Forms of Ownership
Forms of Ownership
Term paper by discipline
"Forms of Ownership"
CHAPTER 1. Property
and socio-economic relations. The theory of property
1.1 The history of the ownership and development of its
Property as an economic category.
1.3 The theory of property rights.
CHAPTER 2 Forms of
ownership and their classification.
CHAPTER 3 Change of
3.1 Change of ownership is an essential condition for the formation
of the market.
3.2 Ownership in transition economies
The property is among the most important and complicated
problems of economics and economic theory. History of economic life during
periods of increased social activity tends to redistribute objects and property
rights. Economy is primarily farming. But, where is the economy, there should be a master. Each economic
entity, every resource, every product must have its master. From an economic
point of view the master is a person who induces an object in the economic
processes, seeking to use it in the best way to extract more value from it.
Where there is an economic activity, there is always a problem of ownership.
Property relations permeate the entire system of economic relations and escort the
man from the moment of his birth to leaving in another world. Everywhere we
constantly come upon one common fundamental question: Who owns the economic
power, who assigns the material conditions of human existence, the owner of the
land, factories, and spiritual wealth?
The social nature of these relations is an expression
inherent to the society in the economic relations of property. Today we are
ready to sue the state, which has assigned and squandered our labor savings,
does not pay us wages, pensions. In this respect civilization has not moved far
from the animal world, where everyone defends their environment, claims a
particular "piece" or territory. It is recognized that the question
of ownership is probably one of the most important issues determining the
generation, the existence and the development of human society. On how and by
whom it was raised, addressed and regulated in a given time, including the
present historical period, the sustainability, prosperity, and often the very
existence of any society for that matter, and each individual member of society
Factor of limiting the life of wealth and economic
resources requires not only a certain order of their distribution, but also
establishing some rules of control over them. Final goods and economic
resources, if limited, can not be equally accessible for disposal, use by
absolutely all members of society. If this were so, then the
society would come into mess.
As soon as the man has picked up a stick, it becomes not
only an instrument of labor, but also in his private club, his property. Weapons
defense and attack, objects of labor, fire, shelter, clothing, and household
goods gradually go into possession of an individual or a group, or a tribe.
Ownership is ensuring the right to control economic
resources and life benefits for the set of economic actors. In households,
there is a point of view that property is the relationship between the man and his
possessions, control over it. Aspirations of a man to property ownership are
considered at the same time as a born instinct. However, in economics the
dominance of the social, and not natural, basis of property is increasingly
recognized. And in this sense we can, to some extent, recognize the approval P.
Proudhon: "Property is a theft" - because no one would argue that if
one person is the owner of the thing, then others are denied the opportunity to
have it in their possession.
In every historical epoch, property as an economic
category reflects the entire system of socio-economic relations. Forms of
ownership and its variations correspond to the prevailing socio-economic system
at all levels. The issue of ownership is extremely multilateral and with each
new stage of development of economic thought new aspects of this problem are discovered.
So, do we need private property or not? We can not reply
this question instantly, we need to understand in more detail the advantages
and disadvantages of different forms of ownership. Thus, the aim of this work is
to study, review and analyze ownership structure: its social, legal and
economic aspects; as well as studying diverse forms of ownership, mainly private
and public, as the main form of ownership; analysis of property development and
interaction of public and private property.
CHAPTER 1. PROPERTY AND SOCIO-ECONOMIC
RELATIONS. THEORY OF PROPRIETARY RIGHTS
The history of the ownership and
development of its forms
Property as an economic relation is formed at the dawn
creation of the human society. Labor and its division between individuals,
tribes have a significant influence on the emergence and development of forms
of property. Possession of means of production has become one of the
determining conditions of life, and production of necessary means of existence.
At the same time, productive work made it possible to obtain economic product
to a greater extent than was necessary to ensure the simplest necessities of
life of the period. There is accumulation of the property; its type emerges in
the form of wealth.
The emergence of the rich and poor, the desire to expand
their holdings generate a war for possession of the territories, wealth,
property, property begins to pass from hand to hand. Growing populations have
more and more land, natural resources, engaged in production. As a
result, all that is available to the man is segregated, captured, appropriated,
divided, i.e. becomes the property.
The emergence of states contributed to the birth of
public property. In this way the diversity of
ownership in the form of personal, family, tribal, state was developed. Tribal,
and then the inter-state wars, capturing and inheritance of wealth gave birth
to the ugliest forms of property - slavery and serfdom, the objects of which
In the era of feudalism subsistence is tightly bound by
ties of land ownership, means of productions, and the cattle to the owning
feudal lord. Under capitalism, the means of production becomes the property of
the owner of capital. Private property blossoms, the relationship between
subjects and objects of ownership increasingly divide into the ownership,
disposal and use. In the future, private property is modified. There is a
joint-stock form of ownership. Along with the ownership of land, natural
resources, buildings, equipment and other real estate property, the role of
gold and jewels, cash, securities constantly increases. The problems of
intellectual property on a spiritual product, and ownership of information
The ongoing revolutions in certain countries transform,
convert forms and property relations. In particular, the socialist revolutions
try to abolish the private ownership of means of production, replacing it with
the public, state. But an economy based on the overwhelming dominance of state
property is ineffective. As a result, the modern economic world that has become
basically the world market economy is based on private property and on the
feasibility of coexistence of different forms of ownership.
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
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
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
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
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
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
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
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
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
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
3.1 Change of ownership is an essential condition for
the formation of the market
For the successful development of the property it is
necessary to satisfy many economic and social conditions, in particular, it requires
a review of the relationship to the property in the new economic conditions.
Modern economics today anew considers many of the processes occurring in
our society. This applies to issues of
ownership, the ratio of plan and market methods to regulate economic activity,
direct and indirect methods of management of public processes.
With the democratization of our society motives of transition
to a market economy appeared, therefore, attempts were made to implement this
goal, sometimes not very successful, but, in our opinion, worthy of
consideration, since it is with them that a slow and painful break-up of our
old economic stereotypes began.
Adjustment period was marked by increasing attention to the plight of the
Soviet people. Nevertheless, the essence of
economics lies in the fact that the sympathy and desire to help taken
separately here do not decide anything. For us to live better, we must
produce more goods and services of high quality. Unfortunately, we still have
not mastered this art. But the government performed
an active social policy through increased emissions, but if adequate quantities
of goods are not produced for this money, then it does not increase the
standard of living, but increases queues, shortages and profiteering, as
observed in the early stages of transition to a market economy.
We believe that for the transition to a market we need,
above all, in general terms, be aware of something that moves our society: what
the modern market is.
Having decided to build a market economy, we must,
above all, create its image, to see at least the outlines, to assimilate the
essence of market relations. However, there are several reasons that prevent deep
perception and understanding of the market for a Soviet man.
First, we have seen and known a true market economy in
all its many manifestations, almost never. If anyone was in the countries of
the free market, then he or she saw only of its appearance, without delving
into the essence of the internal mechanisms of market relations.
Secondly, we are not taught the market economy. In
schools, colleges, institutes, radio and television, we were told that overseas
was decaying crisis economy with exploitation and enslavement of the working
people. Textbooks containing the true description of the market and the market
economy, the works of so-called bourgeois economists were either not translated
or published or became known only to a narrow circle of specialists.
Third, those natural associations of the word
"market", which occur in each of us in one way or another, are connected
with the collective farm market, i.e. with market forms that existed in the
Soviet economy. But these analogies are very far from real civilization of the
modern market and, hence, give rise to a distorted view of true market economy.
The terms "market" and "market
economy" in our country are usually treated only as an exchange of
commodities and commodity-money relations, in other words, as trade, exchange,
but such representation is primitive.
The market is a whole system of diverse economic
relations between people, resulting in the production, distribution, exchange
and consumption, based on certain principles, the main among which is freedom
of economic activity.
The main property of market-oriented economy is to
promote market relations in all economic spheres, their penetration into all
sectors, and coverage of all regions of the country. This
property can be called the universality of market relations.
3.2 Ownership in transition economies
Transformation of ownership - from monopoly to pluralism
Changes in property relations have become mainstays of economic
reforms in the former Soviet republics. In the theoretical plan transformation
of the property required to address: to what level the proportion of state
ownership should decrease, at what pace and what way it goes lower, to whom
public ownership should transit.
In Kazakhstan and other CIS countries embarked on the transition to a
system, combining private (individual and group), public and mixed ownership of
the means of production. This is logical
interfaces with the course of the transition to the market. Since the market supposes
freedom of industrial and commercial activities, competition between
manufacturers, then domination of any one form of ownership must be overcome.
It should be replaced by complementing each other various forms of ownership,
each of which would be best adapted to the specific field of economy, to
State property in the transition
The peculiarity of the relations between subjects and
objects of ownership at the state level are due to the following circumstances:
• The results of the management of state property affect
the fate of many people, determining their standard of living, social security,
health, intellectual development, security and many other recognized human
• state property are distinguished by great variety of
institutional and legal diversity, covers a wide range of national economy
sectors and are intended for use in a variety of directions;
• The implementation of State's right to property
objects is achieved through the system of state property management, which is a
three-tier hierarchical structure. Public ownership is likely to retain its relevance and function
of the foundation of the entire economic chain. Privatization process, leading
to the expansion of individual and group ownership, does not mean that state
ownership will be fully uninstalled. There are sectors of the economy, which
are inappropriate for division on elements.
This applies primarily to large, the most important
system operating in the interests of the entire state. Obviously, in Kazakhstan
energy, transportation and some other industries should remain in state
property. This should include the material resources of science,
especially fundamental science.
The recommendations of various authors are that the
share of state property should be 50-30% of fixed production assets.
Still for a long time ahead the public sector will have
a significant position in the national economy and the sector requires adequate
system of control over it. Apparently, all state enterprises can be divided
into two categories: the first is under the direct control of the state, the
second is on full commercial grounds.
An important issue in the development of state property is
to overcome monopoly characteristic of the administrative-command system. By
the end of 1990 in the engineering industry of the former Soviet Union the share
of monopolized production reached 72%. With the transformation of the former
republics into independent states monopoly was further complicated as many
copying enterprises were on different sides of the new states boundaries.
It is clear that de-monopolization of production, based
on state property is a long and complicated process. Partly overcoming of the
monopoly can be done by downsizing, mechanical section on their part. For the
construction of new copying enterprises, it would require too much money, which
is currently not available for our country.
It can be assumed that breaking monopolies will go
through diversification of production at existing plants, which are in power to
use spare capacity (or expand existing) for the production of scarce goods.
In overcoming the monopoly, the use of Western countries
experience can play a positive role. Many of them are antitrust laws. In
particular, in the United States in 1890 Clayton Act, prohibiting horizontal
merger of companies, if it could destroy the competition was adopted by the
Sherman Act ("charter of economic freedom"), in 1914. -. Law
Zeller-Kefovera (1950) extended this prohibition on a vertical merger. For
violation of antitrust laws legal responsibility is provided (a fine of up to
100 thousand dollars from executive officers and imprisonment of up to 3
years). Court may make the monopoly compensate for damages in triple size the
amount for a company that has suffered from monopoly.
In some Western countries there are administrative bans
on a high degree of monopolization. In the U.S. monopoly reaching 90% of the market
has a compulsory division of the company into parts, if reaching 60% and higher
the monopoly is placed under state control. In Germany, one entrepreneur can
own no more than 30% of the market of products, 2-3 firms can own no more than
50%, 4-5 can own no more than 70%. The upper bracket for a single firm in the
UK is set at 20% of the market, and in Norway and India at 25%.
Nevertheless, one of the major theoretical and practical
problems was the deregulation, the definition and use of the most efficient
ways, models of privatization. Privatization is the transfer of state property
into the hands of individual citizens, labor groups, entities, or the emergence
of state-owned enterprises on the basis of various mixed forms of ownership.
After the privatization the subjects of property become a private citizen, an
employee of privatized enterprises, the labor collective, joint stock
companies, holding companies, etc. The objects of privatization may be trade
and services enterprise, housing, small, medium and large enterprises of
industry and agriculture.
World practice has gained some experience in privatization.
In countries where the process of nationalization took relatively large scale
(the UK, France), privatization took place, for example, in the UK through:
sales and free distribution of shares, contract for services, sale of public
housing tenants; waiver from the state monopoly in order to promote competition.
This process is lengthy. In Western Europe it
lasted 10-15 years. Privatization was preceded by a lot of painstaking
work. The basic directions: free transfer of
property, the redemption of enterprises on preferential terms, the sale of
shares, delivery companies in the rental, sale of small businesses at auctions,
The objectives of privatization are associated with an
increased efficiency of economic activities through market development and the
formation of a layer of private owners, entrepreneurs, encouraging employers to
increase the efficiency of enterprises, expansion of individual liberties and
creating a competitive environment, attracting foreign investment, promotion of
the economy’s democratization.
Privatization is aimed at social protection and
development of social infrastructure by means of privatization.
The process of privatization in Kazakhstan started
before the concept of privatization formed, and the concept of private property
was recognized officially. As a result, there is a peculiar privatization of
public financial resources. Change of ownership does not lead to effective
management. In the economy the rule of natural monopolies firmly established,
economic and financial crisis deepened. In this regard, the following actions
are needed, which were previously used in other countries:
• a differentiated approach to privatization of large
state facilities to establish an economic structure with a reasonable balance of
small, medium and large enterprises, with a reasonable degree of competition
between enterprises in different industries and with adequate participation of
• variety of ways to transfer public property into
private hands, providing short-term loans with the guarantee of state
enterprises whose activities are under qualified supervision, to finance the
salaries and obligations to vendors, etc.
Property as an economic relationship began at the dawn
of the human society. All the important forms of non-economic and economic
compulsion to work hold on the monopolization of various property objects.
Economic compulsion to work is based on the ownership of the conditions of
production or ownership of capital. The social thought has always paid great attention to the issue
of ownership. Special treatment to it can be found in history, philosophy and
literature. Rich tradition and the material has been accumulated in the legal
literature, in frames of which a number of directions in the study of property
rights has established.
The property belongs to such concepts around which for
centuries best minds of mankind have been crossed. In the socio-economic
literature there is the widespread definition of property as the appropriation by
an individual or group of production products within and through specific
social form, or as a very social form itself through which the assignment takes
place. Forms of property are different combinations of characteristics (powers).
I have considered them, beginning from the simplest to the most complex.
As a result of my work, I have considered such an
important issue as: privatization, exploring it in stages, and also used the
experience of foreign countries. It can be concluded that privatization in
Kazakhstan was carried out in a radical version of the character, scale, pace,
timing and methods.
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