Common ownership

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]

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]

In capitalist economies

Common ownership is practiced 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]

Antitrust economics

In antitrust economics, common ownership describes a situation in which large investors own shares in several firms that compete within the same industry. As a result of this overlapping ownership, these firms may have reduced incentives to compete against each other because they internalize the profit-reducing effect that their competitive actions have on each other.

The theory was first developed by Julio Rotemberg in 1984.^[14] Several empirical contributions document the growing importance of common ownership and provide evidence to support the theory.^[15] Because of concern about these anticompetitive effects, common ownership has "stimulated a major rethinking of antitrust enforcement".^[16] The United States Department of Justice,^[17] the Federal Trade Commission,^[18] the European Commission,^[19] and the OECD^[20] have all acknowledged concerns about the effects of common ownership on lessening product market competition.

Contract theory

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.^[21][22] 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.^[23] 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 suboptimally 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.^[24] Recently, several authors have shown that joint ownership can actually be optimal even if investments are in human capital.^[25] In particular, joint ownership can be optimal if the parties are asymmetrically informed,^[26] if there is a long-term relationship between the parties,^[27] or if the parties have know-how that they may disclose.^[28]

See also

• Collective ownership
• Common-pool resource
• Commons
• Commons-based peer production
• Condominium
• Cooperative
• Creative Commons
• Egalitarianism
• Georgism/Geolibertarianism
• Libertarian socialism
• Open source
• Post-scarcity economy
• Property rights (economics)
• Public ownership
• Public property
• Religious communism
• Rival and anti-rival goods
• Social ownership
• State ownership
• Tragedy of the anticommons
• Tragedy of the commons
• Usufruct

References

1. Public Ownership and Common Ownership, Anton Pannekoek, Western Socialist, 1947. Transcribed by Adam Buick.
2. Holcombe, Randall G. (2005). "Common Property in Anarcho-Capitalism" (PDF). Journal of Libertarian Studies. 19 (2): 10.
3. "Acts 2:1–47". Biblia. Retrieved 2017-12-01.
4. "Acts 4:1–37". Biblia. Retrieved 2017-12-01.
5. Mangan, Lucy (2019-07-25). "Inside the Bruderhof review – is this a religious stirring I feel?". The Guardian. ISSN 0261-3077. Retrieved 2019-12-23.
6. "BBC - Inside The Bruderhof - Media Centre". www.bbc.co.uk. Retrieved 2019-10-10.
7. "Bruderhof - Fellowship for Intentional Community". Fellowship for Intentional Community. Retrieved 2017-11-08.
8. "Community Of Goods". Hutterites. 2012-02-24. Retrieved 2017-12-01.
9. "Eberhard Arnold: Founder of the Bruderhof". www.eberhardarnold.com. Retrieved 2017-12-01.
10. Marx, Karl. "Critique of the Gotha Program". Die Neue Zeit. Bd. 1 No. 18 – via Marxist internet Archive.
11. Engels, Friedrich (Spring 1880). "Socialism: Utopian and Scientific". Revue Socialiste – via Marxist Internet Archive.
12. Engels, Friedrich. "The Principles of Communism". Vorwärts – via Marxist Internet Archive.
13. Adams, Ian (1998). Ideology and Politics in Britain Today (illustrated, reprint ed.). Manchester University Press. pp. 144–145. ISBN 9780719050565
14. Rotemberg, Julio (1984), "Financial Transaction Costs and Industrial Performance", MIT Sloan School of Management, Working Paper No. 1554‐84. [1]
15. Azar, José; Schmalz, Martin; Tecu, Isabel (2018), "Anticompetitive Effects of Common Ownership", Journal of Finance, vol. 73, no. 4, pp. 1513–1565, doi:10.1111/jofi.12698, hdl:1721.1/49091, S2CID 7965196
16. Hemphill, Scott; Kahan, Marcel (2020), "The Strategies of Anticompetitive Common Ownership", Yale Law Journal, pp. 18–29.
17. Solomon, Steven Davidoff (2018), "Rise of Institutional Investors Raises Questions of Collusion", New York Times. [2]
18. Federal Trade Commission (2018), "Competition and Consumer Protection in the 21st Century", FTC Hearings on Common Ownership. [3]
19. OECD (2017), "Competition in Changing Times", DG COMP. [4]
20. Vestager, Margrethe (2018), "Common Ownership by Institutional Investors and its Impact on Competition", Competition Committee. [5]
21. Grossman, Sanford J.; Hart, Oliver D. (1986). "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration" (PDF). Journal of Political Economy. 94 (4): 691–719. doi:10.1086/261404. hdl:1721.1/63378. JSTOR 1833199.
22. Hart, Oliver; Moore, John (1990). "Property Rights and the Nature of the Firm". Journal of Political Economy. 98 (6): 1119–1158. CiteSeerX 10.1.1.472.9089. doi:10.1086/261729. JSTOR 2937753.
23. Hart, Oliver (1995). Firms, contracts, and financial structure. Oxford University Press.
24. Schmitz, Patrick W. (2013). "Investments in physical capital, relationship-specificity, and the property rights approach" (PDF). Economics Letters. 119 (3): 336–339. doi:10.1016/j.econlet.2013.03.017.
25. Gattai, Valeria; Natale, Piergiovanna (2015). "A New Cinderella Story: Joint Ventures and the Property Rights Theory of the Firm". Journal of Economic Surveys. 31: 281–302. doi:10.1111/joes.12135. ISSN 1467-6419.
26. Schmitz, Patrick W. (2008). "Joint ownership and the hold-up problem under asymmetric information". Economics Letters. 99 (3): 577–580. doi:10.1016/j.econlet.2007.10.008.
27. Halonen, Maija (2002). "Reputation and the Allocation of Ownership" (PDF). The Economic Journal. 112 (481): 539–558. CiteSeerX 10.1.1.11.8312. doi:10.1111/1468-0297.00729. JSTOR 798519.
28. Rosenkranz, Stephanie; Schmitz, Patrick W. (2003). "Optimal allocation of ownership rights in dynamic R&D alliances". Games and Economic Behavior. 43 (1): 153–173. doi:10.1016/S0899-8256(02)00553-5.

External links

• The Co-operative Advantage - Creating a successful family of Co-operative businesses. The Report of the Co-operative Commission January 2001. The Co-operative Commission was established by British prime minister Tony Blair in 2000 and recommended that A modernizing bill should be put before Parliament to recognize in law the Co-operative form of common ownership. (recommendation 51).
• Frank H. Stephen (1984) The Economic Analysis of Producers' Cooperatives London:Macmillan, ISBN 978-1-349-06250-8, p. 145