An outstanding feature of modern economic life is the institution of private property. By private property we mean the things owned exclusively by a person or group of persons with the right to use them as they desire.
It differs from public property in the sense that public property is owned by the community at large and administered by individuals or groups as agents of the community. For example, railways are public property. The land owned by a landlord is private property.
The private property may be distinguished from public property in respect of the following points:
(i) Firstly, private property is owned by a person or group of persons whereas public property is owned by the community.
(ii) Secondly, private property is usually used by its owner for his own good while public property is used for public good.
(iii) Thirdly, private property is subject to regulations by the state while public property belongs to the state itself and is not subject to regulation by any external group. In other words, private property rights are subject to supervision, regulation and control by the state.
The institution of private property has gathered a great controversy around itself. It has got both its strong supporters and bitter critics. On the one hand, if it is regarded as essential for social progress, on the other, it is called ‘theft’. The economic institution of capitalism is based on private property.
The advocates of the institution of private property put forth the following arguments:
(i) Incentive to Work:
It is said that man in general needs an incentive to work. The right to private property provides such an incentive. It makes people work and work hard. None would like to exert oneself if one has no incentive. Thus, the institution of private property induces a man to work hard which is ultimately beneficial to the community.
(ii) Satisfaction of Natural Instinct:
Man has an acquisitive instinct. He wants to acquire something which he can call his own. He wants to have a house, an automobile and several other things of comfort and luxury. He works hard to get these things and when he gets them he feels pleasure.
(iii) Security against Future:
A man of property has security against starvation. He can afford to pursue intellectual tastes. Poverty means a life of want and uncertainty. Property is a fore guard against the wants of the morrow, and those who have no property, are uncertain whether the morrow will give them the means of life.
(iv) Ethically Sound:
Private property is justified on the ground that it is the reward to an individual for his labour. The builder of a railway, the inventor of a safety razor and the discoverer of a patent medicine, all have put in hard labour. So whatever they gain on account of their hard labour, rightfully belongs to them.
(v) Nurse of Virtues:
It has also been argued by some thinkers that private property creates social virtues like love of one’s family, generosity, energy, philanthropy etc. The man who has private property has a great stake in the country lest his property may be looted by foreign invaders. It is on this account that some political thinkers have suggested that the right to vote should be given only to those who have some property.
(vi) Economic Progress:
This incentive to private property leads people to exert themselves utmost for earning money. This has led to many inventions in the field of industry, agriculture and business which have contributed to economic progress.
(vii) Historical Justification:
The institution of private property is also justified on the basis of history. It is said that all the progressive societies are those which are built upon the system of private property. The United States is a progressive society as it is based on the institution of private property and free enterprise.
But all the above advantages of private property are said to be fallacious. The power to acquire property may defeat more incentives than it creates. In Soviet Russia the right to private property is severely limited. Yet the Russians are no less hard working than the Americans. A person in order to acquire more property may indulge in unsocial or antisocial activities like adulteration, smuggling, hoarding etc.
Its possession may not necessarily be related to socially useful functions. Production may be carried on wastefully. People may build more picture palaces when more houses are needed because picture palaces bring more income. The owner of private property gets control over the lives of those who have no property. Private property may create the vices of prostitution, gambling and drinking in the man who has a large amount of it.
The cultivation of civic virtues does not necessarily depend on private property. A property less person may be more virtuous than a propertied one. Usually private property is associated with ill-gotten gains. Soviet Russia is no less economically advanced than the United States. So it is not true to say that only those societies are civilized which are built on the institution of private property. Thus, the various arguments advanced in favour of private property do not hold any validity upon deeper examination.
Besides, private property gives birth to the following evil consequences:
(i) Greed for Property:
Private property makes man greedy. He wants to earn more and more money by any means. He does not care even for morality. Private property thus leads to moral degeneration also.
(ii) Destruction of Human Values:
In a private property system, everything is measured in terms of money. All values of human life such as love, sympathy, benevolence and affection are evaluated in terms of silver coins. Every person wants to get the maximum. The sole criterion is property not value.
(iii) Basis of Capitalism:
The institution of private property is the basis of capitalism. In capitalism every person has the right to earn and maintain property. The right to property is considered sacred. Capitalism is injurious to both the individual and society.
(iv) Inequality:
Private property is a source of inequality. It creates wide gap between the haves and have-not’s. The ownership of private property gives power to direct the lives of those who have no property. The propertied class gets control to the political machinery and uses it for its personal advantage. Their interests clash with the best interests of the community. In a social system, based on private property the property less man has no social value or rights.
(v) Economically Inadequate:
The system of private property is economically inadequate because it fails to distribute the wealth it creates as to offer the necessary conditions of health and security to those who live by its processes. It has lost the allegiance of the vast majority of the people.
It is regarded with hate and indifference by them. Much of the private property is earned by a person without doing any socially useful work. A number of property owners are absentee owners. They get paid for simply owning the productive instruments rather than for doing any kind of work.
In view of its evils the institution of private property has been challenged by ideologies of the left. Syndicalism, socialism and communism bitterly criticize the property system. Each of them sees the members of the working class pitted against the propertied class. They want to establish collective ownership of property. The challenge of these ideologies has necessitated a restructuring of the institution of private property and its adjustment to the changing social system.