Common ownership

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Common ownership refers to holding the assets of an organization, enterprise or community indivisibly rather than in the names of the individual members or groups of members as common property.

Contents

Forms of common ownership exist in every economic system. Common ownership of the means of production is a central goal of communist political movements as it is seen as a necessary democratic mechanism for the creation and continued function of a communist society. Advocates make a distinction between collective ownership and common property as the former refers to property owned jointly by agreement of a set of colleagues, such as producer cooperatives, whereas the latter refers to assets that are completely open for access, such as a public park freely available to everyone. [1] [2]

History

While virtually all societies have elements of common ownership, societies have existed where common ownership extended to essentially all possessions. Another term for this arrangement is a "gift economy" or communalism.[ citation needed ] Many nomadic societies effectively practiced common ownership of land. [ citation needed ]

Examples

Prehistoric

Marxist theory (specifically Friedrich Engels) holds that hunter-gatherer societies practiced a form of primitive communism as based on common ownership on a subsistence level.[ citation needed ]

Christian societies

The first church in Jerusalem shared all their money and possessions (Acts of the Apostles 2 and 4). [3] [4] Inspired by the Early Christians, many Christians have since tried to follow their example of community of goods and common ownership. [5] Common ownership is practiced by some Christian groups such as the Hutterites (for about 500 years), the Bruderhof (for some 100 years) and others. [6] [7] In those cases, property is generally owned by a charity set up for the purpose of maintaining the members of the religious groups. [8] [9]

In capitalist economies

Common ownership is practiced by large numbers of voluntary associations and non-profit organizations as well as implicitly by all public bodies. Most co-operatives have some element of common ownership, but some part of their capital may be individually owned.

Marxist theory

Many socialist movements advocate the common ownership of the means of production by all of society as an eventual goal to be achieved through the development of the productive forces, although many socialists classify socialism as public ownership of the means of production, reserving common ownership for what Karl Marx termed "upper-stage communism". [10] From a Marxist analysis, a society based on a superabundance of goods and common ownership of the means of production would be devoid of classes based on ownership of productive property. [11]

Common ownership in a hypothetical communist society is distinguished from primitive forms of common property that have existed throughout history, such as communalism and primitive communism, in that communist common ownership is the outcome of social and technological developments leading to the elimination of material scarcity in society. [12]

From 1918 until 1995, the common ownership of the means of production, distribution and exchange was cited in Clause IV of its constitution as a goal of the British Labour Party and was quoted on the back of its membership cards. The clause read:

To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service. [13]

Antitrust economics

In antitrust economics, common ownership describes a situation in which large investors own shares in several firms that compete within the same industry. As a result of this overlapping ownership, these firms may have reduced incentives to compete against each other because they internalize the profit-reducing effect that their competitive actions have on each other.

The theory was first developed by Julio Rotemberg in 1984. [14] Several empirical contributions document the growing importance of common ownership and provide evidence to support the theory. [15] Because of concern about these anticompetitive effects, common ownership has "stimulated a major rethinking of antitrust enforcement". [16] The United States Department of Justice, [17] the Federal Trade Commission, [18] the European Commission, [19] and the OECD [20] have all acknowledged concerns about the effects of common ownership on lessening product market competition.

Contract theory

Neoclassical economic theory analyzes common ownership using contract theory. According to the incomplete contracting approach pioneered by Oliver Hart and his co-authors, ownership matters because the owner of an asset has residual control rights. [21] [22] This means that the owner can decide what to do with the asset in every contingency not covered by a contract. In particular, an owner has stronger incentives to make relationship-specific investments than a non-owner, so ownership can ameliorate the so-called hold-up problem. As a result, ownership is a scarce resource that should not be wasted. In particular, a central result of the property rights approach says that joint ownership is suboptimal. [23] If we start in a situation with joint ownership (where each party has veto power over the use of the asset) and move to a situation in which there is a single owner, the investment incentives of the new owner are improved while the investment incentives of the other parties remain the same. However, in the basic incomplete contracting framework the suboptimally of joint ownership holds only if the investments are in human capital while joint ownership can be optimal if the investments are in physical capital. [24] Recently, several authors have shown that joint ownership can actually be optimal even if investments are in human capital. [25] In particular, joint ownership can be optimal if the parties are asymmetrically informed, [26] if there is a long-term relationship between the parties, [27] or if the parties have know-how that they may disclose. [28]

See also

Related Research Articles

A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning. The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed.

Anti-capitalism Political ideology and movement opposed to capitalism

Anti-capitalism is a political ideology and movement encompassing a variety of attitudes and ideas that oppose capitalism. In this sense, anti-capitalists are those who wish to replace capitalism with another type of economic system, usually some form of socialism or communism. Another manifestation of anti-capitalism is barter.

The means of production is a concept that encompasses the social use and ownership of the land, labor, and capital needed to produce goods, services, and their logistical distribution and delivery.

Market economy Type of economic system

A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers are unimpeded by price controls or restrictions on contract freedom. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.

Private property is a legal designation for the ownership of property by non-governmental legal entities. Private property is distinguishable from public property, which is owned by a state entity, and from collective or cooperative property, which is owned by a group of non-governmental entities. The distinction between private and personal property varies depending on political philosophy, with socialist perspectives making a hard distinction between the two. As a legal concept, private property is defined and enforced by a country's political system.

Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different parties.

State ownership Ownership of industry by the state or a public body

State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community as opposed to an individual or private party. Public ownership specifically refers to industries selling goods and services to consumers and differs from public goods and government services financed out of a government's general budget. Public ownership can take place at the national, regional, local, or municipal levels of government; or can refer to non-governmental public ownership vested in autonomous public enterprises. Public ownership is one of the three major forms of property ownership, differentiated from private, collective/cooperative, and common ownership.

Economic system System of ownership, production and exchange

An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes and patterns of consumption that comprise the economic structure of a given community.

The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market.

A worker cooperative is a cooperative owned and self-managed by its workers. This control may mean a firm where every worker-owner participates in decision-making in a democratic fashion, or it may refer to one in which management is elected by every worker-owner who each have one vote. Most commonly workers additionally have equity in their firm.

Equity sharing is another name for shared ownership or co-ownership. It takes one property, more than one owner, and blends them to maximize profit and tax deductions. Typically, the parties find a home and buy it together as co-owners, but sometimes they join to co-own a property one of them already owns. At the end of an agreed term, they buy one another out or sell the property and split the equity. In England, equity sharing and shared ownership are not the same thing.

Marxism Economic and sociopolitical worldview

Marxism is a method of socioeconomic analysis that uses a materialist interpretation of historical development, better known as historical materialism, to understand class relations and social conflict as well as a dialectical perspective to view social transformation. It originates from the works of 19th-century German philosophers Karl Marx and Friedrich Engels. As Marxism has developed over time into various branches and schools of thought, currently no single, definitive Marxist theory exists.

Property rights are constructs in economics for determining how a resource or economic good is used and owned. Resources can be owned by individuals, associations, collectives, or governments. Property rights can be viewed as an attribute of an economic good. This attribute has three broad components and is often referred to as a bundle of rights in the United States:

  1. the right to use the good
  2. the right to earn income from the good
  3. the right to transfer the good to others, alter it, abandon it, or destroy it

Free association, also known as free association of producers, is a relationship among individuals where there is no state, social class, hierarchy, or private ownership of means of production. Once private property is abolished, individuals are no longer deprived of access to means of production, thus enabling them to freely associate without social constraint to produce and reproduce their own conditions of existence and fulfill their individual and creative needs and desires. The term is used by anarchists and Marxists and is often considered a defining feature of a fully developed communist society.

Economic democracy is a socioeconomic philosophy that proposes to shift decision-making power from corporate managers and corporate shareholders to a larger group of public stakeholders that includes workers, customers, suppliers, neighbours and the broader public. No single definition or approach encompasses economic democracy, but most proponents claim that modern property relations externalize costs, subordinate the general well-being to private profit and deny the polity a democratic voice in economic policy decisions. In addition to these moral concerns, economic democracy makes practical claims, such as that it can compensate for capitalism's inherent effective demand gap.

Socialist mode of production Marxian economy centered around use value, planning and contribution-based distribution

The socialist mode of production, also referred to as the communist mode of production, the lower-stage of communism or simply socialism as Karl Marx and Friedrich Engels used the terms communism and socialism interchangeably, is a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism within Marxist theory. The Marxist definition of socialism is that of an economic transition. In this transition, the sole criterion for production is use-value, therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning. Distribution of products is based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management. Surplus value goes to the working class and hence society as a whole.

Social ownership is the appropriation of the surplus product, produced by the means of production, to society as a whole. It is the defining characteristic of a socialist economic system. It can take the form of community ownership, state ownership, common ownership, employee ownership, cooperative ownership, and citizen ownership of equity. Traditionally, social ownership implied that capital and factor markets would cease to exist under the assumption that market exchanges within the production process would be made redundant if capital goods were owned and integrated by a single entity or network of entities representing society; but the articulation of models of market socialism where factor markets are utilized for allocating capital goods between socially owned enterprises broadened the definition to include autonomous entities within a market economy. Social ownership of the means of production is the common defining characteristic of all the various forms of socialism.

Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit. Socialist systems that utilize markets for allocating capital goods and factors of production among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.

In economic theory, the field of contract theory can be subdivided in the theory of complete contracts and the theory of incomplete contracts.

The following outline is provided as an overview of and topical guide to socialism, a range of economic and social systems characterised by social ownership of the means of production and workers' self-management as well as the political theories and movements associated with them.

References

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  2. Holcombe, Randall G. (2005). "Common Property in Anarcho-Capitalism" (PDF). Journal of Libertarian Studies . 19 (2): 10.
  3. "Acts 2:1–47". Biblia. Retrieved 2017-12-01.
  4. "Acts 4:1–37". Biblia. Retrieved 2017-12-01.
  5. Mangan, Lucy (2019-07-25). "Inside the Bruderhof review – is this a religious stirring I feel?". The Guardian. ISSN   0261-3077 . Retrieved 2019-12-23.
  6. "BBC - Inside The Bruderhof - Media Centre". www.bbc.co.uk. Retrieved 2019-10-10.
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  12. Engels, Friedrich. "The Principles of Communism". Vorwärts via Marxist Internet Archive.
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  15. Azar, José; Schmalz, Martin; Tecu, Isabel (2018), "Anticompetitive Effects of Common Ownership", Journal of Finance, vol. 73, no. 4, pp. 1513–1565, doi:10.1086/261117, hdl: 1721.1/49091 , S2CID   7965196
  16. Hemphill, Scott; Kahan, Marcel (2020), "The Strategies of Anticompetitive Common Ownership", Yale Law Journal, pp. 18–29.
  17. Solomon, Steven Davidoff (2018), "Rise of Institutional Investors Raises Questions of Collusion", New York Times.
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  19. OECD (2017), "Competition in Changing Times", DG COMP.
  20. Vestager, Margrethe (2018), "Common Ownership by Institutional Investors and its Impact on Competition", Competition Committee.
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  23. Hart, Oliver (1995). Firms, contracts, and financial structure. Oxford University Press.
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  25. Gattai, Valeria; Natale, Piergiovanna (2015). "A New Cinderella Story: Joint Ventures and the Property Rights Theory of the Firm". Journal of Economic Surveys. 31: 281–302. doi:10.1111/joes.12135. ISSN   1467-6419.
  26. Schmitz, Patrick W. (2008). "Joint ownership and the hold-up problem under asymmetric information". Economics Letters. 99 (3): 577–580. doi:10.1016/j.econlet.2007.10.008.
  27. Halonen, Maija (2002). "Reputation and the Allocation of Ownership" (PDF). The Economic Journal. 112 (481): 539–558. CiteSeerX   10.1.1.11.8312 . doi:10.1111/1468-0297.00729. JSTOR   798519.
  28. Rosenkranz, Stephanie; Schmitz, Patrick W. (2003). "Optimal allocation of ownership rights in dynamic R&D alliances". Games and Economic Behavior. 43 (1): 153–173. doi:10.1016/S0899-8256(02)00553-5.