Private property

The Volkswagen factory, an example of private property. The factory is privately owned by shareholders who derive income from its operation in the form of profits.

Private property is the employment, control, ownership, ability to dispose of, and bequeath land, capital, and other forms of property by persons and privately-owned firms.^[1] Private property is distinguishable from public property and collective property, which refers to assets owned by a state, community or government rather than by individuals or a business entity.^[2] Private property emerged as the dominant form of property in the means of production and land during the Industrial Revolution in the early 18th century, displacing feudal property, guilds, cottage industry and craft production, which were based on ownership of the tools for production by individual laborers or guilds of craftspeople.^[3]

In Marxian economics and socialist politics, there is distinction between "private property" and "personal property". The former is defined as the means of production in reference to private ownership over an economic enterprise based on socialized production and wage labor; the latter is defined as consumer goods or goods produced by an individual.^[4][5]

The concept of property is not equivalent to that of possession. According to Phillip O'Hara, Property and ownership refer to a socially-constructed circumstance conferred upon individuals or collective entities by the state, whereas possession is a physical phenomenon.^[6]

Roles of private property in society

Liberal perspective

Advocates of capitalism (see: Economic liberalism) consider private property to be essential for the construction of a prosperous society. They believe private ownership of land ensures the land will be put to productive use and its value protected by the landowner. If the owners must pay property taxes, this forces the owners to maintain a productive output from the land to keep taxes current. Private property also attaches a monetary value to land, which can be used to trade or as collateral. Private property thus is an important part of capitalization within the economy.

Private property gives its owners stability, as well as a vested interest in the enforcement of property law. Citizens that own private property have a vested interest in fighting corruption of government officials as in cases where corruption is a direct threat to private property and the laws that govern maintaining private property.

Socialist perspective

In general, socialists view private property relations as limiting the potential of productive forces in the economy. They believe private property becomes obsolete when it concentrates into centralized, socialized institutions based on private appropriation of revenue until the role of the capitalist becomes redundant. With largely reduced capital accumulation from the original class of owners, private property in the means of production is to be replaced with a free association based on public or common ownership of socialized assets.^[7]

Marxist perspective

Marxists define private property as the right of an individual, or group of individuals, to exclude others from the use of an object. In its undeveloped form, private property is the simple relation of the individual to the natural world in which their individuality finds objective expression. Private property finds its ultimate expression only in the relation of wage-labor and capital.^[8] According to Norman Levine, when Marx called for the abolition of private property, he was not referring to privately owned personal property such as clothing and furniture that was not used to produce the "social wealth," but to productive property.^[9]

Austrian School perspective

Austrian School economists Ludwig Von Mises and Friedrich August Hayek argued that private property rights are a requisite for rational economic calculation and that the prices of goods and services cannot be determined accurately enough to make efficient economic calculation without clearly defined property rights.^[10]

History

This section requires expansion.

Personal property versus the means of production

In political and economic theory, the distinction between private property in personal goods and private property in the means of production is important.

In general, personal property is almost an extension of one's person and includes property from which one has the right to exclude others.^[11][12]

From the socialist perspective, private property refers to capital or means of production that is owned by a business or few individuals and operated for their profit. Personal property refers to tangible items and possessions individuals own, such as consumer goods.

From the Marxist perspective, which is very similar to the socialist perspective, private property is a social relationship, not a relationship between person and thing. In capitalism there is little distinction between personal and private property.^[13]

See also

Notes