Social ownership facts for kids

Kids Encyclopedia Facts

Social ownership is when a community or society as a whole owns the things that produce wealth, like factories, land, or businesses. Instead of a few private owners, everyone shares in the benefits. This idea is a key part of a socialist economic system.

Social ownership can take many forms. It might be:

Owned by the whole community.
Owned by the government.
Owned in common by everyone.
Owned by the employees who work there.
Owned by cooperatives, where workers or customers share ownership.
Or even when citizens own shares (parts) of companies together.

In the past, social ownership often meant that big markets for buying and selling capital (like machinery or buildings) would disappear. The idea was that if society owned everything, there would be no need for companies to buy and sell things to each other in the same way. However, some newer ideas, like market socialism, suggest that markets can still exist, but the businesses themselves are owned by society.

The two main types of social ownership are:

Public ownership across the whole society.
Cooperative ownership by groups of people.

The main difference is how the extra money (profit) is shared. With public ownership, the profit might be shared with everyone in society, perhaps as a "social dividend." With cooperative ownership, the profit is controlled by the workers or members of that specific business.

The goal of social ownership is to make sure that the wealth created belongs to everyone, not just a small group of private owners. It aims to reduce the difference between people who earn money from owning things and people who earn money from working. Supporters believe it could also help reduce unemployment, especially as technology makes more jobs automated. When machines do more work, social ownership could mean shorter workdays for everyone, giving people more free time.

Why Social Ownership?
- Problems with Private Ownership
How Socialization Works
- Debates on Socialization
Types of Social Ownership
Ownership in Soviet-Type Economies
Misunderstandings of the Term
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See also

Why Social Ownership?

People support social ownership for several reasons. They believe it can:

End what some call "exploitation," where workers create value but don't get all the benefits.
Make sure that people's income matches their contribution to society.
Prevent job losses caused by new technology.
Share the economy's profits more fairly.
Create a different kind of economy that isn't based on markets.

Karl Marx, a famous thinker, believed that social ownership would naturally happen because of problems within capitalism. He thought that as machines became more advanced, they would replace human workers. This would lead to lower wages and more unemployment for workers, while owners would get richer. Marx argued that this would eventually cause big social problems, making social ownership necessary. For Marx, the main reason for social ownership wasn't about fairness, but about how the economy naturally develops.

Marx also believed that social ownership would allow society to plan its economy better. His ultimate goal was to give people more "freedom" by reducing the amount of time they had to work. This would allow individuals more time to follow their passions and creative interests.

Economist David McMullen listed five benefits of society-wide ownership:

Workers would be more productive and motivated because they would directly benefit from their hard work.
It would make individuals and organizations more responsible.
It would get rid of unemployment.
Information would flow better throughout the economy.
It would reduce wasteful activities like unnecessary business deals and government efforts to control them.

From a different view, called market socialism, a clear benefit of social ownership is to make the distribution of wealth more equal. It aims to reduce the huge differences in wealth that come from private ownership. In this view, profits would still be made, but they would be used to benefit all of society.

Many thinkers, both Marxist and non-Marxist, agree that a major reason for social ownership is to use new technologies to make work easier for everyone. This could lead to shorter work hours and more free time for people to enjoy hobbies and creative activities.

Problems with Private Ownership

Social ownership is often seen as a solution to problems that supporters believe come from private ownership. Some market socialists think that the main problem with capitalism is that private owners keep all the profits. They believe that if profits were shared with society, it would solve many issues.

Other socialists, who don't support market economies, argue that capitalism has deeper problems that make it unstable. For them, social ownership is a way to create a completely different economic system that doesn't have these issues.

Many socialists agree with Marx's idea that private ownership can lead to "exploitation." They argue that the income from owning property (like stocks or bonds) doesn't come from productive work. Instead, it comes from the work of others. They see this as an unfair system, similar to older class systems like slavery.

Economist James Yunker also argued that private ownership of wealth is unfair because it allows a small group of people to get rich without doing any mental or physical work. He believes this creates huge inequalities, which is why social ownership is a better ethical choice.

How Socialization Works

Socialization is a process that changes how an economy works and how people relate to each other in businesses. It's different from "nationalization," which just means the government takes ownership of a company. Socialization usually means deeper changes, like how a company is organized and managed. It often involves giving workers more say in how things are run, like through self-management or workplace democracy.

Marxists see socialization as a way to make workplaces more equal, replacing strict bosses with a group of members who work together.

Debates on Socialization

In the 1920s, socialists in Austria and Germany had big discussions about how to carry out socialization. Some thinkers, like Otto Neurath, believed in a "total socialization" where money would no longer be used, and the economy would be planned based on physical goods and time, not prices. This was different from others who thought money and markets could still exist in a socialist economy.

These debates led to two main groups of socialists:

Those who thought socialization meant getting rid of money and capital markets.
Those who believed that prices and markets could still be used in a socially owned economy.

Some even argued that socially owned businesses could still aim for profit, but the profits would benefit society.

Types of Social Ownership

Social ownership is different from just government ownership. While government ownership is one type of public ownership, social ownership means that the profits from businesses truly benefit all of society.

There are two main types of social ownership:

Public ownership by an organization or group that represents all of society.
Cooperative ownership where employees own their own businesses.

Both types have challenges. If only the government owns everything, it might become too bureaucratic (too many rules and paperwork). If only workers own businesses, they might become too powerful and act like monopolies.

There are also two main ways to manage socially owned organizations:

Public management: Businesses are run by managers who report to a public agency (like a government department).
Worker self-management: Workers elect their own managers or manage the work themselves.

The exact forms of social ownership depend on whether they are part of a market economy or a planned economy.

Public Ownership

Public ownership can exist in both market economies and planned economies. In market socialist ideas, publicly owned businesses would still buy and sell things in markets and try to make a profit. But these profits would then be shared with everyone in the population, perhaps as a "social dividend."

In non-market socialist ideas, public ownership means that a single organization or a network of public organizations would plan and coordinate the economy. Modern ideas suggest using computers to link production and distribution units for efficient planning.

Some economists, like Alec Nove, define social ownership as a form of independent public ownership, different from businesses directly controlled by the state.

Social Ownership of Shares

Another idea is for society to own shares (parts) of companies. This can happen through a public body or through employee-owned pension funds.

American economist John Roemer proposed a model where people would get special coupons that let them share in the profits of publicly owned companies. In this model, "social ownership" means citizens owning shares in a market economy.

James Yunker suggested that public ownership could work like private ownership today, where shareholders own companies but don't necessarily manage them. He called this "Pragmatic market socialism." He believed a public body could own shares of companies, allowing profits to be shared with everyone instead of just a few wealthy owners.

Another way to own shares socially is through pension funds. In the 1970s, Peter Drucker noted that pension funds could give employees financial security while also allowing capital to be flexible. In Sweden, there was a plan to have employee-controlled funds buy company shares, but it was not fully put into practice.

More recently, in his 2020 presidential campaign, Bernie Sanders suggested that workers should own 20% of the shares in large companies in the United States.

Cooperative Ownership

Cooperative ownership means businesses are owned by their workers (workers cooperative) or by their customers (consumer cooperative). Cooperatives often use some form of self-management, where workers elect managers or manage their own work. Many supporters of market socialism, like economists Branko Horvat and Richard Wolff, support cooperatives.

Cooperatives can take different forms, from direct worker ownership to employee stock ownership plans or even just profit sharing. Some high-tech companies in Silicon Valley use profit-sharing and self-management.

One of the earliest ideas for cooperative socialism was mutualism, proposed by French philosopher Pierre-Joseph Proudhon. In his system, businesses would be run as worker cooperatives.

In the former Socialist Federal Republic of Yugoslavia, businesses were officially "socially owned." Workers in each company were members and co-owners, managing their own affairs.

Supporters of cooperative ownership say that workers in cooperatives are more motivated. However, critics argue that cooperatives alone might not solve all the problems of capitalism, like economic crises. They also suggest that cooperatives might try to limit hiring new workers to increase the income of existing members.

Commons and Peer-to-Peer

In some non-market ideas, social ownership means holding the things that produce wealth in common (common ownership). This is where the idea of "usership" replaces "ownership." Commons-based peer production involves sharing resources and products freely through information networks, rather than selling them for profit. A good example is the open-source software movement, where people create software together and share it for free.

Economist Pat Devine defines social ownership as "ownership by those who are affected by the use of the assets involved." He believes this type of ownership is more efficient because it allows everyone's knowledge to be used in making decisions that benefit society.

Ownership in Soviet-Type Economies

In countries with Soviet-type economic planning, like the former Soviet Union, most factories and natural resources were owned by the state or by collective farms. These state-owned businesses were part of a national plan, where the government decided what they would produce and what resources they would get.

According to The Great Soviet Encyclopedia, "socialist ownership" in these systems meant that working people collectively owned the wealth. It was seen as the foundation for a socialist system, aiming to improve living standards for everyone through a planned economy.

Misunderstandings of the Term

Sometimes, especially in the United States, the word socialization is mistakenly used to mean any industry or service run by the government. The correct terms for this are nationalization (when the national government takes over) or municipalization (when a city government takes over). It's also sometimes incorrectly used for any tax-funded programs, even if they are run privately, like in "socialized medicine."

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