Privately-owned enterprise

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Private ownership refers to the ownership of assets by a business enterprise for the purpose of generating profit for a collective group of shareholders or private owners. Private property differs from personal property^[1], which refers to possessions owned by individuals, and public property, which refers to state-owned assets.

Private property refers to property that is owned by a privately-owned enterprise, and is therefore property that collectively or individually belongs to the firms shareholders or private owners.

A privately-owned enterprise refers to a business that is owned by private investors, shareholders or owners (usually jointly, but they can be owned by a single individual), and is in contrast to state institutions, such as publicly-owned enterprises and government agencies, as well as worker-owned cooperatives and cooperative ownership of enterprises. Private enterprises comprise the private sector of an economy. An economic system that contains a large private sector where privately-run businesses are the backbone of the economy is referred to as capitalism. This contrasts with socialism, where economic activity is dominated by either the state or through self-managed worker cooperatives. The act of taking assets into the private sector is referred to as privatization. The goal of private enterprise differs from other institutions, the major difference being private businesses exist solely to generate profit for a few owners or shareholders.^[2]

[edit] Types of Privately-Owned Business

• Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability of the debts incurred by the business. This form is usually relegated to small businesses.
• Partnership: A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. There are three typical classifications of partnerships: general partnerships, limited partnerships, and limited liability partnerships.
• Corporation: A business corporation is a for-profit, limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by a board of directors, which hires the business's managerial staff. Corporate models have also been applied to the state sector in the form of Government-owned corporations.

Privately-owned businesses are typically divided into two subcategories: privately-held companies and publicly-traded companies. Publicly-traded firms list their shares on the stock market, allowing for more diversified ownership as anyone who purchases their stock becomes a partial owner and is able to receive a portion of its profit. Despite the term "public" in its name, a publicly-listed company does not entail public ownership. However, publicly-listed corporations may be partially owned by governments.

[edit] Private Property versus Personal Property

In political and economy theory, the distinction between private and personal property is extremely important.

• Personal property is part of your person and includes property from which you have the right to exclude others (e.g. PCs, cars, houses)^[3]
• Private property is a social relationship, not a relationship between person and thing according to Marx (e.g. factories, mines, dams, infrastructure etc.) In capitalism there is no distinction between personal and private property.^[4]
• In socialist theory, private property refers to capital or means of production that is owned by a business or few individuals and operated for their profit. Personal property refers to tangible items and possessions individuals own, such as consumer goods.

[edit] Criticism

Criticism of private business has come from many perspectives, most notably socialist perspectives. Criticism of private property and privately-owned business is usually accompanied by criticism of the capitalist system entirely. Socialists often argue that within a capitalist system, economic activity is uncoordinated and serves the interest of a small business class as opposed to society as a whole. This results in stifled advancement and an 'anarchy of production'. Marxists criticize private business, along with capitalism, as being a form of exploitation that serves to extract the surplus value from the workforce and distribute it to passive owners (the capitalist class) in the form of profit. Because of this exploitation, the workers do not receive the full product of their labor and are forced, by the conditions imposed upon them by capitalism, to sell their labor to business owners in order to make a living.^[5] Socialists typically argue for public ownership of the means of production, with Marxian socialists advocating more direct collective worker-ownership of business enterprises with democratic worker management. Other critics of private property include technocrats, some forms of economic nationalism, anarchists and proponents of economic democracy, who believe power and economic decision-making should be spread among as many people as opposed to being concentrated into the hands of a few.

[edit] Notes

[edit] See also

• Capitalism, sometimes referred to as the 'Free enterprise' system
• Economic liberalism
• Neoliberalism
• Privatization
• Business
• Private sector
• Public ownership
• Public property
• Personal property