| Part ofa series on |
| Economic systems |
|---|
Major types |
By regional model |
State ownership, also calledpublic ownership orgovernment ownership, is the ownership of anindustry,asset,property, orenterprise by the national government of a country orstate, or apublic body representing a community, as opposed to anindividual orprivate party.[1] Public ownership specifically refers to industries selling goods and services to consumers and differs frompublic goods and government services financed out of agovernment's general budget.[2] Public ownership can take place at thenational,regional,local, ormunicipal levels of government; or can refer to non-governmental public ownership vested in autonomouspublic enterprises. Public ownership is one of the three major forms of property ownership, differentiated from private,collective/cooperative, andcommon ownership.[3]
Inmarket-based economies, state-owned assets are often managed and operated asjoint-stock corporations with a government owning all or a controlling stake of the company'sshares. This form is often referred to as astate-owned enterprise. A state-owned enterprise might variously operate as aNonprofit corporation, as it may not be required to generate a profit; as a commercial enterprise in competitive sectors; or as anatural monopoly. Governments may also use the profitable entities they own to support the general budget. The creation of a state-owned enterprise from other forms of public property is calledcorporatization.
InSoviet-type economies, state property was the dominant form of industry as property. The state held a monopoly on land and natural resources, and enterprises operated under the legal framework of a nominallyplanned economy, and thus according to different criteria than enterprises in market and mixed economies.
Nationalization is a process of transferring private or municipal assets to a central government or state entity.Municipalization is the process of transferring private or state assets to a municipal government.
A state-owned enterprise is a commercial enterprise owned by a government entity in acapitalist market ormixed economy. Reasons for state ownership of commercial enterprises are that the enterprise in question is anatural monopoly or because the government is promotingeconomic development andindustrialization. State-owned enterprises may or may not be expected to operate in a broadly commercial manner and may or may not havemonopolies in their areas of activity. The transformation of public entities and government agencies into government-owned corporations is sometimes a precursor toprivatization.
State capitalist economies are capitalist market economies that have high degrees of government-owned businesses.
Public ownership of themeans of production is a subset ofsocial ownership, which is the defining characteristic of asocialist economy. However, state ownership and nationalization by themselves are not socialist, as they can exist under a wide variety of differentpolitical andeconomic systems for a variety of different reasons. State ownership by itself does not imply social ownership where income rights belong to society as a whole. As such, state ownership is only one possible expression of public ownership, which itself is one variation of the broader concept of social ownership.[4][5]
In the context of socialism, public ownership implies that thesurplus product generated by publicly owned assets accrues to all of society in the form of asocial dividend, as opposed to a distinct class of private capital owners. There is a wide variety of organizational forms for state-run industry, ranging from specialized technocratic management to directworkers' self-management. In traditional conceptions of non-market socialism, public ownership is a tool to consolidate the means of production as a precursor to the establishment ofeconomic planning for the allocation of resources between organizations, as required by government or by the state.
State ownership is advocated as a form of social ownership for practical concerns, with the state being seen as the obvious candidate for owning and operating the means of production. Proponents assume that the state, as the representative of thepublic interest, would manage resources and production for the benefit of the public.[6] As a form of social ownership, state ownership may be contrasted with cooperatives and common ownership. Socialist theories and political ideologies that favor state ownership of the means of production may be labelledstate socialism.
State ownership was recognized byFriedrich Engels inSocialism: Utopian and Scientific as, by itself, not doing away with capitalism, including the process ofcapital accumulation and structure of wage labor. Engels argued that state ownership of commercial industry would represent the final stage of capitalism, consisting of ownership and management of large-scale production and manufacture by the state.[7]
Within the United Kingdom, public ownership is mostly associated with theLabour Party (acentre-leftdemocratic socialist party), specifically due to the creation ofClause IV of the "Labour Party Manifesto" in 1918. "Clause IV" was written byFabian Society memberSidney Webb.
There is a distinction to be made between state ownership and public property. The former may refer to assets operated by a specific state institution or branch of government, used exclusively by that branch, such as a research laboratory. The latter refers to assets and resources owned by the population of a state which are mostly available to the entire public for use, such as a public park (seepublic space).
Inneoclassical economic theory, the desirability of state ownership has been studied usingcontract theory. According to the property rights approach based onincomplete contracting (developed byOliver Hart and his co-authors), ownership matters because it determines what happens in contingencies that were not considered in prevailing contracts.[8]
The work by Hart, Shleifer and Vishny (1997) is the leading application of the property rights approach to the question whether state ownership or private ownership is desirable.[9] In their model, the government and a private firm can invest to improve the quality of a public good and to reduce its production costs. It turns out that private ownership results in strong incentives to reduce costs, but it may also lead to poor quality. Hence, depending on the available investment technologies, there are situations in which state ownership is better. The Hart-Shleifer-Vishny theory has been extended in many directions. For instance, some authors have also considered mixed forms of private ownership and state ownership.[10] In the Hart-Shleifer-Vishny model it is assumed that all parties have the same information, while Schmitz (2023) has studied an extension of their analysis allowing forasymmetric information.[11] Moreover, the Hart-Shleifer-Vishny model assumes that the private party derives no utility from provision of the public good. Besley and Ghatak (2001) have shown that if the private party (a non-governmental organization) cares about the public good, then the party with the larger valuation of the public good should always be the owner, regardless of the parties' investment technologies.[12]
More recently, some authors have shown that the investment technology also matters in the Besley-Ghatak framework if an investing party is indispensable[13] or if there are bargaining frictions between the government and the private party.[14]
Ownership by the government of an asset, corporation, or industry.
public ownership generally refers to enterprises, wholly or partially government owned, which sell goods and services at a price according to use. According to this definition, government-owned railways, airlines, and utilities are examples of public ownership, but hospitals, highways and public schools are not.
There are three broad forms of property ownership-private, public, and collective (cooperative).
Socialists have always recognized that there are many possible forms of social ownership of which co-operative ownership is one. Nationalization in itself has nothing particularly to do with socialism and has existed under non-socialist and anti-socialist regimes. Kautsky in 1891 pointed out that a 'co-operative commonwealth' could not be the result of the 'general nationalization of all industries' unless there was a change in 'the character of the state'.
State ownership of the means of production is not necessarily social ownership and state ownership can hinder efficiency.
For a variety of philosophical and practical reasons touched on in chapter 1, the most obvious candidate in modern societies for that role has been the state. In the past, this led socialists to favor nationalization as the primary way of socializing the means of production…The idea is that just as private ownership serves private interests, public or state ownership would serve the public interest.
| By owner | |||||
|---|---|---|---|---|---|
| By nature | |||||
| Commons | |||||
| Theory | |||||
| Applications |
| ||||
| Disposession/ redistribution | |||||
| Scholars (key work) | |||||
| |||||
