The term Private Property is a judicial classification and means the possession of land by those who are not part of government organisations. There is also a distinction between Public Property and Private property, Public Property is in the possession of a government body. There is also Collective or Co-operative Property, this property is also owned by those not in any government organisation.
Private property can either be classified as Personal property, which can be moved from one place to another. The other is Capital goods; those used in the production of goods and services and are durable goods. The legal concept of Private Property is determined and administered by a country’s governmental system.
History of Private Property
Those who spoke English prior to the 18th Century used the word ‘property’ which referred to land ownership. The term ‘property’ in England in those days did not have any legal explanation; this only came into being in the 17th century. Commercial property that was labelled private property, originated with the European Trading Companies during the 17th century.
The official process of combining a group of small holdings into one larger farm in England, also known as enclosure, was discussed in length during the 17th and 18th centuries. This issue was debated by the combined efforts of Thomas Hobbes (1588-1679), John Locke (1632-1704) and James Harrington (1611-1677). Their philosophy and political ideas helped to address the issue of property ownership.
John Locke argued against those supporting supreme monarchy, he saw property as a ‘natural right’ that God did not grant solely to the monarchy. Locke, who was motivated by the growth of mercantilism, reasoned that because private property existed before, and is therefore separate from government. Locke made a distinction between ‘common properties’, which he referred to as ‘open-access property’, and property in consumer goods and producer goods, meaning that of land. His main contention for property in land was better quality land management and development over collective open-access land. Locke established a theory relating to property rights grounded on labour, which specified that any improvement in nature is a natural result of labour. Therefore any work or labour put into the land, entitles the labourer to its harvest.
The Industrial Revolution occurred in the 18th century and during this time, Adam Smith (1723-1790), an economist and philosopher, saw the differences between the ‘right to property’ as an acquired right and natural right. His views were in disagreement with Locke. Smith limited natural rights to ‘liberty and life’. He also concentrated on the connection between an employer and the employee; he recognised that property and civil government relied on each other. He understood that “the state of property must always vary with the form of government”. Smith also stated that civil government could not survive without property, because its main purpose was to protect property ownership.
Karl Marx (1818-1883), a philosopher and economist, offered a powerful assessment of the growth and history of property developments and their connection to the technical productive forces of a certain time. The ideas that Marx presented on private property have had an influence on succeeding economic theories. It also influenced communist, anarchist and socialist political groups, which steered many to believe there was a connection between private property and capitalism.
Economics of Private Property
The present leading school of economic thought, neoclassical economics, discard some of the statements of the early philosophers, supporting classical economics. But there has been some dispute against neoclassical economics, stating that it is influenced by the remnants of ‘natural moral theory’ and the idea of natural rights. This has all headed towards the introduction of private market exchange and private property rights, identical to, ‘natural rights’ characteristic in nature.
Those who encourage a private sector-led market economy or economic liberals believe that private property is important for the development of a flourishing society. They consider privately owned land to be more productive and the lands value is safeguarded by the landowner. Paying property tax compels the owners to uphold a productive harvest from the land, which hold taxes current.
Private property assigns monetary worth to land, this can then be utilised as collateral or used to trade with. Private property is therefore a significant feature of capitalisation within the economy. Socialist economists are unfavourable towards private property; they say socialism seeks to replace private property by methods of production for social ownership or public property.
Socialists commonly dispute that dealing with private property can restrict the capabilities of the productive forces within the economy. This occurs when productive activity develops into a collective activity, where the capitalist’s function becomes unnecessary. Socialists commonly support social ownership, for reasons such as, to abolish the differences between workers and the owners, and as an element for growth of a post-capitalist economic structure.
As a comeback to the criticism of the socialist economists, Ludwig Von Mises, an economist from an Austrian school, disputed that private property rights are necessary for ‘rational’ economic reckoning. He stated that the value of goods and services cannot be precisely finalised in order to make an effective economic calculation, without identifying clear private property rights. Mises also disputed that a socialist system, would clearly not have private property in aspects of production and would therefore be unable to calculate proper price valuations for the aspects of production. This would therefore, according to Mises, make rational socialist calculation unachievable.
If you have a look at Marxian Economics and socialist politics, you will be able to see the differences between “private property” and then “personal property”. Private property can be seen as a method of production, referring to private ownership above economic enterprise centred on wage labour and socialised production. Personal property is based on consumer goods or goods manufacture by an individual. Private property was seen as land ownership, before the 18th century.
Criticism of Private Property
Private property by aspects of production is the main part of capitalism that is condemned by socialists. Marxist views tell us that private property point to a social relationship, whereby whoever owns property can seize everything somebody else produces with his property, capitalism is subject to private property.
The socialist assessment of private ownership is heavily swayed by the Marxist evaluation of capitalist property forms and is part of wider assessment against that of exploitation and alienation in capitalism. Amongst socialists, there is a disagreement on the soundness of the different parts of Marxian analysis. Many socialists agree on Marx’s observations on alienation and exploitation. Socialists disagree with the private seizure of property income, because the property income does not relate to any profit gained from productive activity, it is produced by the workers and therefore is an act of exploitation.
The capitalist or those that own property then live off the passive property income. This income is produced by the working class, based on their right to ownership by way of private equity and in the form of stock. This oppressive system is made worse by the essence of capitalist society. Looking at capitalism this way, you can see how it is regarded as a class system, similar to the class systems of the past, which include feudalism and slavery.
There has also been some disagreement with private ownership, in regards to non-Marxist ethical arguments by supporters of market socialism. James Yunker, an economist, describes the reasoning behind market socialism: Yunker states that passive property income does not need any physical or mental effort by the beneficiary. Also the seizure of property income by a small section of private owners is the basis of large disparities within contemporary capitalism. The social ownership of property income within a market economy would solve the chief cause of social inequality and its associated social problems.