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.


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]


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 ]



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]

Common ownership in capitalist economies

Common ownership is practised 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]


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. [14] [15] 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. [16] 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 sub-optimality 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. [17] Recently, several authors have shown that joint ownership can actually be optimal even if investments are in human capital. [18] In particular, joint ownership can be optimal if the parties are asymmetrically informed, [19] if there is a long-term relationship between the parties, [20] or if the parties have know-how that they may disclose. [21]

See also

Related Research Articles

State capitalism Economic system

State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are organized and managed as state-owned enterprises, or where there is otherwise a dominance of corporatized government agencies or of public companies such as publicly listed corporations in which the state has controlling shares. Marxist literature defines state capitalism as a social system combining capitalism with ownership or control by a state. By this definition, a state capitalist country is one where the government controls the economy and essentially acts like a single huge corporation, extracting the surplus value from the workforce in order to invest it in further production. This designation applies regardless of the political aims of the state. Many scholars argue that the economy of the Soviet Union and of the Eastern Bloc countries modeled after it, including Maoist China, were state capitalist systems. They also argue that the current economy of China constitutes a form of state capitalism.

In economics and sociology, the means of production are physical and non-financial inputs used in the production of goods and services with economic value. These include raw materials, facilities, machinery and tools used in the production of goods and services. In the terminology of classical economics, the means of production are the "factors of production" minus financial and human capital.

Private property Legal designation of the ownership of property by non-governmental legal entities

Private property is a system that allocates particular objects like pieces of land to particular individuals to use and manage as they please, to the exclusion of others and to the exclusion of any detailed control by society. In legal terms it's usually a 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. Certain political philosophies such as anarchism and socialism make a clear distinction between private and personal property while others blend the two together. Private property is a legal concept defined and enforced by a country's political system.

State ownership type of property

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. As such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce and in what quantities, and who receives the output of production.

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.

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.

Marxism Economic and sociopolitical worldview based on the works of Karl Marx

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, there is currently no single definitive Marxist theory.

Property rights are theoretical socially-enforced 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 four broad components and is often referred to as a bundle of rights:

  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
  4. the right to enforce property rights

Communism is a philosophical, social, political, economic ideology and movement whose ultimate goal is the establishment of a communist society, namely a socioeconomic order structured upon the ideas of common ownership of the means of production and the absence of social classes, money and the state.

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.

Communist society type of society and economic system

In Marxist thought, communist society or the communist system is the type of society and economic system postulated to emerge from technological advances in the productive forces, representing the ultimate goal of the political ideology of communism. A communist society is characterized by common ownership of the means of production with free access to the articles of consumption and is classless and stateless, implying the end of the exploitation of labour.

In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the systems of organizing production and distribution within capitalist societies. Private money-making in various forms preceded the development of the capitalist mode of production as such. The capitalist mode of production proper, based on wage-labour and private ownership of the means of production and on industrial technology, began to grow rapidly in Western Europe from the Industrial Revolution, later extending to most of the world.

Socialist mode of production

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.

The concept of social ownership refers to various forms of ownership for the means of production in socialist economic systems. These systems may encompass state ownership, employee ownership, cooperative ownership, citizen ownership of equity, common ownership, or collective ownership. Historically 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 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.

A socialist state, socialist republic, or socialist country, sometimes referred to as a workers' state or workers' republic, is a sovereign state constitutionally dedicated to the establishment of socialism. The term communist state is often used interchangeably in the West specifically when referring to one-party socialist states governed by Marxist–Leninist communist parties, despite these countries being officially socialist states in the process of building socialism. These countries never describe themselves as communist nor as having implemented a communist society. Additionally, a number of countries that are multi-party capitalist states make references to socialism in their constitutions, in most cases alluding to the building of a socialist society, naming socialism, claiming to be a socialist state, or including the term people's republic or socialist republic in their country's full name, although this does not necessarily reflect the structure and development paths of these countries' political and economic systems. Currently, these countries include Algeria, Bangladesh, Guyana, India, Nepal, Nicaragua, North Korea, Portugal, Sri Lanka and Tanzania.

Collectivist anarchism, also referred to as anarchist collectivism and anarcho-collectivism, is a revolutionary socialist doctrine and anarchist school of thought that advocates the abolition of both the state and private ownership of the means of production as it envisions in its place the means of production being owned collectively whilst controlled and self-managed by the producers and workers themselves. Notwithstanding the name, collectivism anarchism is seen as a blend of individualism and collectivism.

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


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