The eternal debate: state or private property

According to some economists, the more property the state controls, the better. That is, they argue that socialism leads to the most economically efficient results. Others are of the opposite position - if there is a need for any state intervention in the economy at all, it should be minimal. These opposing views are on both sides of the eternal debate "state or private property".

The fundamental question in political economy is how to organize society so as to maximize the production of wealth. The views of economist-philosophers on this problem vary, the difference being the degree of state intervention that they think will make society relatively more prosperous. Since state intervention in the economy is expressed in decision-making by the state and its officials about the use of limited resources that are either state property (so-called public property) or at least nominally considered private property, then the question can be reformulated as follows: when is greater economic efficiency achieved - when the ultimate decisions about the disposal of limited resources are made by the state, i.e. when property is public, or vice versa - when the ultimate decisions about the disposal of limited resources are made by individuals, i.e. when property is private?

According to some economists, the more property the state controls, the better. That is, they argue that socialism leads to the most economically efficient results. Others are of the opposite position - if there is a need for any state intervention in the economy at all, it should be minimal. These opposing views are on both sides of the eternal debate "state or private property".

Nowadays, largely because of the disastrous results of the Russian socialist experiment, those who advocate total state control of the economy are few in number, but those who want state intervention in one or another industry or sphere of socio-economic relations are predominant. Their preferences range from a state monopoly on forests, water, roads, education to interference in the exercise of various professions, the type of lighting fixtures, and the strength of the water jet coming out of the toilet cistern. But ultimately they claim that where they want state intervention, state control of property leads to better results than if this property were controlled by private individuals.

Even if we accept that where socialism has been tried, there is soon a permanent shortage of some goods and a total absence of others, the mere observation of this empirical fact does not help us understand why public ownership is not a suitable means of increasing the production of wealth and why private ownership is.

The very question of whether the state or private individuals should dispose of a given property reveals that resources are relatively limited in relation to human wants and that competing needs require resources, which, however, are in insufficient quantity, which is why it is impossible for all needs to be satisfied simultaneously. The use of such goods, the supply of which is not superabundant, of necessity and as human activity demonstrates, is economized by people, so as to satisfy as much as possible of their still unsatisfied wants. In order to do this, i.e. in order to be able to allocate limited resources to specific uses, consistent with the degree of urgency of his needs, a person must be able to dispose of these resources unhindered. In other words, the individual must have exclusive control over their use.

Having recognized the following two propositions which it is safe to assume to be true - the first, that there are resources which do not exist in superabundance, and the second, that the individual alone knows his needs and the degree of their urgency, and he alone knows how to economize the use of scarce resources so as to try to maximize his satisfaction. It is obvious what social institution would provide an order in which the individual can maximize his wealth: it must be an institution which assigns exclusive property rights.

This is precisely what the concept of private property is all about. According to it, people can claim exclusive control over limited resources so that they can dispose of them according to their expectations for maximum satisfaction. Not only that, but it also enables the individual to evaluate the result of his economizing activity and, accordingly, to learn from his mistakes. This means that private property forms a tendency towards economic efficiency and the elimination of waste.

Furthermore, since private property allows individuals to retain the benefits (as well as the losses) of their activities, it stimulates the accumulation of resources and the maintenance of existing ones, the accumulation of capital, productivity, and trade. In an economy with a division of labor and money, the exchange of private property leads to the formation of prices that allow economic calculation to be made.

In contrast, public ownership is a concept that is inconsistent with the exclusivity of ownership, and as a result leads to waste of resources and an overall reduction in wealth. It does not allow the individual to make ultimate decisions about allocating limited resources to his competing needs, makes it impossible to assess the effects of one's economic activity, and discourages production, capital accumulation, and resource conservation.

Public ownership makes resources relatively scarcer and of lower quality for two reasons: it generally reduces production and innovation (since it socializes their benefits) and also because the few goods produced it leads to are not in line with the degree of urgency of consumer needs.

It follows that if we want prosperity, private property is what will help us obtain it.

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