Social ownership

Social ownership is any of various forms of ownership for the means of production in socialist economic systems, encompassing public ownership, employee ownership, cooperative ownership, citizen ownership of equity,[1] common ownership and collective ownership.[2] Historically social ownership implied that capital and factor markets would cease to exist under the assumption that market exchanges within the production process would be made redundant if capital goods were owned by a single entity or network of entities representing society,[3] but the articulation of models of market socialism where factor markets are utilized for allocating capital goods between socially owned enterprises broadened the definition to include autonomous entities within a market economy. Social ownership of the means of production is the common defining characteristic of all the various forms of socialism.[4]

The two major forms of social ownership are society-wide public ownership and cooperative ownership. The distinction between these two forms lies in the distribution of the surplus product. With society-wide public ownership, the surplus is distributed to all members of the public through a social dividend, whereas with co-operative ownership the economic surplus of an enterprise is controlled by all the worker-members of that specific enterprise.[5]

The goal of social ownership is to eliminate the distinction between the class of private owners who are the recipients of passive property income and workers who are the recipients of labor income (wages, salaries and commissions), so that the surplus product (or economic profits in the case of market socialism) belong either to society as a whole or to the members of a given enterprise. Social ownership would enable productivity gains from labor automation to progressively reduce the average length of the working day instead of creating job insecurity and unemployment. Reduction of necessary work time is central to the Marxist concept of human freedom and overcoming alienation, a concept widely shared by Marxist and non-Marxist socialists alike.[6][7]

The term "socialization" refers to the process of restructuring the economic framework, organizational structure and institutions of an economy on a socialist basis.[8] The comprehensive notion of socialization and the public ownership form of social ownership implies an end to the operation of the laws of capitalism, capital accumulation and the use of money and financial valuation in the production process, along with a restructuring of workplace-level organization.[9][10]


Social ownership is variously advocated to end the Marxian concept of exploitation, to ensure that income distribution reflects individual contributions to the social product, to eliminate unemployment arising from technological change, to ensure a more egalitarian distribution of the economy's surplus,[11] or to create the foundations for a non-market socialist economy.

In Karl Marx's analysis of capitalism, social ownership of the means of production emerges in response to the contradictions between socialized production and private appropriation of surplus value in capitalism. Marx argued that productivity gains arising from the substitution of variable capital (labor inputs) for constant capital (capital inputs) would cause labor displacement to outstrip the demand for labor. This process would lead to stagnant wages and rising unemployment for the working class alongside rising property income for the capitalist class, further leading to an over-accumulation of capital.[12] Marx argued that this dynamic would reach a point where social ownership of the highly automated means of production would be necessitated to resolve this contradiction and resulting social strife. Thus the Marxist case for social ownership and socialism is not based on any moral critique of the distribution of property income (wealth) in capitalism, but rather the Marxist case for socialism is based on a systematic analysis of the development and limits of the dynamic of capital accumulation.[13]

For Marx, social ownership would lay the foundations for the transcendence of the capitalist law of value and the accumulation of capital, thereby creating the foundation for socialist planning. The ultimate goal of social ownership of productive property for Marx was to expand the "realm of freedom" by shortening average work hours so that individuals would have progressively larger portion of their time to pursue their genuine and creative interests. Thus the end goal of social ownership is the transcendence of the Marxist concept of alienation.[14]

The economist David McMullen identifies five major benefits of social ownership, where he defines it as society-wide ownership of productive property: first, workers would be more productive and have greater motivation since they would directly benefit from increased productivity, secondly this ownership stake would enable greater accountability on the part of individuals and organizations, thirdly social ownership would eliminate unemployment, fourth it would enable the better flow of information within the economy, and finally it would eliminate wasteful activities associated with "wheeling and dealing" and wasteful government activities intended to curb such behavior and deal with unemployment.[15]

From a non-Marxist, market socialist perspective, the clearest benefit of social ownership is an equalization of the distribution of property income, eliminating the vast disparities in wealth that arise from private ownership under capitalism. Property income (profit, interest and rent) is distinguished from labor income (wages and salaries) which in a socialist system would continue to be unequal based on one's marginal product of labor – social ownership would only equalize passive property income.[16]

Notable non-Marxist and Marxist socialist theorists alike have argued that the most significant argument for social ownership of the means of production is to enable productivity gains to ease the work burden for all individuals in society, resulting in progressively shorter hours of work with increasing automation and thus a greater amount of free time for individuals to engage in creative pursuits and leisure.[17][18][19]

Criticism of private ownership

Social ownership is contrasted with the concept of private ownership of the means of production, promoted as a solution to what its proponents see as being inherent issues to private ownership.[20] Market socialists and non-market socialists therefore have slightly different conceptions of social ownership. The former believe that private ownership and private appropriation of property income is the fundamental issue with capitalism, and thus believe that the process of capital accumulation and profit-maximizing enterprise can be retained, with their profits being used to benefit society in the form of a social dividend. By contrast, non-market socialists argue that the major problems with capitalism arise from its contradictory economic laws that make it unsustainable and historically limited. Therefore, social ownership is seen as a component of the establishment of non-market coordination and alternative "socialist laws of motion" that overcome the systemic issues of capital accumulation.[21]

The socialist critique of private ownership is heavily influenced by the Marxian analysis of capitalist property forms as part of its broader critique of alienation and exploitation in capitalism. Although there is considerable disagreement among socialists about the validity of certain aspects of Marxian analysis, the majority of socialists are sympathetic to Marx's views on exploitation and alienation.[22] Socialists critique the private appropriation of property income on the grounds that because such income does not correspond to a return on any productive activity and is generated by the working class, it represents exploitation. The property-owning (capitalist) class lives off passive property income produced by the working population by virtue of their claim to ownership in the form of stock, bonds or private equity. This exploitative arrangement is perpetuated due to the structure of capitalist society. From this perspective, capitalism is regarded as class system akin to historical class systems like slavery and feudalism.[23]

Private ownership has also been criticized on ethical grounds by the economist James Yunker. Yunker argues that because passive property income requires no mental or physical exertion on the part of the recipient and because its appropriation by a small group of private owners is the source of the vast inequalities in contemporary capitalism, this establishes the ethical case for social ownership and socialist transformation.[24]