Alexander V. Osadci

THE PROPERTY General Theory of the State and Social Evolution

http://state.110mb.com

statetheory@yahoo.com

All rights reserved, 2003

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To the memory of my father

Valentine

Professor, PhD in Economics

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Table of Contents

PART I. PROPERTY RELATIONS AND SOCIAL EVOLUTION

Chapter 1. Exclusive Property Rights

Chapter 2. Property Rights Imperfections

Chapter 3. Self-interest Oriented Human Nature and Socialization

Chapter 4. Social Evolution

Chapter 5. Strength and Elimination of Monopoly

Chapter 6. Economic Inefficiency and Economic Injustice

PART II. THE STATE

Chapter 7. State as Production Factor Monopoly

Chapter 8. Dictatorship and Democracy

Chapter 9. State Functions

Chapter 10. State Bureaucracy

Chapter 11. State and Communism

Chapter 12. Capitalism, Socialism and State Monopoly

Notes

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PART I. PROPERTY RELATIONS AND SOCIAL EVOLUTION

Chapter 1. Exclusive Property Rights

Amongst economic categories and definitions, property perhaps is the most fascinating and the most global in terms of the explanation of societal processes and economic realities. Relying on property relations, we can draw an essence of any particular economic and social phenomenon. Property at the same time is one of the most popular categories in social science. Everybody possesses one or another type of property beginning from beggars clothe and ending with a space shuttle. Any object, material or immaterial, tangible or intangible can be considered as a certain type of property. Intellectual property, patent, State or public property, income, salary, house, clothe, exclusive rights upon utilization of certain production facilities, education those are concrete examples of a general category of property. Even such idealistic intangible substances as our ideas, feelings, emotions, sentiments and even our own life also represent particular types of property. Just as any material property these types can also be influenced or controlled by other people; majority of them can even be appropriated by the other people. Ones own property upon his feelings, emotions, ideas and upon ones own life is an essence of what we understand under definitions of "human rights", "freedom" and "liberty". People often think about property as about an economic category or as about something, what can be sold, bought, exchanged, etc. All that makes sense, but this is only a part and absolutely not a determinative part of the general phenomenon of property. Truth is that the property is essentially a social category rather than economic one, because there is no property without its foundation on power and coercion. Without at least minor degree of power, we would be unable to acquire and to hold any property and even our very own life would belong to other powerful people we would simply be slaves without any bit of power. Any proprietorship, first of all, is based on power; power is a foundation of proprietorship. There is no any proprietorship apart from its reliance on power. Law, which allegedly guarantees us our property possessions, is nothing else as a mere reflection of the balance of power in society. What kind of property and to what extent particular private individual in any particular society can possess and use is being determined by two factors his personal power or his personal relation to social mechanisms of coercion and a balance of power in this particular society based on counteraction between all private interests. Whatever system of property rights and property relations we are having in modern times in economically developed countries, it is based exclusively on the balance of power in our society, and only thanks to that particular balance of power we are able to acquire property, to use and to hold it. People are not struggling and fighting in society just on their own; quite often they are grouping or formally and informally uniting for promotion of their special interests. Because of that and also because of the general commonness and uniformity of basic human needs and basic human interests a person does not have to fight for his rights and privileges only on his own, he can do it in association with the other people with similar interests.

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Even more than that, as we all know, sometimes he can even be a free rider. Therefore, besides a private component of our social power, there is also an inbuilt or embedded in every person group component of power, which is uniting particular private individual with a particular power group, with a particular interest promotion group or with a particular social group.

Usually we think about property as about something, which belongs to concrete individuals or to groups of people. This can be attributed to understanding of property in economic or in legal sense and at economic level. At the economic level property rights are realized by their direct proprietors who are simultaneously their main beneficiaries beneficiaries, first of all, in terms of income. From economic point of view, any economic proprietor is realizing his property rights through different types of economic activity. Property rights include, as well, a right to freely manage ones property and to use according to ones wish any benefits arising from utilization of the particular type of property. Economic or legal property rights, their applications and appropriations are the most explicit ones not only for professionals and practitioners, but for general public as well. They are lying on a surface of everyday economic activity and of everyday social life. On the other hand, owing to their interconnection with real tangible economic interests, economic property rights are often stimulating significant controversy, discussions and quite often even more severe types of social counteraction. They are also directly connected with a distribution of income and property in any particular society.

At the social level things are relatively different and first of all what concerns a definition of property. Economic property rights and connected with them distribution of income are realized by their economic, private or lawful proprietors only up to a degree limited by existing in society at particular point in time balance of power or balance of counteraction between all private interests expressed in a system of societal or property relations. Without understanding of social - based on mechanisms of power and coercion - property rights we cannot describe different types of social formations such as slavery, feudalism, capitalism, socialism and communism. On the other hand, without understanding of property relations at social or societal level we cannot describe any social phenomenon generally, because property relations are determining not only particular fixed in time social processes, but also social processes in their evolution or social evolution as well. We can go even further and say that economic or legal definition of property is not enough for understanding of property and property relations and therefore is not enough for general understanding of social relations in any society and as a matter of fact without the notion of "social property rights we cannot describe anything in society. A feeling of multidimensionality of societal relations related to production of material wealth occurs far back in history being explicitly pronounced by Franz Oppenheimer.

There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one's own labor and the forcible appropriation of the labor of others

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I propose to call one's own labor and the equivalent exchange of one's own labor for the labor of others, the economic means" for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the "political means." 1

Property is a very complex and exceptionally influential category what concerns social and economic processes as well as what concerns social and economic behavior. Property is having a double nature. First part of its nature is connected with personal consumption and utilization of property for satisfaction of personal needs. In such quality property serves as a reproduction factor for labor force or for entrepreneurial capacities. Its second part is connected with industrial or economic consumption and in such quality property serves as a reproduction factor for capital. Property as labor force reproduction factor is utilized in personal or private consumption, which under normal circumstances never troubles other people either socially or economically. In this sense few limitations can be attributable to personal consumption or to this form of property utilization. On the contrary, production utilization of particular property or more precisely its utilization in value creation process is directly connected with interests of the other people and because of that property is acquiring a coloring of social phenomenon. Uniting and connecting various private interests, production utilization of property is bearing a seal of social counteraction and potential of becoming a social phenomenon.

Entering into production or economic relations, property is loosing its personalized or personified character and starting to be related, in addition to its direct proprietors also to a certain number of other people. Any act of property exchange represents at least two-dimensional deal. Simple exchange transaction can at least be considered from the point of view of buyer and from the point of view of seller.

The buyer depends on the seller and the seller on the buyer 2

Every one of them is having his egocentric interest in particular exchange transaction and tends to extract from such transaction as much benefits as possible. Despite this fact, main visible outcome of the economic utilization of private property is the decrease of a general level of prices or an increase of the aggregate level of income in society. Such outcome forms the nature of a process of property accumulation. If we have more property today than we used to have yesterday we can speak about property or capital accumulation. Single intensive (not directly connected with discovery of new resources) method of capital accumulation leads either to decrease in prices or to growth of aggregate income, which are the two different effects of the very same economic or value creation process, as we shall see.

Property, especially in its application to economic activity is not something fixed, constant or steady. Quite opposite, the very logic and reason for any economic activity is to make property work and move. If from the legal point of view or from the point of view of common understanding of property, it probably more corresponds to the former characteristics, from economic point of view property rather represents a constant

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process of movement, flows and reallocation of resources. It influences and concerns not only separate economic proprietor, but rather closely fits into the network of macroeconomic and societal relations. Any social (based on mechanisms of power and coercion) obstacle on the way of free property flows is allowing certain people and social groups to obtain exclusive property rights and is bringing along both inefficiency and appropriation of monopolistic income. Based on that, economic operations are under a great deal of social pressure and quite often also represent a social phenomenon, which is uniting, counteracting or cooperating more than one interest. Economic property possessions as well as capital or property flows can be limited or restricted at the societal level or by certain social (based on mechanisms of power and coercion) property claims. Since property is not something fixed, but vice-a-versa is something, which must constantly move and flow in order to bring any value - universal status of social property rights presumes unrestricted property flows in correspondence with maximum economic efficiency requirements. If somebody does not have an access to any particular property, it means that somebody else is utilizing this property on exclusive basis and is benefiting from such utilization in an exclusive way. Any non-exclusive economic property possession and moreover economic utilization of such property also represents an act of socialization. Any non-exclusive economic property possession is beneficial both for its proprietor and for society as a whole or for every single member of society. Economic non-exclusive utilization of property is not a private process (even though property is called private) because it involves and concerns a certain number of people and because it is being carried out without creating any exclusive property rights at social level with implication of the mechanisms of power and coercion.

Private property of the material factors of production is a public mandate, as it were, which is withdrawn as soon as the consumers think that other people would employ the capital goods more efficiently for their, viz., the consumers', benefit 3

Economic utilization of property is nobodys merit or nobodys accomplishment from the point of view of moral or justice. Proprietor is benefiting in terms of income and therefore already is receiving an award from people for his actions. On the other hand, people are benefiting in terms of new products, in terms of lower prices or in terms of growth in aggregate income or what is the same in terms of growth in aggregate property's value. Consequently non-exclusive or non-monopolized property possession is not only allowing property accumulation for the owner of this particular property, but also through its economic utilization is increasing a value of property of the other members of society. This is the highest economic expression of socialization of the private interest. Under perfect competition or under monopoly-free environment, any member of society is having an access to the same economic resources as all other people, and if somebody does not succeed, it is merely because he is not so smart or lazy. Therefore, nobody can say that a winner is getting an unfair or exclusive reward (income) on account of the other people. On the other hand, under monopoly free environment any proprietor always has to think about his customers or potentially about every particular individual since only serving their preferences to their utmost satisfaction he can benefit from his

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property. Permanent dependence and interconnection with economic property rights and of other people are keeping separate private interest within an aggregate framework of interests of all other people thus socializing it.

The market does not directly prevent anybody from arbitrarily inflicting harm on his fellow citizens; it only puts a penalty upon such conduct. The shopkeeper is free to be rude to his customers provided he is ready to bear the consequences 4

We have a completely different picture if somebody managed to obtain particular exclusive property rights, exclusive social property claims or exclusive privileges based upon social mechanisms of power and coercion. Such rights and privileges are freeing particular proprietor from economic interconnection and interaction with the rest of society. First of all, this proprietor simply has fewer incentives to satisfy demands of every particular individual in this particular society, because people do not have a choice in terms of procurement or utilization of this particular property. From the other side, exclusive proprietor is becoming independent from the rest of society in evaluation of his property in terms of the other peoples property and therefore is becoming to be able to evaluate on his own both his property as well as other peoples property and economic contribution in terms of his property. This is another big step away from socialization. Both factors are bringing self-interest oriented human nature of exclusive proprietor in contradiction with interests of other people and moreover with the requirements of macroeconomic and social efficiency. Carrying a human self-interest all the way to exclusive social property rights, such statement of things creates disturbances in the entire system of social and property relations.

Social property rights are closely connected with and relying upon macroeconomic or social evaluation of property or upon price influence situation. Marx, for example, had demonstrated rather explicitly that the process of exchange represents a complex social relation5. It is not just a matter of particular seller and of particular buyer. It goes much deeper in its social essence and influence. Every particular transaction is inseparable from an overall societal process of exchange. Clearly, those are the compound claims of all market operators upon any particular commodity what is driving and determining exchange ratios and not just the narrow preferences of particular seller and buyer. On these basis an exchange value of any particular commodity is being established. This implies that all individuals in society have an influence or have a right to vote on any particular exchange transaction according to their preferences, being at the same time able to repeat it, if they wish, with their own financial resources in the very same way. This also implies, that if somebody for one reason or another is unable to reproduce a desirable kind of transaction owing to social (based on mechanisms of power and coercion) factors, he is automatically excluded from particular process of economic bargaining or from economic formation of a price of particular commodity. Speaking otherwise, this person is becoming unequal or inferior in his economic voting rights related to expression of his consumer preference. Not only he is unable to vote on price of particular property (commodity) of certain other people, but he is equally unable to

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participate in a formation of price of his own property in terms of certain other peoples property as well. Those other people acquiring exclusive property rights based on power and coercion are violating his social property rights and are determining instead of him the price or economic contribution of his property in terms of their property. This is a major underlying reason of monopolistic injustice from the point of view of economic exchanges.

Generally speaking, any commodity is not bound to be exclusively utilized since the entire economic network by and large is directed towards maximization of revenues and therefore towards maximization of sales. Only certain specific commodities can be subject to exclusion from the market and to their exclusive utilization. These commodities are called production factors. What is so special about them that make them so desirable in terms of their exclusive utilization? First of all, it is their nature based on impossibility of any economic, social and therefore of any life supporting activity without their implication. And if this is the case, then their withdrawal from exchange will give their proprietors exclusive rights on their utilization and first all will provide them with a possibility to receive exclusive or monopolistic income. Accordingly, it will make other people, who are left out of price voting influence upon economic contribution of particular production factor, to pay certain exclusive prices, which exceed economic or market value of these resources.

Let us consider a simple case of exclusive rights - monopoly on production and distribution of matches in particular city, which has emerged, for example, as a result of bribing of city council officer by matches production and distribution company. Such circumstances are making people in this particular community to pay monopolistic price for matches. However, consequential exclusive income is not distributed equally among owners of each production factor, which has participated in manufacturing of matches. Since production of matches is sufficiently simple and does not require sophisticated skills and qualifications, workers who are employed to produce matches are easily exchangeable for other people. Value of labor in this case is determined by the market or by the price voting mechanism with participation of every single consumer of matches. Particular employee cannot influence the price of his labor. Let us suppose, that land affiliated to this factory is rented from a local landowner. There are hundreds of other plots of land and hundreds of other landowners in town and in its vicinities. Price of land, therefore, is also determined solely by the market. Consequently all production factors employed in this particular economic activity are subject to formation of their value through market exchange process, with an exception of capital. In other words, an overall economic voting is involved in the process of price formation for all production factors employed except for the capital. It is not only the voting of particular people engaged in these particular transactions what counts. Every member of society is voting on values in this particular economic activity. Price or value formation process involves all people in equal manner even if due to certain reasons some of them do not want to or simply cannot buy particular commodities. All land market participants or landowners determine a price of land including the price of land for this particular project. All labor

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market participants are determining a price of particular labor input at our matches factory. Speaking otherwise, every member of society is taking part in determining economic value of this deal. Here lies a connection between economic and social nature of the value (price) identification process. If every single member of society is able to participate in price formation for any particular exchange transaction, we have a case of economic and social justice and we do not have any exclusive property rights or property rights violations. On the other hand, if only particular individuals or particular social groups are able to determine economic and social value of particular property or of particular economic transaction on their own, discriminating or excluding the rest of society, then appear both exclusive property rights and associated economic injustice. In our example of matches factory, concrete economic process of value identification is violated. People are not able to effectively participate in the process of price formation for matches or more precisely in identification of the economic value of capital as of production resource for this particular commodity or for this particular economic agent. Access to matches capital is closed for the rest of society. Nobody can use capital to produce matches. Social property rights of every particular individual are violated and simultaneously exclusive social property rights are appropriated by the proprietor of matches factory. People are excluded from the market voting or from the process of value identification for this particular commodity. They are also excluded from identification of value of the participation of this particular structural capital in overall economic activity - of its general economic contribution. Exclusive property rights represent in this case a social phenomenon - imperfection in the system of property relations, which arises as a result of self-realization of an egocentric interest through utilization of the mechanisms of power and coercion (City Council) and not on account of any economic factors. These particular exclusive property rights are not emerging from economic competition, but vice a versa they are appearing owing to a direct violation of such competition and therefore this kind of property rights is bearing purely social and not an economic nature. Nature of social monopolization is essentially different from the nature of economic monopolization - those are two absolutely different types of monopolization.

Price of property or of commodity is not a private matter of buyer and seller or even of both of them - it is rather an economic phenomenon, which depends on every member of society. Every particular individual is evaluating his property in terms of other people property. He does not fix price just in terms of monetary units, but rather marks it in terms of a certain amount of other peoples property. If people accept his price, by selling his property (commodities) he is acquiring economic claims upon their property. The same is valid in terms of other individuals claims upon his property.

This is what is meant by those who call the market economy a democracy in which every penny gives a right to vote 6

Even if somebody does not want to buy or does not have enough money to buy particular property he is also voting by saying this price is too high for me and I vote it

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should be reduced or even I generally do not need this commodity even for free. This is his influence upon property of the other people or his social property right. Although he is not participating in a particular transaction and may not even own any property (which is very unlikely) nevertheless he has a social right to vote just like anybody else. Through economic voting he is acquiring the right on evaluation of anybodys property in terms of his own property. Ones own property, at the end of the day, is not expressed in some mythical or mysterious monetary units, but only in terms of other peoples property. If a large number of people will articulate their claims upon particular property or commodity in the same negative way, then under the pressure of market competition an owner of particular property or of particular commodity will have to reconsider his price. By doing so, he will contribute to economic efficiency requirements, which claim that the price of his commodity is too high and therefore the cost of his property to the society is too high as well. Society or any actor on behalf of society within the process of exchange neither have any ability nor any justification to coercively persuade the owner to reconsider a price of his property. If the owner does not want to respond to social property claims of the other people and to reconsider his price and therefore also to reconsider the cost of his property to other people, then his competitor or proprietor of similar commodity will reduce the price in order to increase sales and profits. By doing so, he will be able to extend his property possessions, because buyers will now vote for his price and therefore for his commodity. By responding to social property claims of the other people this particular proprietor will be able to sell more or what is the same will be able to increase an amount of his property.

But what if in the system of property relations appear some kind of imperfections and owing to certain social factors, which we will consider later, there are no more any substituting property possessions while the proprietor of certain commodity is becoming to be a single supplier of this particular commodity on the market? Accordingly this particular proprietor is acquiring exclusive social property claims accompanied by violation of the price voting mechanism. Price voting mechanism and social property rights cannot anymore influence the value of his property and its cost to every particular individual in society, simply because there is no any other price and no any other similar property (commodity) offered. There is no any alternative price option; there is only one option established by exclusive proprietor. People, therefore, will loose their social rights upon this particular property, even though they are still able to acquire this property (commodity) within the process of exchange through a simple exchange transaction. On the other hand, people will not be able anymore to participate in evaluation of their own property in terms of this particular proprietors property. As a result their rights on evaluation of their own property or their own social property rights are violated. In other words, if somebody is acquiring social possibility to determine a price of his property only on his own independent from other people, it means that this individual is not only denying for other people a possibility to participate in value formation process related to his property or to determine his economic contribution, but simultaneously he makes it impossible for them to evaluate their own property in terms of his particular property. This phenomenon, which we call price influence situation, is essentially important for

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understanding of the nature of problems and imperfections arising in the system of property relations very important first of all on account of associated patterns of income distribution.

Normally, any proprietor is eager to obtain exclusive rights for utilization of his property and for associated appropriation of exclusive income or, otherwise, is eager to limit an influence of the other members of society upon evaluation of his particular property and upon the consequential pattern of income appropriation. Since it is quite difficult to accomplish this task on ones own, sometimes it is more profitable for a group of exclusive proprietors to unite their efforts and to form a social group in order to acquire and to maintain exclusive property rights on utilization of particular property. Such incentive moreover exists in case of monopolization of the entire production factor.

Exclusivity of social property rights is a rather quantitative phenomenon. Whenever certain social group manages to obtain exclusive property rights, we are having a case of social property rights violation or a case of appropriation of exclusive social property rights. Such situation generally means restricted social (based on mechanisms of power and coercion) access for individuals and social groups to certain type of property. Violation of social property rights simultaneously implies that particular individuals or particular social groups owing to certain social circumstances together with ordinary economic property rights are simultaneously acquiring certain exclusive social property rights. In order to realize their exclusive social property rights, proprietors need some kind of macroeconomic or social entity a source of coercion - for protection of their exclusive privileges as well as for facilitation of the distribution of associated exclusive income. Accordingly, exclusive social property rights for one particular social group and property rights violations for other members of society are normally coming together at the social or societal level and with direct participation of the State main or even single social entity empowered with coercion and social persuasion.

Unlike economic property rights, exclusive property rights can be realized only on account or in detriment of the other individuals and social groups and objectively against their interests. It is exactly at the social or societal level exclusive property rights are being generated and the main reason for their emergence is power, while the main tool for their maintenance is coercion, both existing only at the societal or mostly at the State level. Perfect competition simply means that nobody in society is having exclusive social property rights based on power and coercion or otherwise that everyone is having full-fledged unlimited social property rights based on universal price voting mechanism. Unrestricted non-exclusive social property rights presume equal opportunities for realization of socialized interests through various types of economic activities. Under economic property rights we will understand rights, which are not having any determinative influence upon societal processes, which are not based upon mechanisms of power and coercion and which do not lead to emergence of any exclusive privileges and benefits. Under social property rights we will understand general social accessibility of

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any particular type of property for every particular individual in given society. Social property rights have to be appropriated by all people and by every single individual separately. Unfortunately, they are not fallen from sky and never belong to people automatically. Initially, only the most fitted, the strongest and the most powerful individuals directly associated with the mechanisms of coercion are acquiring social property rights. While if property rights are appropriated only by a certain group of individuals or by a certain social group, they are right away becoming to be exclusive and inaccessible for other members of society. Originally exclusive property rights are very strong and therefore social property rights violations are very strong as well. And only with the time passing by, those other people counteracting established exclusive rights are gaining little by little their own social property rights, for which they have to fight permanently and continuously. Any social property rights including exclusive social property rights imply underlying them power and coercion - that is why we call them social. Violation of social property rights generates exclusive social property rights and simultaneously creates a social opposition or social counteraction to any exclusive rights.

If at the economic level we have one particular beneficiary of any private property a proprietor, at societal level the situation is rather different and normally we can identify other social beneficiaries of the same property, which owing to certain social circumstances are able to profit, in one way or another, from property possessions of the other people. Exclusive social property rights therefore represent another way of benefiting from economic property possessions. However, on the contrary to non-exclusive private property rights and to non-exclusive social property rights, particular individuals and social groups can benefit from exclusive social property rights only on account of the other individuals and social groups. Particular individuals and social groups are becoming social beneficiaries of property possessions of the other people owing to existence of exclusive property rights, which are established and maintained with utilization of the mechanisms of power and coercion. Only the socially strongest and the most fitted individuals, usually united in social groups, are acquiring exclusive property rights based on mechanisms of power and coercion and are becoming property and income beneficiaries on account of the other members of society as well as on account of general economic efficiency. Besides direct social beneficiaries sometimes we can also identify indirect social beneficiaries, who are benefiting from income redistribution, rather than from income distribution. They are nevertheless social beneficiaries, because any redistribution of once earned income is only possible through application of the mechanisms of power and coercion. Difference between income distribution and income redistribution is very simple and straightforward. Income expropriated from its direct proprietors and received in a non-market way through application of the mechanisms of power and coercion represents income redistribution or unearned income. Indirect social beneficiaries can be of a very different nature, origin and social characteristics, beginning from kings mistress and up to the elder people, disabled, unemployed and different other groups of

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population varying throughout particular countries and particular historical periods. With emergence of globalization and with growth of international aid appears a process of income redistribution at international level where beneficiaries are not only represented by particular individuals and social organizations, but much rather by particular governments and States. Any income redistribution similar to distribution of exclusive or monopolistic income can only be realized relying on force, power and coercion. In order to redistribute resources, it is necessary to possess certain power and to be able to persuade and to punish those who are not willing to give up their property. Income redistribution being possible only through application of power and coercion is always coming along with associated exclusive rights on utilization of the instruments of coercion, with appropriation of exclusive or monopolistic income and therefore with imperfections in an overall system of property relations.

Social groups normally should be defined according to a relation of particular individuals to certain types of property possessions and to certain income appropriation patterns. Since income appropriation is the most significant and the most influential part of property rights, the definition of social groups, first of all, has to rely on property relations and on exclusivity of property rights. Exclusive property rights and especially exclusive property rights upon particular production factor are a single reason for any social groups to exist. Exclusive property rights of particular social group upon particular production factor are determining and differentiating social formations slavery, feudalism, capitalism, socialism and communism. Within each social formation we can identify two fundamental types of social groups monopolistic social group, which possesses exclusive property rights on particular production factor and monopoly dependent social group, which has to pay for these exclusive property rights of the first group at least in terms of property and income. Besides financial or monetary payments per se, normally monopoly dependent individuals and social groups also have to pay in terms of their social or human rights, in terms of their freedom and liberty. It is very difficult to maintain exclusive property rights without at least some limitation of social rights for monopoly dependent individuals and social groups. One needs to rely heavily on mechanisms of power, coercion and forcible persuasion in order to make people pay for his exclusive rights. Otherwise, nobody would voluntarily agree to pay exclusive or monopolistic price. In order to acquire exclusive property rights from one side and in order to persuade monopoly dependent social groups to pay some extra price from the other, one would need extraordinary power as well as immense material and financial resources.

Income received from economic utilization of non-monopolized property is not making people to unite in social groups - at most in special interest groups (which typically form in order to fight for certain exclusive rights and privileges - not in order to maintain already gained rights). What creates social groups is either a necessity to support and to preserve existing patterns of income appropriation or, vice a versa, a need to counteract exclusive income appropriation rights of the others. In the first case social groups are monopolistic (ex. slave-owners), in the second - monopoly dependent (ex. slaves).

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Normally nobody in a society can escape direct or indirect payments for existence of exclusive property rights. At the same time, besides monopolistic and monopoly dependent social groups by and large in any society there are certain other groups of people, which are neither really paying monopolistic price from one side nor having any exclusive rights from the other. These people (for ex. doctors, artists, etc.) in fact do not represent any social group, because their property and income appropriation patterns are not associated with any exclusive rights while their social rights not always and not directly are being limited by the mechanisms of power and coercion.

Only income appropriation and income distribution connected with exclusive property rights is a key for identification of the social groups. We cannot define social groups according to their line of occupation or to their relation to particular non-monopolized property. Writers, lawyers, doctors, farmers, entrepreneurs cannot be considered as social groups. At most they might form professional interest groups, which usually (though not always) are not organizationally designed in order to manage exclusive economic or exclusive income interests and in order to organizationally influence or even manage instruments of coercion. Taken separately people of particular profession within their professional mode of income appropriation do not even have any reasonable common interest to fight for - in their non-monopolistic nature they are simply selling their services as anybody else. More than that, normally they are competitors among themselves. However, if only those people are somehow uniting in order to impose a certain pressure towards specific patterns of income distribution and redistribution and if they are succeeding in that, then they are automatically acquiring exclusive property rights. Any exclusive income or any exclusive property rights are simultaneously generating social opposition or social counteraction. Social counteraction is what social groups are all about. Any social structure based upon exclusive property rights, power and coercion is leading to social counteraction and simultaneously creates social groups.

Political power, properly so called, is merely the organized power of one class for oppressing another 7

Definition of social group does not imply any caste alike stubborn system of social relations. Generally speaking, what makes peoples transition from one social group to another difficult is the level or degree of exclusivity of particular property rights. Pursuit of exclusive rights is making monopolistic proprietors eager to limit an overall number of owners of the monopolistic property and therefore to increase their personal share in total monopolistic income. Monopolistic social groups simply do not like to share their exclusive income with the other people. Such statement of things is explaining rigidity and inflexibility of social groups. However, certain opportunities for transition from one social group to another or rather from non-monopolistic and monopoly dependent social groups to monopolistic ones exist even under the most severe types of exclusive property rights. The less exclusive are property rights - the larger are the possibilities for such transition.

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In order to assure long-term social privileges, permanent wealth or even means of subsistence at the earliest stages of the formation of human society, socially stronger individuals, which afterwards had formed a foundation of ruling social groups, were not only eager to possess some kind of property on exclusive basis, but also to assure for this possession to be of a long-term hereditary character. It is exactly the exclusive property rights, what creates social groups and not people's relation to private property as Marx once assumed. The closer is an aggregate national market to perfect competition or the lower is domination of exclusive property rights in a particular society, the less significant are economic, social and even cultural differences between social groups. Social groups are distinguished based on their relation to certain types of exclusive property rights and not based on their relation to different types of property or even to different types of production factors. Particular individuals are beginning to recognize their common interests of a social group whenever they have something in common to hide, to protect and to maintain (for example exclusive property rights and privileges) on the one hand or whenever they have something in common to fight for, on the other hand. Whenever people are under monopoly free environment or under perfect competition, every single individual is having his own, quite independent from other people, interests. Under these circumstances, there is no need or what is more important there is no sense to unite such interests in one common social interest. Generally speaking, any political and social interests are, first of all, uniting on the basis of common ideas about income distribution and redistribution, i.e. owing to purely economic reasons even though they are uniting socially i.e. relying on mechanisms of power and coercion.

General declaration of universal non-exclusive social property rights can be referred to something like - to assure for every member of society a social opportunity to benefit from every single property possession through unrestricted non-exclusive social access to any type of production factor and to any kind of property. Under the non-exclusive property regime, every member of society is benefiting from every single property possession of all other people through their economic and production activity simultaneously participating in an overall property evaluation process. In order for this statement to hold, every person or every business organization must have a possibility to realize their social property rights through the free flows of economic resources in any economic sector or in any type of business activity according to maximum economic efficiency requirements and in correspondence with market indicators. If for certain people an access to particular type of property or moreover to particular production factor, for one reason or another, is restricted or denied, or otherwise, if capital flows are limited, then their social property rights are being violated. While certain other people in this case are automatically acquiring exclusive property rights.

The principal cause of the evil lay in the accumulation and immobility of capital of all sorts, -- an immobility which prevented labor, enslaved and subalternized by haughty idleness, from ever acquiring it 8

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Chapter 2. Property Rights Imperfections

All people are born equal in their natural rights, one of the principal fundamental rights being a right to possess any kind of property. Right to possess property without any restrictions, at the same time represents a right on realization and development of ones natural capacities. But, since natural capacities are not equal and since human nature so far is having mainly self-interest oriented character, people with the strongest and more suitable for particular stage of social development abilities are naturally inclined to benefit on account of their weaker in the social sense compatriots. The only way possible for that are exclusive property rights, property rights limitations and social restrictions to possess and to use certain types of property. Otherwise everyone is in the same conditions. These limitations may well have a variety of forms starting from a simple forcible expropriation and up to exclusive property rights upon particular production factor, upon other peoples labor and even upon other peoples life. Such outcomes, which are somewhat familiar to general public under a concept of "monopolization", we will call property rights imperfections. At certain stage of social evolution people came to realize that simple compulsory expropriation is a too rough and therefore a too short-term pleasure. It is also too bad for an overall economic performance. More appropriate as well as more long-term means have to be discovered in order to get an exclusive monopolistic income.

it begins to dawn on the consciousness of the wild herdsman that a murdered peasant can no longer plow, and that a fruit tree hacked down will no longer bear. In his own interest, then, wherever it is possible, he lets the peasant live and the tree stand. principally in accordance with a developing customary right - the first germ of the development of all public law - the herdsman now appropriates only the surplus of the peasant. 9

Self-interest oriented human nature is having a general tendency to direct any activity towards maximum possible level of exclusivity. This tendency is not based merely on idealistic assumptions of pride, self-esteem or others of a kind. Exclusivity is having a very specific and very tangible economic expression, allowing realization of particular economic activity on certain exclusive or monopolistic basis. The higher level of exclusivity is assuring a higher level of income of a longer-term character as well as all consequential social benefits and privileges. Generally speaking, property rights imperfections are a direct consequence of the self-interest oriented and exclusive in its self-interest human nature. However, not any type of human exclusivity is yet creating property rights imperfections, but only the one, which is establishing and maintaining itself through utilization of the instruments of power and coercion

Property acquisition or property exchange represents an essence of economic activity and not necessarily creates property rights imperfections. It is natural that people want to acquire any kind of property in order to satisfy their needs or in order to realize certain economic activity. There is equally no sign of exclusive social property rights in a desire

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to acquire higher level of education, which sometimes is also allowing for a certain degree of exclusivity. All these aspirations can be accomplished within purely economic process of exchange. It is not the property itself, what creates problems and inefficiencies in economic and social systems, but vice a versa the imperfections in system of property relations. Property rights imperfections can occur only at the societal level, because in order to gain and to maintain exclusive property rights, their proprietors need social mechanisms of power and coercion, which exist only at this particular level. In other words, they need an instrument of force and coercive persuasion, which will allow for their interests to remain exclusive or non-socialized and to be in a direct contradiction with the interests of other members of society. This is an essential difference between property rights imperfections and ordinary non-monopolistic or non-exclusive property possessions. The latter are generally subject to microeconomic or business transactions, rather than to social ones based on power and coercion.

Disturbances or imperfections in system of property relations are widely familiar under the term monopoly. However, as we shall see, not every kind of monopoly is leading to exclusive property rights. Term monopoly in its common understanding unites a variety of phenomena both of economic and social nature. Exclusivity starts from forcible property expropriations of a personal one-time character such as robbery for instance if we consider robbery as an exclusive possibility for burglar to expropriate certain kind of property based on force (which is giving him a shotgun, for example) and as a violation of economic property rights. Difference between general robbery and other types of property rights imperfections stands in the fact, that under those other types a process of property (income) expropriation is always legal, of a long-term nature, more dispersed in terms of robbed or monopoly-dependent individuals and a way more hidden by social infrastructure.

If, then, the State takes more from me, let it give me more in return, or cease to talk of equality of rights; for otherwise, society is established, not to defend property, but to destroy it. The State, through the proportional tax, becomes the chief of robbers; the State sets the example of systematic pillage: the State should be brought to the bar of justice at the head of those hideous brigands, that execrable mob which it now kills from motives of professional jealousy 10

or else

A robber who justified his theft by saying that he really helped his victims, by his spending giving a boost to retail trade, would find few converts; but when this theory is clothed in Keynesian equations and impressive references to the "multiplier effect," it unfortunately carries more conviction 11

Indeed, short-term or single time forcible expropriation of property also represents property rights imperfections, moreover that it directly violates legal property rights. Forcible or coercive expropriation of property implies exclusive utilization of force or

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power, which an opposite side due to certain social circumstances either does not possess or possesses to a much smaller extent than the side expropriating property. Let us consider a simple case of robbery when criminal is threatening his victim with a shotgun. Let us suppose that due to a variety of reasons the victim does not carry a gun. In that case the burglar is acquiring exclusive opportunity to use particular property (such as would be a force or a shotgun) and therefore to appropriate some property based on certain degree of force. It does not really matter whether this is an in-law or an out-of-law action, since we are not talking here about any legal rights, but rather about real social opportunities arising owing to use of force, power and coercion. We may employ a word opportunity or possibility instead of right. In order to differentiate this kind of actions from property rights imperfections connected with economic activity, we will call them property rights violations. This particular type of property rights imperfections is different from exclusive property rights mainly on account of its short-term character. Indeed, it is not so easy to find any other differences between property rights violations and long-term property rights imperfections. Robbery represents private violation of property rights or property rights violation of private nature. Another type of property rights violations property rights violations of social nature. Already the word social tells us that this type of property rights violations is relying upon mechanisms of power and coercion rather than upon force of one particular individual as in the case of robbery. In order to better understand property rights violations of the social nature, let us examine a simple historical example - coercive expropriations of wheat during the so-called war communism in Russia in 1918-1920th. Farmer, whose grain is being confiscated, may possess a shotgun, but it is quite unreasonable for him to use it, if in front of him he sees five State appointed expropriators with five shotguns. Therefore in this case expropriators are having an exclusive authority over this particular farmer and over his property sealed by the stamp or by the power of State. This authority stands for exclusive social rights based on instruments of coercion and is realized through a forcible expropriation of property carried out by one social group on account of another or on account of separately taken private individuals.

Normally property rights violations of the social nature, which for simplicity we might call social expropriations, are being carried out by social groups, which come to power as a result of social revolutions or of some significant qualitative social changes. However, sometimes yet in our recent history, such uncivilized acts had been employed by governments of fairly civilized nations under the so-called nationalization policies. Fortunately at least in economically developed countries all such nonsense has ended by now. Expropriations being in their nature obnoxious and barbarian acts, in order to be accepted and tolerated by society normally have to be based on certain underlying ideologies - none of them, of course, deserves any attention from the point of view of property relations or from the point of view of common sense. From the point of view of property relations only an expropriation of exclusive property rights and elimination of different types of social monopolies based on power and coercion can be justified and moreover are absolutely necessary. Expropriation of any kind of property, even of the property associated with exclusive property rights, not only unable to create any value,

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efficiency or justice, but vice a versa always brings along inefficiency, injustice and moral degradation and represents a direct violation of property rights. Not only property expropriations are deteriorating property regime, social rights and economic freedom, but quite often they are also taking peoples lives.

Property rights imperfections are not the only kind of imperfections, which is appearing as a result of a contradiction between self-interest oriented human nature and general social and economic progress requirements. Together with imperfections in system of property relations, another social process, which in our days we call violation of social or human rights, is simultaneously taking place with a different intensity at various historical stages of social evolution. Since economic freedom is a determinative element and a necessary precondition for social freedom, any violation of economic property rights and therefore also of economic freedom is indispensably accompanied by violation of social freedom. Even more than that, violations of social rights do not represent merely unscrupulous brutality, but are normally being carried out rationally in order to achieve certain social and economic results. Under social rights violations we will understand property rights violations of a long-term, persistent and usually mass character associated with restrictions and limitations of personal freedom. Nature and reasons for violations of social (human) rights are based solely on exclusive property rights. No matter what are objectives and motives of particular individuals and social institutions committing social rights violations, the fundamental cause, which lies underneath such actions, is an appropriation of exclusive property rights and of exclusive income.

In his critics of capitalism, Marx referred to property relations at the economic level, where they represent a source of simple exchange transactions.12 He had a feeling that something is not right, he even had a feeling that it is exactly an exclusive character of certain property possessions what is not right, but he connected this exclusivity with private property. During Marxs epoch, certain degree of monopolization or certain degree of social exclusivity in property relations might have existed. Capital flows were very much constrained by a lack of financial resources for procurement of industrial property on behalf of working class and of certain other groups of population. Property rights were concentrated with a relatively narrow group of wealthy people. Capitalists, as Marx called them, as a social group probably did obtain in certain cities, towns or regions certain exclusive rights, which were out of reach for other groups of population. Term reach or access is actually connected with another very important social concept directly related to property rights imperfections, which is having a rather wide application and significant influence upon the entire spectrum of social and economic relations. This conception is very important for our further consideration and, first of all, for understanding of the phenomena of State, society and social evolution. In order to better capture a nature of this conception let us turn to economic conditions and property relations of Marxs historical time frame. It is exactly exclusive property rights monopolized at societal level and absolutely not a private property, are responsible for possible appropriations of monopolistic income, which might have existed at that time and which are described by Marx. Of course, overall level of income and economic

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development was rather low comparatively with the modern ones and that well could be a main reason (which is more of economic nature rather than of the social one) why quite a narrow group of population had an exclusive access to certain type of property (capital), while, on the other hand, for a lot of people such an access was denied. No matter what political and social circumstances were shaping this situation, it gave to quite a narrow group of people more or less exclusive possibility to utilize particular type of property. At the same time, large part of population simply did not have sufficient financial resources in order to acquire necessary productive capital. Such kind of monopolization, which is emerging owing to purely economic or economic development factors, we will call economic monopolization. On the other hand, now and then a social access to a circle of bourgeoisie or to some particular capital in particular town, province or even at the national level might have been relatively restricted for newcomers and outsiders. Local and national bourgeoisie was certainly eager to oppose any attempts of new business entries employing social ties and personal connections, overcoming of which might prove to be fairly difficult. Now and then even social attributes of individual social origin, religion, nationality, origin of wealth, family status and family members, education, morality, etc - were exploited in order to jeopardize new capital entry. If there ever were any problems for potential entry into bourgeoisie as a social group it much rather would be represented by an occasional application of some direct power, authority and coercion in order to limit a freedom of capital flows either at national or at local level through different social pressures. This type of property rights imperfections, which is appearing and being maintained relying on utilization of the social mechanisms of power and coercion we will call social monopolization. Social monopolization is a keystone and the most fundamental social concept for understanding of the nature of society, State and social evolution.

Property rights violations and social monopolization together are embracing all types of property rights imperfections, which might exist in any particular society. Property rights violations (especially those of the social nature), being the roughest form of property rights imperfections, historically are appearing when social counteraction is rather weak. Property rights violations usually can be of one time or at most of the short-term character. Length and intensity of property rights violations depend exclusively upon the level of social counteraction to these violations and upon the social power of counteracting individuals and social groups. On the contrary, social monopolization because of its reliance on particular social and ideological infrastructure, which is designed to preserve particular social formation and particular type of property relations, is normally having a much longer-term character. Connection of social monopolization with economic or production activity is a major factor differentiating it from property rights violations. Such connection is not changing the social nature of property relations too radically, but it is creating more obstacles for understanding of social monopolization and concealing the real essence of this phenomenon in a more profound way. Under the property rights violations there is only coercive or forcible expropriation, which is not connected with any type of economic or production activity. In this sense property rights violations represent a purely social type of property rights imperfections, which is

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emerging only as a result of weak social counteraction or as a result of profound social weakness of particular individuals and social groups. Social monopolization, on the contrary, is uniting in itself both economic and social nature. It cannot occur without at least some kind of economic activity, even though similarly to the property rights violations, it is based primarily on social mechanisms of power and coercion.

Social monopolization usually represents a much more wide scale and longer-term phenomenon comparatively with property rights violations, including in terms of its disturbing influence upon the general system of property relations. Even though property rights violations may be more intolerable from the point of view of justice or morality, while their effect on economic development and economic efficiency is more disastrous, their authority and influence is usually of a rather short-term character comparatively with those of social monopolization because normally people do not tolerate any bare violations for too long. Interconnection between property rights violations, social monopolization and violations of social rights is a significantly complex and a very important social phenomenon. Property rights violations of the social nature similar to any other property rights imperfections are unavoidably infringing on social or human rights. Property, generally speaking, represents a fixed and concentrated realization of particular feelings, emotions and ideas and simultaneously an accomplishment of lifetime hopes and objectives of the people. While realization of human feelings, emotions, sentiments, ideas and objectives (including such objectives as freedom, liberty and life) is exactly what we understand under the social rights. If property rights are violated while property is being expropriated such situation automatically represents an act of expropriation of particular social rights.

Property is a real right, jus in re, -- a right inherent in the thing, and whose principle lies in the external manifestation of man's will. Man leaves his imprint, stamps his character, upon the objects of his handiwork. This plastic force of man, as the modern jurists say, is the seal which, set upon matter, makes it holy. Whoever lays hands upon it, against the proprietor's will, does violence to the latter's personality. 13

If certain property rights are socially monopolized and people have to pay specific monopolistic price, it automatically means that they have to give up more of their emotions, sufferings, feelings and intellectual efforts for the same amount of property of those who possess exclusive property rights.

Fundamental difference between social and purely economic monopolizations stands in the fact that economic monopolization in its pure form is not based on exclusive social property rights. In its pure form economic monopolization is being generated within the market competition and does not bring along exclusive rights based on mechanisms of power and coercion as well as a long-term appropriation of monopolistic income associated with social monopolization. This type of monopolization rather represents a microeconomic monopolization, which is arising from natural economic competition and which is not connected with exclusive property rights, power and coercion. If there are

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no power and coercion involved then there is nothing social in any phenomenon. Under economic monopolization coming from purely economic competition, anybody can enter particular market as well as participate in economic price formation of any particular property or as economists would say - there is always a possibility of potential market entry, although the latter conception we are applying here in a purely social sense meaning potential social entry. Potential possibility of social entry implies that there are no any social barriers based on application of the mechanisms of power and coercion for free capital flows or simply that there are no any exclusive property rights. Just as in economy we have an economic competition, in the very same way in society we are always having a social competition between all individuals and between all private interests for social property rights as well as for exclusive property rights. And even more than that - as long as exist mechanisms of power and coercion economic competition does not represent a key determinative part of an overall competition for production resources and for particular social privileges.

Wherever opportunity offers, and man possesses the power, he prefers political to economic means for the preservation of his life. 14

Social competition always brings along exclusive social and property rights. Monopolies of economic nature equally embrace property rights upon certain sophisticated knowledge or information. In this sense, all intellectual property rights and industrial patents can be attributed to this category. Actually a phenomenon of knowledge or information as well as its role both in value creation process and in property relations deserves special attention, which is out of the purpose of this book. Since knowledge, information and technology sooner or later are becoming obsolete economic monopolies usually do not last long. Besides, being short-term in their nature, they do not contain price influence situation of the social character. Special short-term price can be considered as an award for accumulated knowledge and information and for their productive utilization. However, particular individuals and organizations are always eager to maintain their economic advantages relying on mechanisms of power and coercion, even if those advantages are emerging under purely economic competition. Accordingly all economic monopolies incorporate a certain potential to acquire exclusive property rights and may lead to social monopolization.

Preservation of social monopolies is not an easy task, because other things equal people are not very much eager to pay for somebodys exclusive rights. We have mentioned already that one the most fundamental tools for maintenance of exclusive property rights is mechanisms of power and coercion. However, it is quite difficult to maintain exclusive rights relying only on such a primitive tool, first of all because people are always inclined to counteract and to destroy those mechanisms. Rather fortunately for monopolistic social groups there is another influential instrument in order to persuade people to support or at least to tolerate a presence of exclusive rights. This instrument is ideology. The single purpose of any ideology is to persuade people to buy certain social monopolies and to pay certain monopolistic prices. Any ideology is benefiting either

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ruling social groups or social groups eager to get in power. Ideology is a very dangerous phenomenon, which represents an appeal to human feelings and emotions aiming, first of all, at downgrading of the rational apprehension of reality. At the same time, ideology may include a standard logical appeal as well. However, grounds for argumentation or social assumptions are always being based on emotional apprehension of reality. If particular ideology is capable to change or to shift certain social assumptions it can draw whatever conclusions one wants. Any ideology is rationally and logically inconsistent because there is no such thing in the whole world, which can justify exclusive property rights. From the point of view of monopolistic social groups employment of any ideology besides logical inconsistency incorporates another essential negative feature - any ideology is rather costly and inefficient social phenomenon, which is usually connected with significant income redistribution for its direct and indirect support. Inefficiency and costs associated with promotion of particular ideology quite often are leading to economic bankruptcy of social regimes, which is very much linked with their political bankruptcy.

Together with dissolution of primitive societies, an assurance of relatively comfortable standard of living as an objective of social monopolization from the point of view of monopolistic social groups, is substituting in superiority an assurance of means of survival and becoming to be a predominant reason of property rights collisions and imperfections. At the same time, with further social and wealth differentiation and with emergence of social groups, maintenance of social status and social privileges arising from social monopolization is becoming equally important for monopolistic social groups. Underneath various types of artificially induced limitations for capital flows there are always clearly defined material or financial interests of particular individuals and social groups. Quite often such interests are not even recognized by advocates and promoters of particular property rights restrictions or of particular capital flows limitations.

Similar to Marx, Lenin also had a feeling of problems inherent to his particular society and to his particular time period.15 Deriving his vision from Marxism, he naturally considered that these problems are connected with the private property and represent an immanent characteristics of capitalism. However, property rights imperfections described by Marx and monopolization portrayed by Lenin in his Imperialism, the highest stage of capitalism are two different types of property rights imperfections. Although both belong to the social formation, which we usually call capitalism, their nature and origin are utterly different. Property rights imperfections described by Marx, at least ideally, are based upon exclusive property rights of certain social group (capitalists) on particular production factor capital, and upon limited access to this factor for certain other social groups (workers). This particular type of property rights imperfections connected with exclusive property rights upon the entire production factor we will call production factor monopoly, though such monopoly have hardly ever existed under capitalism. Alternatively, monopolization described by Lenin is related to exclusive property rights upon all capital within particular economic sector sector

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monopolization. Such type of monopolization is characterized by a limited access to industrial capital in particular economic sector on behalf of all other social groups, but also on behalf of all other capitalists (outsiders for this particular economic sector). Exclusive property rights in this case are violating social rights of the rest of society to participate in evaluation of an overall economic contribution of particular economic sector. Property rights imperfections connected with exclusive rights upon all property in particular economic sector or in particular geographic region we will call structural monopoly. Under the production factor monopoly of capital an access to various economic sectors for all capital proprietors is relatively free, while under the structural monopoly it is either limited or restricted. In case of structural monopoly, flows of economic resources between labor and capital as well as access of social group represented by labor to capital and to social group represented by capital might be significantly less restricted (or even not exist at all) than in the case of capital production factor monopoly. Within Lenins historical time frame it becomes less difficult for other social groups to become capital proprietors, but not in structurally monopolized industrial sectors. Origin of structural monopolies may have purely economic reasons (such as economies of scale, for example), nevertheless afterwards they might easily transform into social monopolies with potential market entries being opposed by monopolists through utilization of the social mechanisms of power and coercion.

Diagram 1. Property Rights Imperfections

In application to production factor monopolies the phenomenon of price influence situation is having a much more complex nature and must be understood in a much broader sense, than merely an influence upon the price of particular commodity under ordinary microeconomic transaction. Price influence generally is a very complicated and diversely significant phenomenon and not only from economic point of view, but what is far more important - from the point of view of its social influence and underlying this influence types of economic relations. Price influence is determining not only peoples economic contribution, but also the entire social structure and social relations as well.

Property Rights Imperfections

Social Monopolization Property Rights Violations

Structural monopoly

Production factor monopoly

Of social nature

Of private nature

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Price influence situation at macroeconomic or at the social level embraces a variety of property and exchange relations, which only on a surface are expressed by interconnection and fluctuations of price indicators. Very simple price influence situation is determining price levels at monopolized potato market in a small town. Much more complex social and property relations are determining the mechanism and the level of monopolistic income appropriation by land aristocracy under feudalism including redistribution of national income through the State, where aristocracy is benefiting from a social alliance with the state bureaucracy. These types of property relations are much more hidden and much more difficult to trace; especially taking into consideration a huge social infrastructure designed to conceal any appropriation of monopolistic income. Nature of price mechanisms related to both production factor and structural monopolies we will examine in more details in chapter 6. At the end of the day both social monopolization and social rights violations are built upon price influence situation.

Price of any commodity simultaneously represents a measurement of this particular commoditys value in relation to all other commodities, services and production factors. Being subject to economic evaluation process, price is an objective category, which cannot be influenced by direct human interference. At the same time, we have seen already, that under certain social circumstances appears price influence situation connected with some kind of exclusive property rights. In this case particular commodity is acquiring a non-economic or social value, which is reflecting an appropriation of exclusive or monopolistic income and which is based on social mechanisms of power and coercion. Price of a particular commodity incorporates payments for all production factors employed in manufacturing of this commodity including for monopolized ones. Every producer and every proprietor is generally trying to make his commodity, service or technology exclusive in satisfaction of certain human needs in terms of quality, price, design and numerous other characteristics or in terms of combination of these characteristics. Such statement of things represents a fundamental motivation for potential exclusivity of practically any type of property. But only when this exclusivity is starting to be based on social mechanisms of power and coercion and when it begins to interfere with production factors flows, it does generate social monopolization.

While structural monopolies can have either economic, arising from competitive environment, or non-economic social nature, production factor monopolies are always of the non-economic nature. They are the social monopolies of artificial origin in a sense that their emergence is only possible at the social level owing to the general orientation of human self-interest towards power and associated with it possibilities of exclusive benefits and privileges. On the other hand, elimination of production factor monopolies is a natural or evolutionary process, which is happening through peoples counteraction to any exclusive rights outside of the domain of economy. Eradication of social monopolies is mainly connected with inefficiency of property relations, which is accompanying any exclusive property rights and which essence we will examine later in chapter 5. Sometimes some serious man-planned efforts directed towards elimination of production factor monopolies do not succeed because property relations have not yet

26

came in sharp contradiction with economic or production factors development (such as, for example, numerous slaves rebellions in ancient Rome including Spartacus). On the other hand, sometimes very few efforts might be enough in order to overthrow a degraded system of property relations (for example, peaceful revolutions in communist Hungary and Czechoslovakia). Even though, at the end of the day they serve the interests of certain social groups, production factor monopolies do not appear as a result of a will of particular individuals, but rather as a result of significant differences in social strength and social power of particular individuals and social groups. It might be the case that everyone wants to be a king, but originally only the strongest or the best socially fitted individual is becoming one. On the other hand, if his social strength or power fails somewhere or sometime or if the king fails to remain the most fitted person, there are plenty of others, who are ready to replace him, at least what concerns governance of the country if not what concerns an actual title. It is exactly the system, rather than concrete beneficiaries what matters when we are dealing with exclusive property rights. It is exactly the system of property relations what creates inefficient and unfair outcomes and not concrete individuals who are benefiting from exclusive property rights - they are just children of fortune or better to say children of natural selection the most fitted to particular societal systems individuals - and it does not really matter who they are personally. People can destroy one particular social construction, but it will always appear another one in its place, because self-interest oriented human nature will always fight its way through to the highest degree of power, coercion and exclusive property rights. Because of that it is quite difficult to imagine anarchism in its pure version or general State cancellation under the self-interest oriented human nature. Normally property rights imperfections always appear when the interests of certain number of people are strong enough in their unification under one common social vector, while interests of all the rest of society or of other social groups are too weak to counteract trend expressed by such vector. Similar to their emergence, social maintenance of production factor monopolies is also relying on power and coercion. Particular production factor monopoly is dominating social and economic relations in any given society up to a degree defined by the power of associated with it social groups comparatively with a compound social power of monopoly dependent individuals and social groups.

Once being established, production factor monopolies are not only determining the entire social infrastructure, but are also starting to influence personal character and social behavior of particular individuals and social groups. Social nature of production factor monopolies is equally portrayed by the fact that exclusive property rights do not belong to particular individuals or groups of individuals, but much rather to the social groups. Monopolistic social groups represent groups of people united in their social, economic and political interests by exclusive, forbidden for any other individuals and social groups, types of property possessions and social privileges and, first of all, by the benefits of exclusive income, which are emerging from this kind of possessions. Social monopolization, making part of property rights imperfections is having its roots in social and property relations and cannot be described relying merely on conventional economic

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property rights. In fact, quite possible is a situation when there are no particular superficial disturbances in economic property rights associated with existence of social monopoly. If we address our previous example of matches factory - an owner of this company can sell it to another proprietor just as any other property. Actually, social monopoly as a property is separated from economic possessions of any type of capital or of any economic resource. Generally speaking, from the point of view of its proprietor, monopoly itself is already a capital or a property. Ideally, in its pure version it is able to bring income without any associated property or without any associated capital. Monopoly is having its own value - separate from the value of associated property. Owing to that, sometimes, it can be bought and sold without the associated property as, for example, structural monopolies in England in 17th and in France in 18th century. If social monopoly not necessarily has to be associated with a particular property, equally not necessarily it has to be associated with only one proprietor or with only one economic agent. If social monopoly does not suppose any underlying property, it can be realized by a group of individuals with rather different property possessions if only this group will somehow manage to obtain certain exclusive rights. This is opening a wide horizon and comprehensive possibilities for materialization of production factor monopolies, which are socially uniting several or multiple proprietors of separate economic property possessions. Members of particular social group are gaining exclusive income not from their land, from their capital or from any other economic resource (if these resources are not socially monopolized they do not bring any exclusive value) but only from exclusive property rights or from the very fact of social monopolization of a particular production factor, such as, for example, slaves labor under slavery or land under feudalism.

In our example, a selling price of the matches' factory besides other factors will be also influenced by a higher return on capital as a result of embedded possibilities for appropriation of monopolistic income. But, nevertheless, it will still be determined according to a market rate-of-return on capital as any other investment transaction. There is no any violation of economic rights of various proprietors. Those are only the social property relations, which are violated and which violation is explaining an exclusive condition of this particular company. Monopolized property economically, technologically and financially may perform just like non-monopolized property. Oil refinery equipment, which forms fixed costs or fixed capital, is having the same microeconomic nature with or without monopolization. If one single manufacturer manages to monopolize the entire oil industry, appears a situation when nobody else can sell oil products or, what is the same, as a result of the presence of exclusive property rights, nobody else can invest capital in oil production and in industrial utilization of oil refining equipment. Price influence situation and changes in income appropriation patterns connected with this monopolization are associated with the social nature of exclusive rights and are certainly not connected with microeconomic or technological nature of particular property or of particular equipment. Exclusive property rights on account of certain social factors are attributing specific social nature to ordinary microeconomic property possessions.

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Throughout the entire human history have existed and still exist a lot of different and sometimes not even clearly identifiable property rights imperfections, or different kinds of restrictions, regulations and limitations related to possession of particular types of property or, what is the same, various restrictions on realization of particular economic activities. All these imperfections according to their scale, economic nature as well as to their economic and social influence can be divided into two basic categories production factor monopolies, which are defining the very essence of social and economic formations and structural monopolies, which are extensively investigated by economic science and are abundantly described in economic literature. Such division not only is connected with the differences between particular types of property under associated exclusive rights, but also with the degree of influence of a particular social monopoly upon social, political and economic environment in any society and within any social formation. Production factor monopoly, which we are trying to understand, is a very complicated and simultaneously fascinating social and economic phenomenon as well as a fundamental reason or rather even an essence of social and economic disturbances and disarrays. Production factor monopoly is also a much more persistent throughout the entire human history as well as much more socially influential phenomenon than any structural monopoly.

Different types of monopolies of different sizes are surrounding us beginning from that shop around the corner and up to a national gas and electricity su