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Issue 42, October 1999

The case against the market

A Future for Public Ownership
By Malcolm Sawyer & Kathy O'Donnell, 1999, Lawrence & Wishart, £7-99
Reviewed by Pete Watson

PUBLIC OWNERSHIP has been under attack now for a whole generation. In the 1980s Margaret Thatcher declared that 'there is no alternative' to the market. The collapse of the Stalinist economies such as the Soviet Union (based on a distorted form of public ownership), gave suppport to this onslaught.

Now, New Labour prime minister, Tony Blair, declares that the government works in partnership with business, 'as a pro-business, pro-enterprise government' (speech to Labour Party conference, 1998).

This book provides an antidote to the 'accepted wisdom' of the capitalists. While concentrating on the utilities (water, electricity and gas), it also seeks to answer important questions relating to public ownership in general.

Is regulation of private industry by government the answer? New Labour makes a lot of regulation to get higher safety and environmental standards and a better deal for the consumer. The authors found, however, that regulators were often captured by the companies they were supposed to regulate. The free air travel and bean feasts that the National Lottery regulator enjoyed is an extreme example of an established trend. Who has the power in relations between consumer, company and regulator? The company has control of information and unlimited access to the regulator. The consumer has little information and even less access.


The battle-cry of pro-marketeers is that private ownership is efficient. Through competition, the pursuit of profit and fear of takeover, they claim, the best companies win through.

Is private more efficient than public? The authors say not, and that is comparing private with the forms of public ownership that socialists would argue are far from ideal. In comparisons using productivity, level of costs and some measures of efficiency, US electricity companies, Australian airlines and Canadian railways showed no difference between private and public. In the UK, the authors provide some interesting historical figures. Growth rate was higher in public enterprises than in mainly privately-owned manufacturing from 1951 through to 1985. They also demonstrate that takeovers lead, in general, to a decline in efficiency and profitability for the takeover firm. The shareholders of the firm being taken over make the biggest gains.

Didn't privatisation spread economic power out to millions of new shareholders? The figures show that individual ownership of shares has, in fact, declined from 30.4% in 1981 to 20.3% in 1993. Some argue that pension funds, which now own 33% of all shares, represent power for future pensioners, but what real say do contributors have in how pension fund managers ply their trade?

Having proved that public ownership can match private, the authors deal with positive points in favour of public ownership. These include such things as community control, standards of employment, income and wealth distribution, and environmental factors.


The most interesting section deals with the different forms of public ownership which could be proposed for the utilities. These include full public ownership, partial public ownership, strategic ownership, regional public ownership, mutualisation, and democratic employee ownership.

The arguments presented on these options were as follows. Full public ownership represents a return to single, vertically-integrated monopolies. Partial public ownership is an easier step for government to take, but it would mean that they and certainly workers would have little real say in how companies were run. Strategic ownership means bringing a key part of an industry under government control. Examples of this would include companies like Railtrack and the electricity national grid. This would give greater guarantees on safety and supply, but would continue the contracting problems that the rail system suffers and leave large chunks of industry in private hands.

Regional public ownership is an inexact phrase because it includes the power of public ownership for the new Scottish parliament and Welsh assembly that represent nations. The authors remind us that local authorities used to run publicly-owned gas and electric companies up to the second world war. Mutualisation means ownership by consumers. An example of this form is the old building societies, where savers had shareholding rights. The authors correctly point out that shareholders, in fact, have little everyday control in these companies.


The last form of public ownership analysed is democratic employee ownership where the workforce become collective owners of the company, sharing profits after wages and investment has been taken into account. This is the most democratic method of ownership and has been attempted by groups of workers who formed cooperatives in the 1970s and early 1980s.

The authors conclude with some recommendations for the utilities - which includes full public ownership as one of the options for the electricity and gas industries.

This book is a readable and short (about 100 pages) argument in support of public ownership. It is also based on research commissioned by UNISON following the decision of UNISON's conference to support the renationalisation of the utilities. It will be useful for supporters of the Campaign for a Fighting Democratic UNISON (CFDU) and other activists, therefore, to ensure that it does not disappear.

For socialists in general, however, the book is of value but is limited in scope. It fails to distinguish between limited public ownership within a capitalist framework and the public ownership of a wider spread of the biggest companies, which would lay the basis for a new socialist form of society. It underestimates also the ferocious resistance that the ruling class would put up to even the limited amount of public ownership that it proposes.

What is the best form of public ownership? Past experiments in workers' co-ops showed that the bosses are a redundant and unnecessary layer in society. Those co-ops failed, but only because they were isolated. If many of the largest companies were run in the same way, the suppressed talents of the working and middle classes would express themselves in enormous leaps forward in ideas and productivity. Such companies would need to co-operate within themselves and also with each other to meet the needs of society as a whole.


We should reject the old idea of bureaucratic nationalisation. Industries such as mining and rail were nationalised to service capitalism with cheap raw materials and transport. Workers and users had no say in how they were run.

Would the new way of running things under a socialist system mean a continuation of vast, vertically-run monopolies or smaller, more responsive and potentially more democratic forms of production? Maybe the advances in information technology will allow society to go down the latter, more preferable course.

What the future holds is, of course, only speculation. But what we can say is that the decisions about the nature of future society are now being laid down through the terrible experiences of war, poverty and starvation, that the masses of the world are living through under capitalism.

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