The purpose of this post is to examine the concept of private property by which I mean the ownership of enterprises, homes etc by individuals rather than the state or society as a collective whole. I will argue that there are two main justifications for private property namely efficiency and the protection of individual liberty.
In an article for the July 2006 issue of theUK-based Socialist Review (the monthly journal of the Trotskyite Socialist Workers Party), Alex Callinicos argues for an alternative to Capitalism as follows “The implication is that any sustainable alternative to neo-liberalism has to be based, not on the market, but on democratic planning. There are some models of how this could work. One is Albert’s Parecon, or participatory economics. This involves an economy of workers’ and consumers’ councils in which individuals and enterprises submit proposals for their share of society’s resources. Then a process of gradual adjustments (Albert calls them “iteration”) takes place while technical experts come up with a plan that would give everyone as much as possible of what they want.
The main weakness of this model is that it mimics a bit too closely the workings of a market economy, in which claims on resources are driven by individual demands. Albert is an anarchist, and his commitment to decentralisation here goes too far. The allocation of society’s resources isn’t a neutral technical issue. It’s a political question that requires some sort of collective and democratic decision-making process to choose between what would often be competing views of the priorities of the society in question.
From this perspective, the British left wing economist Pat Devine offers a superior model of what he calls negotiated coordination. Here the allocation of resources is largely the outcome of discussion between producers, consumers, and other affected groups, but within the framework of overall decisions about economic priorities made democratically at the national and international level”, (see http://www.socialistreview.org.uk/article.php?articlenumber=9793).
The above argument is full of holes. The idea that decisions about resources should be decided at a political level rather than by supply and demand in a market economy would turn into a beurocratic nightmare. Let us assume that consumer councils believe that a specific product (for example internet enabled televisions) are desirable and that their production should be boosted but politicians contend that resources should be concentrated on expanding the UK’s space programme, how would this divergence of opinion be settled? The politicians would, I assume get their enhanced space programme while consumer demand for internet enabled televisions would remain unmet. The advantage to a market economy is that enterprises are constantly striving to meet consumer demand in order to maximise value to their shareholders. In the case of internet enabled televisions their manufacture will increase in accordance with consumer demand benefiting those who wish to purchase the product and the owners of the companies who produce them.
During the early days of the internet many pundits argued that the technology would remain largely confined to the military and academia. How wrong they were! Demand for internet services has sky rocketted and continues to head heavenwards. If most consumers (in the form of consumer councils in a socialist society)had been asked during the early days of the internet whether firms should devote resources to it’s development I would hazard a guess that the answer would have been a resounding “no”. However this fortunately did not occur and the market now provides a sometimes bewildering variety of options for those wishing to go online.
Individual consumers (not consumer councils who would, in effect become an arm of the state) are the best judges of their own interests. That is not to deny that the market requires to be regulated. Legislation rightly exists to prevent the development of monopolies thereby preventing the exploitation of consumers. Again environmental standards are applied to prevent irresponsible companies from polluting the environment. All of this is necessary and is part of a regulated market economy, the system advocated to varying degrees by parties of the centre, the centre-left and the centre-right.
Well distributed property ownership is the mark of a free society. The fact that in a democracy the media is in a variety of hands helps to ensure pluralism. Individual owners do, of course have their own views however in many instances editors of newspapers have (and are) given considerable editorial freedom. In states such as the former Soviet Union all media was in the hands of the state and it showed! What the populace received was the opinion of the Communist Party of the Soviet Union all other views being censored or misrepresented by the state media. The free media can abuse it’s position. However it is in a democratic society subject to the rule of law and those who abuse their power can (and have) found themselves facing justice.
Many individuals aspire to own their own homes although this does vary from one country to another. The idea of one’s private space a place to which one can retreat and feel safe is pivotal to the continuing existence of individual liberty. Provided you pay the mortgage (assuming that you still have one) you are safe from the expropriation of your home.
Totalitarian societies understand the link between freedom and property ownership. In Stalin’s Russia the “Kulaks” (rich peasants) were forced off their land and sent to the Gulags (labour camps). While private property existed in Nazi Germany Jews and others who the regime considered to be “non-German” were deprived of their right to own property.
Private property is beneficial not only to the property owner but also to society as a whole (including those who do not themselves own property). As pointed out above the fact that enterprises are privately owned leads to firms providing those products desired by consumers. Consequently even if a customer is not a shareholder he/she benefits from the workings of the market. Having said that, defenders of the rights of private property need to be mindful of the fact that many people find it difficult (or impossible) to become home owners or investors. There is a particular problem in London were many young people who wish to become home owners can not aford to do so. Ideas such as shared ownership where people own part of the stake in their home and, over time increase that stake as and when they can aford to do so have the potential to assist those who want to get their foot on the property ladder. Other solutions can and should be explored.
A mixed economy which respects property rights is the best way of ensuring efficiency and personal freedom. However the right to own is balanced by rresponsibility to behave ethically by, for instance not polluting the environment and ensuring that employees are provided with good working conditions.