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ISSN 2067-3310, E-ISSN 2067-7669 

Vol. 18, No. 2 (2024), pp. 245-251 

 

245 
 

MODERN CHALLENGES IN THE DEVELOPMENT OF PROPERTY 

RELATIONS 

 

T. R. ROSS 

 

Tim Rasimovich Ross 

Azerbaijan University, Baku, Azerbaijan  

https://orcid.org/0000-0002-1565-183X, Email: m333013@gmail.com  

 

Abstract: This article analyzes the key factors influencing the transformation of 

property relations in the current context of globalization and economic democratization. It 

examines examples of countries actively developing sharing and network-based property 

forms. The need for updating the methodology of property regulation and implementing 

adaptive management mechanisms for efficient resource allocation and protection of the 

interests of all economic process participants is highlighted. 

Keywords: property relations, democratization of property, sharing economy, sharing 

enterprises, innovative business models 

 

INTRODUCTION 

Property relations are a fundamental aspect of a society’s socio-economic structure. 

Economic globalization, technological advancement, and geopolitical shifts present new 

challenges that necessitate transformation in these relations. The new industrial revolution 

offers unique opportunities to establish new forms of property ownership. The changing nature 

of work, driven by modern technology, underscores the crucial role of human factors in the 

emerging “socialized economy.” The democratization of property involves an equitable 

redistribution of rights, engaging a broader population in asset management, which leads to a 

dispersion of wealth and power and creates a sustainable economy. Democratizing property 

also fosters favorable conditions for entrepreneurship. 

According to Klaus Schwab, the “participatory or shared economy” is a leading factor 

in the new industrial revolution (Schwab, K. 2017:13). The sharing economy has become 

essential amid digitalization, as highlighted during the 2019–2021 pandemic. Sharing economy 

services and platforms transform traditional property regulation by shifting from individual 

ownership of production means and products to shared ownership and usage. These new forms 

of property not only enhance ownership but profoundly impact market architecture, expanding 

opportunities for micro-enterprises, which were previously limited to large organizations. 

Jeremy Rifkin suggests that the Fourth Industrial Revolution encourages self-governance and 

self-organization. In developed countries, there is a continuous increase in democratically 

organized, self-governing institutions, covering both production and non-production spheres, 

such as healthcare, education, creative groups, and consumer cooperatives (Rifkin, 2014:23). 

New property forms improve management efficiency by reducing transaction costs and 

removing unnecessary bureaucratic layers. It should be noted that post-Soviet countries have 

prior experience in collective resource utilization. The modern sharing economy differs in 

several respects:   

https://orcid.org/0000-0002-1565-183X
mailto:m333013@gmail.com


MODERN CHALLENGES IN THE DEVELOPMENT OF PROPERTY RELATIONS 

 

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 The sharing object is not scarce (no deficits in material, financial resources, etc.). 

Today's sharing service users make more conscious purchases, considering ethical and 

ecological values among various options. IT advancements have made renting and leasing 

faster and simpler (Nesterova, 2023). 

The sharing economy's advantages include cost reductions for users, expanded access 

to goods and services, and the development of new business models. However, it also has 

drawbacks, such as unstable income for workers, a lack of social guarantees, and 

underdeveloped legal frameworks. There are conflicting views in society regarding the sharing 

economy's growth. Some believe that “the spread of non-market exchanges and institutions 

will reduce competition, thus decreasing production efficiency” (Ginarte et al., 1997:283–301). 

We believe that the development of new information technologies in the modern world 

is forming an alternative system for coordinating economic activities, where non-market 

mechanisms compete with market mechanisms, creating a multiplier effect for further 

economic growth. Notably, the sharing property model has become widespread in the most 

developed countries. In the United States, Canada, and the United Kingdom, for instance, up 

to 10% of the workforce is employed by sharing enterprises, with 72 cities worldwide 

connected through the Shareble platform (The Fourth Industrial Revolution: Realities and 

Modern Challenges. Xth Anniversary St. Petersburg Sociological Readings: Proceedings of the 

International Scientific Conference, April 13–14, 2018. - 896 p., p.83). The sharing economy 

is necessary for transforming traditional economies, which are divided between property 

owners and non-owners. The sharing economy is characterized by a new property regulation 

methodology involving all participants—direct owners, managers, and work collectives. This 

requires the establishment of co-participation in property management and profit distribution. 

In developed countries, the socialization of property is becoming recognized. For 

example, Article 14 of the German Constitution states, “Property entails obligations. Its use 

should also serve the public good” (https://worldconstitutions.ru/?p=155.%202017). This 

principle was further elaborated in a ruling by the German Constitutional Court, which stated 

that it implies rejecting a property system where individual interests outweigh societal interests 

(Maximov, 2018:56–69). Article 42 of the Italian Constitution states, “Private property is 

recognized and guaranteed by law, which determines its acquisition and usage methods, and 

its limits - aimed at ensuring its social function and availability to all” 

(https://legalns.com/download/ books/cons/italy.pdf). This article emphasizes that, in the 

public interest, the law reserves the right for the state, public institutions, worker or consumer 

associations to transfer ownership. Additionally, the law supports small and medium-sized 

property and may impose size limits to ensure rational land use. 

 

MATERIALS AND METHODS 

The sharing ownership model applies a heterarchical management system, using 

horizontal management structures. This model relies on interdependent relationships with 

broad autonomy of production system elements and a mutual distribution of power. This 

management style is typical for network economies. In its report, the European Commission 

defines the network economy as a specific environment where any company or individual, 

regardless of scale, can connect with minimal costs for business, research, idea exchange, and 

information (Telework 1997, European Commission Report). H.Kagermann and J.Helbig view 

https://worldconstitutions.ru/?p=155.%202017
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Tim Rasimovich ROSS 

247 
 

the network economy as a qualitatively new level of organization and management throughout 

the product lifecycle. This economy is based on a new technical system, ownership 

relationships, and management (Kagermann, 2013:53). According to R. Drath and A. Horch, 

Industry 4.0, as the foundation of the network economy, is a triad of physical objects, their 

virtual representations, and services and applications (Drath, 2014:56–58). They view it as a 

qualitatively new horizon of business models, services, and customized products. 

 

Table 1. Methodological Features of Economic Activity Regulation Forms 

Features Organizational 

Forms of Economic 

Activity 

  

 Command-

Administrative 

Market-Driven Network-Based 

Property Form Centralized Private Sharing 

System Approach 

Characteristics 

Dominance of political 

objectives 

Equality of all 

economic subjects 

Subordination to 

network structure 

interests 

Productive Forces 

Allocation 

Centralized-command Based on private 

economic interests 

Based on socio-

economic interests 

Circulation of Goods 

and Capital 

Based on 

administrative 

decisions 

Driven by competitive 

decisions 

Oriented toward 

socio-economic needs 

Response to External 

Environment 

Changes 

Passive, limited 

response 

Active adaptation 

through pricing 

High adaptation and 

coordination among 

system participants 

Dynamism in 

Economic Expansion 

Unidirectional growth 

in organizational 

structure 

Market-oriented 

organizational 

transformation 

High flexibility and 

modular adaptability 

within a network 

structure 

Tendency for Global 

Integration 

Capable of only 

vertical integration 

Capable of vertical 

and limited horizontal 

integration 

Capable of broad 

horizontal integration 

in a global context 

Source: Compiled by the author based on (Vayber, R. 2020). 

 

Table 1 presents the advantages of network structures in terms of both their technical 

and technological foundations, the content of transactional processes, and the characteristics of 

resource allocation. The development of the network economy accelerates the process of global 

economic integration and fosters the emergence of new forms of ownership. 

The advancement of technologies, particularly with the advent of 5G as one of the 

cornerstones of the network economy, also leads to time savings. This results in the 

acceleration of operations on stock exchanges and the processes of property distribution. In 

this context, the improvement of property distribution methodologies, the removal of property 

from monopolistic ownership, legal formalization, and the development of the stock market 

gain particular importance. 



MODERN CHALLENGES IN THE DEVELOPMENT OF PROPERTY RELATIONS 

 

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The concentration of ownership in the hands of oligarchic groups, as is well known, 

turns a country into a raw material appendage of the developed world. Countries that support 

the democratization of ownership boldly integrate into the global economy by creating 

attractive conditions for foreign investments. For example, China, which was considered one 

of the least developed countries until the end of the 20th century, is now among the leaders of 

countries with developed economies. Saudi Arabia is transitioning to a new level of post-

industrial development, moving from specialization in energy raw material production to the 

production of high-tech products. 

 

Figure 1. Dominant Principle of Influence in Classical and Network Economies. 

 
Source: Vayber, 2020 

 

A characteristic feature of sharing enterprises in the network economy is the high initial 

costs for development and production. For this reason, companies in this sector begin their 

activities by launching a large volume of products on the market at relatively high prices. An 

increase in sales volume leads to a reduction in fixed costs and an increase in profits. Figure 1 

shows that as production volume grows, marginal revenue increases in the network economy 

and decreases in the industrial economy. As seen, the network economy is characterized by an 

increase in fixed costs and a decrease in marginal costs. Therefore, producers in the network 

economy are interested in the quickest possible realization of the maximum possible volume 

of products.  

Modern challenges to the development of property relations concern both new 

technologies and global economic processes, as well as social justice and economic 

sustainability. Adapting property rights to new conditions, developing effective management 

mechanisms, and protecting the interests of all participants in economic activities have become 

key tasks for contemporary society. Property relations continue to evolve, including through 



Tim Rasimovich ROSS 

249 
 

the development of the sharing economy, digitalization, and globalization. In order for these 

changes not to become sources of new inequalities, legal, economic, and social reforms are 

necessary to ensure a more equitable distribution of resources and opportunities among all 

members of society. 

 

DISCUSSION AND RESULTS 

The findings underscore the significant advantages of the sharing ownership model in 

enhancing flexibility, efficiency, and responsiveness within network economies. This model 

aligns with a heterarchical management structure that promotes horizontal integration and 

interdependent relations, which is essential for the dynamic nature of network-based economic 

activities. Unlike the command-administrative and market-driven models (Table 1), the 

network economy relies on a collaborative approach to ownership, enabling companies to adapt 

quickly to external changes and pursue economic expansion through global integration. For 

instance, recent studies report that network-based firms grow approximately 30% faster in their 

initial years compared to traditionally managed firms due to their capacity for rapid information 

exchange and product scaling (Deloitte, 2021). An essential feature of the network economy is 

the reliance on advanced digital infrastructures such as 5G, IoT, and cloud computing, which 

collectively enhance communication, streamline financial transactions, and optimize 

operational efficiency. According to estimates from the World Economic Forum, digital 

transformation in network economies is projected to create an additional $100 trillion in global 

value by 2030. These technologies contribute to lowering transaction costs and increasing 

responsiveness, providing network-based firms with a significant competitive advantage. 

Figure 1 illustrates that network economies, characterized by high fixed costs at the outset, 

achieve notable reductions in marginal costs as production volumes increase. This reduction in 

marginal costs underpins a profit-maximizing model that incentivizes enterprises to rapidly 

scale production, allowing for swift cost amortization and increased profitability. 

The network economy’s success also highlights the importance of democratizing 

ownership, which plays a key role in achieving socio-economic stability. For example, China's 

integration into the global economy, bolstered by policies encouraging joint ventures and 

shared ownership models, has transformed it into a technology and manufacturing leader. 

Between 2000 and 2020, China’s GDP grew from $1.2 trillion to over $14 trillion, a 1,000% 

increase, largely due to reforms that supported shared ownership and foreign investments 

(World Bank). Similarly, Saudi Arabia’s Vision 2030 agenda includes a transition from a 

resource-dependent economy to a diversified, network-based economy focused on high-tech 

production, projecting an annual GDP growth rate of approximately 4.2% over the coming 

decade. These cases exemplify how network economies can attract foreign investment, 

stimulate innovation, and reduce economic disparities by broadening access to ownership and 

production resources. 

From a property rights and legal framework perspective, network economies require 

adaptive regulatory mechanisms that prevent monopolistic practices and promote equitable 

participation. The European Union's Digital Markets Act and Digital Services Act, for 

example, aim to regulate large tech firms' behavior, ensuring that the network economy remains 

inclusive and competitive. These frameworks create safeguards for smaller enterprises within 

network economies, allowing them to compete on a level playing field by ensuring fair access 



MODERN CHALLENGES IN THE DEVELOPMENT OF PROPERTY RELATIONS 

 

250 
 

to digital platforms. Reports indicate that the implementation of these regulations could lead to 

a 15% increase in market access for small- and medium-sized enterprises within the EU 

network economy over the next five years (European Commission, 2023). 

The initial cost of adopting a network-based model is substantial, with estimates 

showing that implementing the necessary technological infrastructure can cost companies 

between $500,000 to $2 million. Despite these high upfront expenses, companies in the 

network economy achieve considerable economies of scale, with operating cost reductions of 

up to 40% as production volume scales. This efficiency is especially crucial for sectors like 

renewable energy, where decentralized network-based systems reduce dependency on 

traditional, centralized power sources. A study by McKinsey & Company found that companies 

in the network economy, particularly in high-tech and green energy sectors, experienced 

average annual revenue growth of 25% within the first five years of network model adoption. 

In summary, the sharing ownership model and network economy principles enable 

economies to pursue sustainable, equitable growth. By integrating advanced technologies and 

implementing regulatory safeguards, network economies can offer inclusive access to 

ownership while achieving high levels of flexibility and adaptability. The cases of China, Saudi 

Arabia, and the European Union demonstrate the potential of network economies to attract 

foreign investment, foster innovation, and promote fair competition. With digital 

transformation projected to add trillions to the global economy, network economies represent 

a promising foundation for addressing contemporary challenges in property rights, economic 

sustainability, and social equity. 

 

CONCLUSIONS 

The network-based economic model marks a transformative shift from traditional 

command-administrative and market-driven systems by emphasizing shared ownership, 

adaptability, and high interconnectivity. This structure enables a dynamic, globally integrated 

approach that aligns economic activities with socio-economic needs, fostering flexibility and 

rapid response to external changes. Unlike previous models, the network economy’s reliance 

on digital technologies and decentralized ownership streamlines production and reduces 

marginal costs as output increases, positioning it as an ideal model for today’s fast-paced, 

innovation-driven environment. Moreover, the capacity for extensive horizontal integration 

encourages global partnerships, fueling rapid technological advancement and economic 

diversification. Countries adopting this model often become attractive hubs for foreign 

investment, underscoring the model's potential to enhance competitiveness on a global scale. 

However, challenges remain—particularly the risks of ownership concentration among 

powerful entities, which can lead to social disparities if left unchecked. This reality calls for 

policies that ensure inclusivity and equitable benefit distribution. 

 

REFERENCES 

1. Constitution of the FRG. (2017). Constitutions of the World. Available at 

https://worldconstitutions.ru/?p=155.%202017 

2. Constitution of the Italian Republic. (2016). Available at 

https://legalns.com/download/books/cons/italy.pdf 

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4. European Commission. (1997). Status Report on European Telework: Telework 1997. 

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