The political economy of the Left has always aimed at combining social justice and economic efficiency.footnote1 The goals have not changed, but the best way to achieve them has increasingly come under scrutiny. For most of the twentieth century, the favoured means has been a single measure, the common ownership of the means of production. Common ownership has meant many things. Within the Marxist tradition an important distinction was always drawn between socialization and nationalization. The former meant cooperative production while the latter signified state capitalism. Other socialist traditions also supported many different forms of common ownership. But increasingly common ownership came to be equated with state ownership, especially after democratic franchises had bestowed the mantle of popular legitimacy on state executives, and this became the accepted definition of what socialism meant in practice for both its friends and its enemies.footnote2

The importance attached to common ownership in socialist thought derived from the association of ownership with the distribution of wealth and power. Changing ownership was the key to economic and social transformation. The main challenge to this perspective came from social democrats who downplayed the importance of changing ownership for realizing socialist goals. One reason for this change was the success of Keynesianism in offering governments a technique for managing capitalism without taking industry into public ownership.footnote3 A second was the trend towards the separation of ownership and control in capitalist firms, first noted by Marx and analyzed in the 1930s by Berle and Means, which appeared to make legal ownership much less significant.footnote4

In the last twenty years regimes based on central planning have collapsed, state ownership has been in retreat, and even Keynesianism has been widely discredited as a reliable tool for steering capitalist economies. The Left has been widely perceived to be bereft of clear ideas or direction in its economic thinking. Faith in nationalization to deliver either efficiency or social justice has withered, while Keynesianism is no longer thought capable of guaranteeing full employment and prosperity or underpinning a redistributive welfare state. Privatization and deregulated markets rule in their place.

The rebuilding of a political economy for the Left has to come to terms with these developments and needs to reassess the nature of ownership in modern capitalist economies. There is a strong case for experiments with new forms of common ownership, and a need for the Left to restate the case for some forms of public ownership, but even more important is the need for the Left to develop a distinctive approach to private ownership. It is with this second agenda that this article is concerned.

In Britain there has long been a revisionist strand in the Labour Party which has rejected the traditional commitment to common ownership, but it has been generally uninterested in the question of private ownership. Similarly New Labour’s decision to redraft Clause iv of the Party constitution and drop the commitment to common ownership only reflected what had long been the Party’s practice,footnote5 but it was not accompanied by any acknowledgement of the need to rethink other forms of ownership. Marxists have rightly continued to emphasize the importance of ownership for a left political economy but have generally failed to perceive the potential of new forms of private ownership, and have continued to think exclusively in terms of common ownership, while social democrats have rejected common ownership, but also the Marxist insight that ownership matters vitally to the way in which economies perform. This combination has been disabling and has led to a lack of clear thinking about how to pursue egalitarian objectives within a market economy.