Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Glossary and abbreviations
- Map: The European economy in 1914
- Part I Introduction
- Part II The Construction of the New European Infrastructure c. 1830–1914
- Part III Nations and Networks c. 1914–1945
- Part IV State Enterprise c. 1945–1990
- 10 The new state, economic organisation and planning
- 11 Coal, oil and security
- 12 Airline regulation and the transport revolution
- 13 Telecommunications 1950–1990: from calm to storm
- 14 Economic policy, financial accountability and productivity growth
- Part V Conclusions
- Appendix: Infrastructure service levels and public ownership c. 1910: a statistical analysis
- Bibliography
- Index
14 - Economic policy, financial accountability and productivity growth
Published online by Cambridge University Press: 14 July 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Glossary and abbreviations
- Map: The European economy in 1914
- Part I Introduction
- Part II The Construction of the New European Infrastructure c. 1830–1914
- Part III Nations and Networks c. 1914–1945
- Part IV State Enterprise c. 1945–1990
- 10 The new state, economic organisation and planning
- 11 Coal, oil and security
- 12 Airline regulation and the transport revolution
- 13 Telecommunications 1950–1990: from calm to storm
- 14 Economic policy, financial accountability and productivity growth
- Part V Conclusions
- Appendix: Infrastructure service levels and public ownership c. 1910: a statistical analysis
- Bibliography
- Index
Summary
State enterprises were formed as a result of government disinclination to leave the infrastructure industries to arm's-length regulation of private firms. As we have seen in earlier chapters, a whole raft of non-commercial obligations were laid on them: promoting regional development and network integration, aiding working-class living standards, curbing monopoly profits, controlling strategically important resources like coal, oil and airspace. After 1945 these obligations came to be formalised under the title of the ‘public interest’. This still left many policy areas unspecified – in particular, how far should public sector prices reflect costs in different sectors, how should investment projects be evaluated? Left to their own devices, state industry managers would tend to look for a ‘business approach’. This then raises the issue of how pricing and investment policy could reflect the public interest. Such conundrums generated a whole new industry of professional economists designing price and investment policies for public-sector firms. In this chapter I first provide a brief outline of the economists' theory about state enterprise. Put crudely, it amounted to advocating cost-based tariffs, fares and rates. There was considerable resistance to widespread adoption of such policies because they conflicted violently with the policy objectives under which state enterprise had been established. I then ask how far the actual and the recommended policies were consistent with the key financial requirement laid on state enterprise, that of ensuring that revenues covered costs. Finally, we examine how the productivity record of state enterprises compares with privatised regimes.
- Type
- Chapter
- Information
- Private and Public Enterprise in EuropeEnergy, Telecommunications and Transport, 1830–1990, pp. 257 - 284Publisher: Cambridge University PressPrint publication year: 2005