mistaken for an asset the worker is entitled to sell. Companies could become unable to satisfy audit, regulatory, security, record-retention, and business-continuity obligations.

There is also a worker-to-worker externality. Allowing each worker to sell context independently does not necessarily empower labor. One person's sale can improve the company's capacity to automate or substitute for other workers, weakening their bargaining position. Workers may then underbid one another for a payment that does not reflect the collective loss of leverage. Team context is therefore often better governed through collective bargaining, a knowledge guild, a union, a data trust, or another pooled institution than through individual micropayments alone. The companion HBS paper Knowledge Guilds proposes collective administration of training uses and returns through such institutions. Collective bargaining does not erase individual contribution; it manages worker-to-worker effects that a bilateral sale cannot internalize.

The political-economic issue is not whether investment deserves a return. Companies supply capital, data infrastructure, coordination, market access, legal responsibility, and risk-bearing; those contributions warrant protection and reward. The issue is whether one employment payment should silently purchase an unlimited, perpetual, transferable right to reproduce a human capability, including after employment ends. At the other extreme, it is equally untenable to let an individual privatize the contributions of teammates, the employer's protected environment, or third-party data.

A sustainable regime must make continued knowledge production rational for both sides. It should protect the firm's factual and operational assets, preserve the worker's future productive agency, recognize collective production, and price uses that exceed ordinary employment, especially continued operation of a personalized model after departure.