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Property as an economic category
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1.2 Property as an economic category
Representations of the property have been forming in science and life for thousands of years, while ownership has become, above all, the official target of legal institutions and philosophy. For a long time the property as a special social relationship was the immediate object of law (especially civil law), but with the further development of social production the property along with legal became also the determining economic category. The concept of property relations includes on one hand relation of an owner to their belongings, i.e. property relationship between subject and object. The subject of property (the owner) is the active side of property relations, having objects of property, possessing, controlling and using them. It should be noted that the property can not be subjectless. As to the orphan objects, things that did not have or have lost their owner, then they cease to be property.
The object of ownership is a passive side of property relations in the form of objects of nature, matter, energy, information, possessions, spiritual, intellectual property, wholly or in some degree belonging to the owner. Often the object of property is called simply the property.
In fact, property can not be imagined without individuals or groups considering their specific things, conditions and products of production as theirs, and others as belonging to strangers. From that it obviously follows that the property is the individual's attitude to things. In this case, since this is the attitude of different people to the same concrete thing, then there is evidence of ownership as the relationship between individuals about things. Being legally settled by state, they take the form of ownership, which include the authority of the owner to possess, use and dispose of property. In the more complete definition of the deployment of property as an economic category, various economists used different static or dynamic bases in this category, its main manifestations in the everyday practice, its class and historical character and so on. From my point of view, the most functional thing to do, in terms of the present study, is to determine the owner of the thing through the main manifestations of the economic domination: the possession, use, and disposal.
In the most general form the ownership can be defined as the relationship between economic agents regarding the attribution of economic resources and consumer goods. Also in the most general terms we can say that the appropriation of economic resources is the primary determinant in regard to the appropriation of consumer goods. Consequently, in any society or any country the rich and poor stratification of the population stems mainly on the different attitudes to economic resources as belonging to one or others.
It is possible to understand the essence of property, if we consider it in conjunction with all other economic relations of society: the production, distribution, exchange and consumption of goods. It is exactly the property that fully reflects the socio-economic character of the epoch. All existing economic systems differ in their attitude, especially in the ownership of the means of production. There are several historic property types, characterized by different methods of connecting the producer and the means of production and distribution of products of the social product among the members of society. It is accepted to distinguish the primitive, slave, feudal and capitalist types of property. Until recently, the socialist type of property was also highlighted, for which, apparently, there were not sufficient grounds. Socialism actually was built in none of the countries that were once part of the socialist community. Direct producers in these countries were still exploited, the reunification of the means of production with production workers in fact did not occur. The type of property under totalitarian regime (sometimes overtly, but in many cases disguised) that appeared in these countries, intricately combined the characteristics peculiar to ownership types of earlier ages and now existing.
Thus, the property as an economic category is defined as the relation of individuals or community of individuals to things as belonging to them, which is expressed in the ownership, the use and the disposal of property, as well as in addressing the impact of all other actors in the sphere of economic domination, into which the power of the owner extends, that is to say, the public attitudes on the ownership, control and disposal of the thing.
1.3 The theory of property rights
In a society with the state legal structure the economic relations of property inevitably receive legal consolidation. This is expressed either as a system of legal rules governing these relations and the Institute of ownership, or in securing some measure of legal authority for a specific person who is the owner of the thing. In the first case we speak of ownership in the objective sense, in the second sense we speak of the subjective sense or of the subjective ownership.
Ronald Coase was at the root of property rights. According to his theory: "the property is not resources, not factors of production, and but a set of rights or share of rights to use resources." Contents of property rights comprise, belonging to the owner, authority to own, use and dispose of the thing. These powers, as well as the subjective right of property in general, constitute legally supporting behavior capabilities of the owner; they belong to him as long as he remains the owner. In cases where the owner is unable to effectively exercise these powers, such as the arrest of its property for the debts or where the property unlawfully was held by another person, he does not lose either the powers themselves or the property rights in general. To disclose the content of property rights, it is necessary to define each of the powers belonging to the owner. Let's start with ownership.
Competence of ownership is the legally backed possibility of economic domination of the owner of the thing. It concerns the economic dominion over the thing, which does not require that the owner is in direct contact with it. For example, leaving on a long trip, the owner remains the owner of his apartment and the belongings located in it.
Possession of a thing may be illegal. By law possession is called legal, if it is based on any legal basis, i.e. the legal title of ownership. Legal ownership is often referred to as having title. Illegal possession cannot have a legal basis, so it has a title. Things, as a general rule, are in the possession of those who have a right to own them. This circumstance makes it possible in disputes over things to use the presumption of legality of actual possession. In other words, one who has the thing is expected to be entitled to its possession until proven otherwise. Illegal owners in turn are subdivided into honest and dishonest. The owner is conscientious, if he neither knew nor should have known of the illegality of his possession. Owner is unscrupulous, if he knew about it or should have known. In accordance with the general presumption of conscientiousness people participating in civil rights and responsibilities, we should act upon the assumption of good conscientious of the owner.
The division of the illegal owners in those with conscientious and without is important in settlements between owners about the income and expenditure, when the owner claims his thing by the court claim, as well as in deciding whether the owner can buy property right of ownership by prescription or not.
Competence to use is the legally backed possibility of extracting useful properties from things in its personal or industrial use and for production purposes. For example, a sewing machine can be used for clothing not only for one’s own family, but also on the side for a fee. Competence to use is usually based on the entitlement of ownership. But sometimes you can use the thing, and not owning it. For example, musical instruments rental studio delivers instruments for rent with the condition that tool use occurs indoor of the studio, for example, at certain hours and days. The same is true when using the slot machines.
Competence of orders is the legally secured possibility to determine the fate of things by making the legal acts in respect of the thing. There is no doubt that in cases when the owner sells his thing, lends it, pledges it, transfers it as a contribution to a business entity or partnership or as a donation to the charity fund, it carries out the disposal of the thing. It is significantly more difficult to legally characterize the actions of the owner in respect to things when he or she destroys the thing that has become useless to him or her, or throws it, or when a thing is by its properties designed for use in only one act of production or consumption. If the owner deletes something or throws it, he disposes of a thing by making one-sided deal, because the will of the owner is directed for abandonment of property rights. But if the ownership is terminated as a result of single-use of the item, the will of the owner is not directed towards the termination of the right of ownership, but towards extracting useful properties out of the things. Therefore, in this case there is an exercise only of the right to use the thing, but not the right to dispose it.
Disclosure of the content of property rights is not completed by defining powers belonging to the owner. The fact is that the powers of the same name may belong not only to the owner, but to another person, including the bearer of the economic management right or of the life inheritable possession right. It is therefore necessary to identify a specific trait that is inherent to the specified competence exactly as authority of the owner. It is in the fact that the owner uses the powers vested in him at its discretion. As to the property rights, the exercise of the right at discretion including disposal means that the power (the will) of the owner is based directly on the law and exists independently of the authorities of all other persons in respect of the same things. Authorities of all other persons are not only based on the law, but also are dependant on the authority of the owner, affected by it. Ownership has the property of elasticity. This means that it has an inherent ability to recover in the same volume as soon as the connections of limitations no longer exist.
Ownership is among the exclusive rights. This means that the owner is entitled to exclude the impact of all third parties to the belonging-to-him scope of economic domination, including through the measures of self-defense. This, however, does not mean that the power of ownership over belongings is boundless. In accordance with the permissible thrust of civil regulation, the owner can actually perform, with respect to his property, any action, but not contrary to the laws and other legal acts. The owner is obliged to take measures to prevent harm to the health of citizens and the environment, which may be caused in the exercise of his rights. He must refrain from conduct which brings anxiety to his neighbors and others, and especially from the actions perpetrated solely with the intent to cause someone harm. The owner also has the obligation, on the terms and conditions and within the limits prescribed by law and other legal acts, to allow limited use of his property by others. These circumstances must be considered in formulating a common definition of property rights. Finally, giving the definition of property rights should be based on a common definition of subjective civil right, which extends to the right of ownership.
As for the right of property this general definition should be elaborated taking into account the specific traits inherent to the right of ownership. The purpose of the use of any property right is to obtain economic benefit. In law the basic rights of property are complemented by a number of provisions that reinforce and develop those rights, it is the right of inheritance, the indefinite possession, receipt of income from the use of goods belonging to the social protection system, etc.
CHAPTER 2. OWNERSHIP FORMS AND THEIR CLASSIFICATION.
Ownership is called its type that is characterized, above all, by who is the owner. Ownership type determines the identity of various objects of property to the subject of a single unified nature, say, a person, family, group, team, people. We cannot understand the economy, if we do not learn how to classify the property. That is, we must be able to distribute the relations of classes and assign them to subordinate species, specific forms, depending on their common characteristics. Classification assignment is largely hampered by the fact that there are two types of property relations - in the economic and legal sense. Hence, there are two distinct grounds for classification.
The basis for the classification of property in its economic sense is the degree of cooperation of labor and production. This test shows how many people are united in the process of labor and during the process appropriate funds and the results of production. Thus, the real property socialization level is determined. In its scope socialized production has three main levels:
1) the lowest level - one-man assignment (small enterprise, on which one person or his family are based);
2) the average scale of socialization (more or less a large enterprise or business association, which is united under the work of many people);
3) the highest level - a national complex (labor is cooperated in the national scale).
Classification of property in the legal sense is grounded in different kinds of powers of the owners and the character of the property. The following are different: the nature of attribution and the relationship between property owners and not owners;
1) the ability or inability to freely share the common property among individual owners at their discretion.
Sometimes the form of ownership in general is reduced to two types: private and public, to facilitate their consideration and study. In light of the above let’s concentrate on the three forms of ownership, which on the one hand have received wide recognition in science, but on the other hand are among the most common.
In the vast majority of countries private ownership is now prevailing in varying degrees. The use of private property is one of the basic elements of a mixed economic system. Much of the capital is privately owned. Private ownership of capital, produced goods and services, and the received revenues are essential to support the free enterprise system. Property is called private, in relation to which the owner is personified, isolated as an individual. Private ownership requires a certain rejection of others, not related to the number of owners; it requires the right of control over certain objects - capital, land, income, final goods, etc. All of those are personalized and have concrete owners. In other words, property is considered private if the right to it belongs either to one person or a relatively small group of people, each of which has a partnering owner, has his or her personal share of the property.
Private property belongs only to individuals. A variation is a private individual ownership. Individual, private firms, which form a legal entity, are small and are represented in a few sectors: handicrafts and agricultural production, services of all kinds, including the most modern, such as consulting. Their owners are either one person or a small number of individuals; the natural work (one person or family, as it takes place on farms in the countryside) prevails, but in addition thereto paid employment may be applied. Worldwide, there are several hundred million such households, but they are characterized by a huge rotation: every year a large number of such firms go bankrupt and are liquidated, but replaced with new ones. Besides small firms, individual private property category includes used-for-income property objects of individual entrepreneurs (small traders, artisans and liberal professions), working on the relevant resolution (patents, licenses) from the authorities and not forming a legal entity. Intermediate position between the private and public ownership is common property of a number of subjects. Common property is divided into a joint and shared. The common joint property is owned by all the owners together and not divided between them to pieces. The common share ownership is divided into shares, parts. In cooperatives, societies the share of each owner is called eral resources. In many cases, shared ownership extends only to the value of ownership property, it gives the right to participate in the management of the subject, but the owner can not withdraw their share in tangible, physical form, pick up "a piece".
Common share ownership is difficult to distinguish from the private; the boundary between them is blurred. For example, stock ownership can be considered both private and commonly shared, as the shareholder contributes its share to the capital of stock company. Stock ownership is also called the corporate as it is the property of a single corporation. Corporative enterprises exist wherever the technological base of an industry involves formation of medium or large-scale production, which requires large amounts of capital. These companies exist in the form of companies (corporations and limited liability companies), partnerships (complete, in faith, and others), cooperatives, non-profit organizations (foundations, associations). The subjects of common property can be any property owners, including the state. If the owner separates their part of the common property, it becomes private property.
The common property understood in the broadest sense extends from the narrow sectional to state property. The subject of property as an individual is not stressed in public property, and property rights apply to all citizens. At the same time, it would be inappropriate to assume that in the public property (sometimes called social) the individual as an owner does not appear. State property is something that belongs to all, together and separately, i.e. every member of society at least to some minimal but to some extent has the rights of the owner. Often, public property is identified with the state that is not quite correct.
The overall, including the national, property is sometimes divided on a territorial basis. In that case, those forms of ownership are distinguished as a regional (territorial) and municipal (local). Separation of those forms of ownership emphasizes the fact that the property to a certain extent is managed by the authorities of the territory, say, the municipality. Municipal property adjoins directly to the public, which, however, in the West, and in Kazakhstan is qualified as differing by the state. Nevertheless, in its economic nature, they are related to each other. The only difference is that municipal ownership is linked with the budget of the lower level and operates in geographically limited areas of national economy; ownership of a region does not extend to the entire country.
State ownership is ensuring for the state the right to control objects. State ownership in the developed capitalist countries today is concentrated in a very limited range of industries, which for one reason or another are low profit or even unprofitable, which makes them unattractive to private capital. These are mainly the socio-economic infrastructure (railways, utilities, education). In other industries there is only "point" of state participation in the form of stakes in companies. The average for developed countries of the share of public enterprises in the creation of GDP does not exceed 7%. In developing countries and countries with transition economies, the figure is 11 and over 40%. Companies that referred to as the state company, either are wholly owned or the state owns a controlling stake (or at least, has a solid blocking minority). Legally the owners in federal states are the federal land agencies (such as the land of Germany or U.S. states), and in unitary states the owners are the relevant central and regional institutions.
Companies and institutions (e.g. educational or health) in which the state participates at a level below a blocking minority could be called mixed.
In countries with a federal system the government property is divided into federal and sub-national, i.e. it is the property regions, subjects of the federation.
To clearly distinguish between the state and public property is difficult. The objects of public property, logically, should be good, generally available to all citizens on an equal basis, such as vacant land, water and river spaces, public parks and beaches, forests. If the possibility of using them by all the people is limited, then there is the principle of priority applied. And such places as zoos, nature reserves, which are administered by state governments, as well as are already in state ownership, as well as state enterprises, institutions, the main types of natural resources, defense facilities.
Now let’s turn the important question: which of the considered forms of ownership is better? Usually this question is in the form of a dilemma: public or private property? In fact, such an alternative formulation of the question is counterproductive. It should go about finding the most rational, optimal combination of both forms. Criterion for evaluation can be only one: what kind of property in a given historical moment and in longer term, offers higher level needs satisfaction of the population, while taking into account the indicators of life quality. From the combination of these criteria, preference should be given to private property, which is now the core of the developed market economies of the West. To create just such an economic system, developing and former socialist countries are striving. It contains the profit motive and competition, the realization of which brings the highest economic efficiency and better meets the needs. However, private ownership has its drawbacks, especially regarding employment and unemployment. After all, the profit motive and competition is forcing businesses constantly to seek perhaps a greater reduction in production costs, including economy in labor force. In Western countries, a wave of privatization in the 80's, the first half of the 90's led to a reduction in the proportion of state ownership in the production of GDP from 9 am to 7% on average, that means overcoming the legacy of the prewar and early postwar years. In the 30-ies state's direct participation in the economy expanded in the process of overcoming the deepest crisis in the history of capitalism of 1929 - 1933 years. State ownership in the prewar years in most Western countries was significantly strengthened as a sort of "backup" of private enterprises, that had revealed the sequential weaknesses, and as an instrument of maintaining the strength of the social system. In the late 40's - 50's in Western Europe and Japan, private capital was temporarily weakened by war damage and certain other circumstances. Such a gap as a need occurred was filled by the state, what is now not necessary.
The potential for further privatization in the Western countries has largely been exhausted. The state share in it, at least in the medium term, will remain approximately at current levels with slight changes in some countries. However, in some cases to deal with the possible appearance of unemployment, in labor-intensive industries (especially in infrastructure) new enterprises can be created through public investment. Programs of Western social democracy, which came in power recent years, in several countries, including France, Britain, Germany and Italy, provide for such measures. In developing countries in the same period, the mentioned rate remained at 11%. On one hand, this was due to the influx of foreign private investment, through which the creation of new private enterprises was possible. On the other hand, the weakness of national private capital forced the state to maintain a relatively high level of its presence in the economy. As in the medium term, we can not expect a massive increase in inflows of direct investment from Western countries, as well as other reasons, the current figure is unlikely to change significantly in the foreseeable future.
Former socialist countries have embarked on the transition from planned to market economy mainly at the turn of the 80's and 90's. Market transformation, of course, first of all requires displacement of state ownership with private through privatization and the creation of new private enterprises. In this regard countries with economies in transition since the early 90's had already passed (each in varying degrees) a significant segment of the path. However, the share of government property in the production of the GDP of these countries, on average, still accounts for 20 - 30% or more, i.e., noticeably exceeds the corresponding figure for developed and developing countries.
CHAPTER 3. Change of ownership
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