THE FUTURE 
OF PUBLIC 
OWNERSHIP 


A FABIAN GROUP 

THREE SHILLINGS 



This pamphlet represents the work of a group of members 
of the Society. The group, which was set up as a result of 
a rasolution passed at the Society's Annual General Meeting 
in 1959, reached its conclusions after a series of discussions and 
this pamphlet represents the generally agreed views of the 
participants, though individual members do not necessarily 
accept all the group's conclusions. 
The members of the group included a lecturer in engineer-
ing ; a managing director of a large industrial concern ; a 
social worker ; an engineer and works manager ; an industrial 
consultant ; a social research worker ; two working in the 
public services ; and a consultant physician . 
June, 1963 
FABIAN TRACT 344 
THE FABIAN SOCIETY, 
11. Dar~mo~tb ::;treet, S.W.l. 
, .-. '• 
• ..-&! • • ... , . ...... . ., ~..~ . \f .. 'i' ~ r.,, t ~~ : r , " ,:;·(P ::t lb7~I'),, ·~ ; 
··\ l r-e. \ · c-; ,. ; :f ~~ ~.'] T \ '-' \~ .. \ :,/ 
..::: l . 7 · 1 ,··, ·~ .F 
Note.-m~t. like all publications of 
the F AB/AN SOCIETY, represents not the collec-
tive view of the Society but only the view of the 
individuals who prepared it. The responsibility of 
the Society is limited to approving the publications 
which it issues as worthy of consideration within 
the Labour Movement. 
This pamphlet represents the work of a group of members 
of the Society. The group, which was set up as a result of 
a rasolution passed at the Society's Annual General Meeting 
in 1959, reached its conclusions after a series of discussions and 
this pamphlet represents the generally agreed views of the 
participants, though individual members do not necessarily 
accept all the group's conclusions. 
The members of the group included a lecturer in engineer-
ing ; a managing director of a large industrial concern ; a 
social worker ; an engineer and works manager ; an industrial 
consultant ; a social research worker ; two working in the 
public services ; and a consultant physician . 
June, 1963 
FABIAN TRACT 344 
THE FABIAN SOCIETY, 
11. Dar~mo~tb ::;treet, S.W.l. 
, .-. '• 
• ..-&! • • ... , . ...... . ., ~..~ . \f .. 'i' ~ r.,, t ~~ : r , " ,:;·(P ::t lb7~I'),, ·~ ; 
··\ l r-e. \ · c-; ,. ; :f ~~ ~.'] T \ '-' \~ .. \ :,/ 
..::: l . 7 · 1 ,··, ·~ .F 
Note.-m~t. like all publications of 
the F AB/AN SOCIETY, represents not the collec-
tive view of the Society but only the view of the 
individuals who prepared it. The responsibility of 
the Society is limited to approving the publications 
which it issues as worthy of consideration within 
the Labour Movement. 

I. Introduction 
B EFORE the war the idea of public ownership of industry was generally 

accepted as a practical expression of socialism. It was favoured by all 
sections of the Labour Party and regarded as the main feature which distinguished 
Labour from the Conservative and Liberal Parties. Although 
most Labour supporters were vague1 as to the practical forms such ownership 
would take, it was generally equated with nationalisation. 

Conservative propaganda had not then attached to this word the image 
of intense dislike which it later denoted for thousands of people well outside 
the ranks of the Conservative Party. To many moderate minded people 
some forms of public enterprise were quite respectable. For over a generation 
municipal socialism had been practised by many Conservative and 
Liberal local authorities. The idea had been pioneered both bythe Webbs and 
Joseph Chamberlain. It was a Conservative Government under Stanley 
Baldwin which made the crucial initial experiments with national public 
corporations in 1926 by setting up the Central Electricity Board and the 

B.B.C. Large sections of the Labour Party assumed that one had only to 
extend this sort of thing over the field of industry generally and Utopia 
would be on the way. Many other vaguely progressive people thought that 
a certain measure of nationalisation might be allowed provided it did not 
go too far or too fast. 
Contrast the situation today. 'Nationalisation' is a dirty word in most 
political circles outside the Labour Party and within the Party there has 
for some years been much doubt as to how far it should be extended. Ever 
since the war a propaganda campaign has been conducted against all the 
public services-notably the civil service, and local authorities-and against 
the whole concept of public ownership. The bulk of this has consisted of 
mere assertion and insinuation. Of course the special difficulties of the 
coal ·and railway industries have provided plenty of occasions for complaint, 
and Conservative Governments have been able to provide further 'arguments' 
against nationalised industries by such simple expedients as forbidding 
them to charge enough to cover their costs, making them do uuprofitable 
jobs like running little-used airlines, and transferring their more profitable 
business to private 'enterprise'. 

All this has had its effect. Conservatives, most Liberals, and many independent-
minded people now believe that nationalisation is something to be 
avoided at all costs and much recent political controversy has consisted of 
Conservative and Liberal 'charges' that the Labour Party was planning 
further nationalisation. 

Does this mean that public ownership is a hopeless policy for a Party 
trying to win power? Before jumping to this conclusion we should remem


1 Exceptions were: Socialisation and Transport, Herbert Mor:ison, Constable, 
1933; Public Enterprises, Ed. W. A. Robson, Alien and Unwm, 1937. 


2 rHE FtiTURE OF PUBLIC OWNERSHIP 

ber that injustry and commerce are steadily becoming less private and less 
.~nterprising and moving towards integration in bigger and less dynamic 
units, increasingly dependent on government support and on national and 
international planning. National planning has become respectable among 
some big industrialists and even the Tories are now contemplating more of 
it, albeit on a limited and tentative scale. No one in any political party proposes 
to de-nationalise any of the existing nationalised industries, with the 
possible exception of civil aviation and the remaining state steel firms. 

There is much re-thinking within the Labour Movement about public 
ownership. As a contribution to this we should start by asking: What is 
the purpose of any political programme in human terms? Many young people 
are now questioning the basis of our Society not only in economic terms 
but also in cultural and moral terms, and the Labour Party must answer 
them in such terms. 

We believe that man is degraded by certain aspects of our way of life: 
the gross inequality of living standards among different peoples; the continual 
emphasis on material values; the exploitation of men by others for their 
personal gain; and personal rather than social enrichment. It is nonsense 
to suggest, as apologists for capitalism do, that ultimately it is only concern 
with self that makes the world go round. 

We are not proposing a political Utopia. Political measures cannot make 

people perfect but they can give them the means to improve themselves. 

Early socialists used to talk more freely than we do today of the 

brotherhood of man, but whether Christian or Humanist we can still take 

this notion as a reasonable starting point. The young today, with their 

concern about racial questions and the Bomb, often show a better appre


ciation of it than their elders. Modern communications have underlined it. 

With it goes the notion of the dignity and sanctity of man as an individual. 

If this is to be given practical effect every man must have full freedom to 

develop and express his creative faculties. 

Of course a practical industrial system cannot be built overnight purely 

on goodwill. Much of t:he world's work is now done by people who are 

forced or cajoled into it, but the most valua:ble work is done when people 

decide for themselves that they want to do it. Freedom is more efficient 

than coercion as was shown by the tremendous waste of manpower by the 

Nazis during the last war. 

Moreover whether people's motives are good or bad they are seldom 

wholly economic. Man may be greedy, or lazy, 'and have many vices, but 

is seldom dominated solely by the nicely calculated economic objectives 

that are assumed in the academic common room. 

The basic purposes of industry are to bring people together to work 

in harmony for themselves, for each other and for others; to do practical 

jobs to meet physical and other needs. It ought to provide the best prac


ticable conditions for those who work in it, to enaJble men to develop their 

initiative as freely as possible with as little compulsion as practicable and to 

work in co-operation with others. Industry should ensure that the tremendous 

mass of potential resources-human, scientific and technological-are put 

to the most sensible use, which they manifestly are not at present. 


THE FUTURE OF PUBLIC OWNERSHIP 3 

In Britain, a country whose standard of living is higher than most 
others, there are many elementary and obvious social and human needs 
which are not met. Very many of the aged, the physically and mentally 
handicapped, the sick and the widowed, live in loneliness and poverty. 
In recent years we have been spending in rea,l terms barely half what we 
spent before the war on hospital development,! 2 Thousands of married 
couples have no bedroom to themselves, and thousands of others share a 
parent's house. Aged couples are separated in hospitals and institutions,3 
because their children's houses are too small for them. A steadily mounting 
number of famillies, now running into thousands, are without homes altogether, 
and over 1,000 children in London alone are separated from their 
parents for this reason.4 Slum clearance proceeds at a snail's pace : 'Millions 
of people are being condemned to live in outrageous conditions, completely 
out of harmony with the achievements of this age and of present affluence.5 
Four million houses, many built between the wars, have no bathrooms; five 
million have only an external lavatory. School children are herded into 
classes of forty or fifty. Because of lack of teachers, and of schools, one third 
of children with grammar school ability do not go to grammar schools. 
There is not room in our overcrowded Universities for thousands of the 
liveliest minds of our generation. The millions in receipt of National Assistance 
(apart from the unknown number whose earnings are below the 
National Assistance levcl but who do not receive it) are one measure of the 
failure of our economic system.6 

Natural energy, goodwill, youthful idealism and desire for adventure 
are too easily quenched by the conditions and frustrations of modern life. 
Who can estimate the part played by all this in the rise of crime? 

All these things should be obvious to almost everyone. But are the 

1 J. R. Seale (1961), Lancet, 2, 476. 

2 The hospitals, and medical research, are being starved to finance the new 
hospital building programme costing a mere £500 million over 10 years-increasedin 1963 to £600 million. 

a The Last Refuge. Peter Townsend. Routledge and Kegan Paul, 1962. 

4 Lena Jeger, G.uardian, 13th July, 1962; leading article of same date. 

s Dr. N. Lichfield, an urban economist who has recently left the Ministrv 
of Housing and Local Government, reported in the G.uardian, 5th July, 1962. 

s Of a sample 4,443,005 male manual full-time workers aged 21 or over 
18 pet cent. (800,807) were earning £11 or less p.w. (10 per cent. were earning 
£10 or less) in October, 1960 (Min. of Labour Gazette, April, 1961). The 
permissive weekly allowance in 1960 for a family with one child, aged ~y 3 
years, receiving National Assistance, was about £8 48. (Report of National 
Assistance Board, 1962, Omd. 1730). Townsend has shO":'Jl (Brit. ~our. Sociol., 
13, 210, 1962) that •o define poverty in tetrns of N~honal Ass!stance rates 
plus rent it is reasonable to use, as the critical level of mcome, a lme drawn at 
40 per cent. aJbove these rates-say 30 per cent. so as not to prejudice the 
argument. On this basis (£8 4s. plus 30 ·per cent. equals £10 13s.) the pay of 
800,000 actual or potential breadwinners in full-time work in 1960 was about 
the poverty line or below. This is a conservative estimate for many of these 
men will have had more than one child. 

Townsend has reviewed social deficiencies in modern Britain (Op. cit.J. 



THE FUTURE OF PUBLIC OWNERSHIP 

nation's efforts being directed to dealing with them? The content of advertisement 
hoardings, I.T.V., newspapers and magazines deny it. From these 
it would appear that our population was suffering from a desperate lack of 
appreciation of the virtues of beer, cigarettes, motor cars, cosmetics, etc. 
Much of industry produces things we need least, often with the cynical 
concept of 'planned obsolescence' to add to the waste. Yet when it is suggested 
that anything more should be done for hospital patients, retired 
people, widows, handicapped and injured people, school children or any 
of the arts, we are told that the economic system could not stand the strain. 
The glaring contrast between the rich nations and the poor nations where 
the bulk of the population hovers near starvation is not only a mockery of 
the idea of human kinship but an acute danger to the peace, and hence 
now the existence of the human race. 

How can we replace this Irresponsible Society by something better? 
Some people say that no one can be sure of what is needed and that any 
attempt to change society may lead to tyranny. But the major needs of our 
society are not in dispute. Only extreme reactionaries would pretend that the 
social evils we have mentioned do not exist. The usual arguments are that 
we cannot afford to remove them, or that the machinery required to do 
so would be too difficult to work. 

Our economic system is based on the theory of competition for money. 
Yet over wide areas of our economy there is no competition; the theory 
is at variance with the facts and indeed with the lower as well as the higher 
side of human nature. Many people would rather be lazy than compete 
to become millionaires and many millionaires would rather fix things quietly 
between themselves than go on competing. The point about the theory of 
competition is that it usually dcesn't work. 

Before considering p~actical measures for planning through public 
ownership we should< examine the idea of private property. Libraries of 
political literature exist on its theoretical aspects, but we must look briefly 
at its practical implications. The first thing is to clear it of the philosophical 
mystique, mostly dating from the 17th and 18th centuries, with which 
Conservatives, who claim to be practical on-doctrinaire people, nevertheless 
so often befuddle it. There is no such thing as one general principle of 
private property. Most people, except soldiers and monks and the patrons 
of Moss Bros., like to own the clothes they wear, but this does not mean 
that a tiny group of millionaires O'Ught to own nearly all our newspapers. 
Some people like their own gardens, others like living in flats. A wellorganised 
community should see that all its members have access to private 
or public gardens as they choose-similarly with books. 

Given a really free choice many people would still prefer to own the 

houses they Jive in; but others .would prefer to rent them from any reason


able landlord (public or p,rivate). Today, however, vast numbers of people 

have no effective choice but to own their houses subject to heavy mortgage 

payments whtich continue fer most of their lives. This Hob<;on's choice 

gives no right to impersonal companies to own other people's houses or the 

factories they work in. The vast 1:5ulk of industrial property today is far too 

large to be ·'owneq' in any,: personal sense by individuals unless they have 

acquired a quite inordinate share of the community's wealth. 


THE FUTURE OF PUBLIC OWNERSHIP 

What people want from property, whether it be land, buildings, machinery 
or objects of personal use, is not an abstract legal or philosophical 
concept of ownership, but the sense of security it gives them. They want 
the practical freedom to use things for activities of their own choice. What 
no one should claim as a right is to own his own coal mine or the nuolear 
power stations of the community. 

Summarising the indictment of our present social and economic system: 

(a) 
It fails to provide adequate scope for the best instincts and desires of 
ordinary people, notably their creative <impulses in work and leisure. 
(b) 
It fails to secure a reasonably equitable distribution of goods and 
services. 
(c) 
It concentrates productive effort on ephemeral objects and it fails to 
provide for the basic and long term needs of society. 
What are we to put in its place? Basically we need: 
(i) 
An economy, first national and then 1international, which can be planned 
and adjusted to meet the wishes and needs of 'Society as a whole and 
of its individual members. 
(ii) 
Individual industries and services which will fit into such a planned 
economy and also by themselves provide reasonable working conditions 
and scope for constructive, co-operative, and creative impulses. 
2. Public Ownership and Planning 
fOR a decade after the last war 'planning' was anathematised. Now it is 

becoming fashionable. The Government have set up a national planning 
organisation (N.E.D.C. or 'Neddy'), and by it evidently hope to regenerate 
our economy. Neddy has indeed made some useful studies, and set certain 
targets, and information it gathers could be of use to a future Labour 
Government; but we have yet to see whether it can produce results, and 
what it will do if people whose co-operation it needs are unhelpful. We are 
doubtful if Neddy's methods will be effective even for the purposes intended 
by the present Government, let alone those suggested in the first chapter 
of this pamphlet. Neddy's targets are concerned mainly with general growth, 
without much regard to social priorities. After years of insistent anti-planning 
propaganda, based both on economic and philosophical theories,1 and on 
practical experience of Government planning in the war and immediate 
post-war years,2 we wonder if the Government's more powerful supporters 
have really been converted to the idea of planning. 

Antirplanning propaganda, developed at great length, is now less 
fashionable, but still needs consideration. It can be summarised under two 
heads: Firstly, that it is morally wrong because it infringes personal liberty; 
secondly that it won't work because it will be evaded and essential information 
will be withheld from the planners; that attempts to make it work 
will lead only to red tape, bureaucracy, frustration and muddle. The first


1 Hayek, F. A. The Road to Serfdom. Routledge, London, 1944. 

2 Prof. J. Jewkes. Ordeal by Planning. Macmillan, London, 1948. 


6 THE FUTURE OF PUBLIC OWNERSHIP 

the moral argument-is surely ill-judged. Any form of civilised society 
entails organisation and rules, whether formally made or not, and hence 
some restrictions on personal liberty. Those who 'are averse to Government 
planning seldom oppose the restrictions on individual liberty imposed by 
economic decisions made behind the closed doors of company boardrooms. 

We do not, however, wish to brush aside those doubts about planning 
w!hich are based on genuine concern for personal liberty and democracy. As 
democratic socialists we ·think it of the first importance that as many of 
the adult population as possible should be actively involved in the economic 
decisions which affect their lives. We want to extend practical democracy 
within firms, within industries and between industries and we shall return 
to this point in a later chapter. 

To the second anti-planning argument-the practical one--the advocate 
of planning can take one of two attitudes. He can, like C. A. R. Crosland 
on the one hand, rebut it by giving practical examples of the extent to which 
planning controls in the war and post-war years did! work-and he might 
also add that they could have worked even better if more vigorously applied. 
On the other hand, he can accept that Government attempts to control and 
direct private industry against its will are always liable to result in evasion 
and confusion, and go on to argue rthat a different sort of planning, depending 
on a wider measure of control and of public ownership of industry, is 
there~ore necessary. He can quote examples of take-overs in private industry 
to suggest that outright ownership presents the best means of exercising 
firm control without friction. He can deduce from this that a selective 
extension of public ownership offers the chance of public control of the 
whole economy being exercised more firmly and yet, after the initial shock, 
with a light touch. 

Crosland: Planning can be made to work 

Crosland argues that under the Labour Government (1945-51)1 : 'Investment 
proceeded briskly, and indeed had to be restr-ained; the opposition 
to nationalisation, although vocal, was never violent; firms and Trade Associations 
co-operated amicably with Labour Ministers; there was no hint 
of sabotage; and generally the atmosphere was one of amiable amenability, 
not untinged with nervousness.' 

He cites <the acceptance of voluntary dividend restraint during the 
Crippsian era. 'Despite the outcry in the city press, the degree of co-operation 
was remarkable, and a striking sign of weakened capitalist self-confidence. 
Certainly company chairmen continued to fulminate . but their 
actions were the reverse of aggressive.'2 

Indeed most of them had little cause to worry. Maybe as Crosland 
suggests, the power of management vis a vis the irlvestor has increased, but 
the managers often prefer to retain profits for development; this often 
results in a tax-free capital gain to the investor. Why should dividend 

1 C. A. R. Crosland (1956). Th e Future of Socialism. Jonathan Cape, 

p. 29. 
2 Op. cit. 


THE FUTURE OF PUBLIC OWNERSHIP 

restraint be opposed by industry at a time when investment is needed? It 
provides a splendid opportunity to invest (without going to the market). 

Attempts to control industry against the financial interests of its shareholders 
meet with a very different response, as was seen in the case of steel. 
For there was opposition and it was not confined to the city press. Opposition 
to nationalisation of the steel industry took many forms, representing 
a direct use of industrial power.1 Continued ·opposition to planning and to 
the principle of nationalisation in the press had a great effect on public 
opinion, which was one of the main reasons why the Labour Party lost 
power. This was doubly ironical for much that was done was merely the 
completi·on of a process already begun by the Conservatives and, with the 
exception of steel, the Labour Party programme suited industry well. 

Crosland2 suggested that Labour's view of planning had been modified 
as a result of the inefficiency and inequality of the 1930s giving way to the 
expansionist full employment economy of the 1950s, and with resolution of 
the balance of payments difficulties and dollar shortages of the immediate 
post-war years. 

All this is questionable. True the widespread poverty of the 'thirties has 
gone, but there are still grave economic and social injustices in our society 
and international payments crises are constantly recurring. 

Even in private industry rationing occurs. When there are shortages of 
capital goods, and delivery dates are as long as eighteen months, some 
system of priority has to be evolved. This may either be imposed or, as 
normally happens at present, be arronged between manufacturers and users. 
Expense accounts are one of the means which can help to secure priority 
where no proper scheme exists for articles in short supply. 

As Crosland says, controls are often economically inefficient3 : '. .. raw 
material allocations being inevitably, for political reasons, non-discriminatory 
and therefore based on past performance, simply perpetuate the status quo 
discourage new entry and protect the less efficient firms . .. .' Price Controls 
tend to be more effective the simpler and more essential the goods, so they 
often result in wages and profits being higher in the less essential industries. 
As a result resources are attracted in the opposite direction to that intended. 
Many controls, moreover, won't work once supplies become plentiful; they 
can be too easily circumvented, and a 'grey' market develops; '. .. in the 
end a detailed attempt to plan the output of different industries is bound to 
fail unless backed by direction of labour; and this no one was willing to 
countenance as a permanent measure.' 

'Free enterprise', however, has its own restrictions-price fixing and 
allocations to prevent new entry into a business, as the M·onopolies Commission 
has shown. Indeed much of the paraphernalia of Government control 
was established privately through industry itself. Perhaps the problems arise 
not so much from control as from private ownership. 

Crosland concludes4 : '(planning's) prime function is to ensure that the 

1 John Hughes. Steel Nationalisation and Political Paa•er. The New 
Reasoner, Autumn, 1957. 

z Op. cit. p. 500. 3 Op. dt. p. 500. 4 Op. cit. p. 501. 


THE FUTURE OF PUBLIC OWNERSHIP 

right quantities of resources are allocated to each of the main sectors of 
the economy, and that these quantities add up to a full employment but 
non-inflationary level of demand. I do not mean to imply that the Government 
can precisely control what proportion of the material product will 
next year be devoted to exports, investmenlt, consumption, and so on. But 
it can influence these proportions in broad terms; and in some cases, where 
it is itself the consumer or the source of funds, it can determine them 
fairly exactly.' 

He defines the objects of planning1 : to maintain a high level of investment, 
and a sufficient volume of savings and risk-capital to match it; to 
control wages and home demand (to encourage exports); and to increase 
social expenditure. To achieve these he envisages the use of a skilful and 
determined fiscal policy, and subsidiary controls where necessary. 

Crosland believes that when the post-war Labour Governments failed 
to achieve successful results by planning it was due mainly to lack of boldness. 
He believes that if socialists want bolder planning they must choose 
bolder Ministers and, of course, themselves accept sometimes unpleasant 
personal effects. 

However, the means to achievement are not discussed2 : he wants planning 
but only in very broad terms, and by largely financial and fiscal 
methods, the details being left until practical situations arise. 

The Instruments of Planning-Monetary 

The major sources of capital for British Industry are the great industrial 
and insurance groups, and the investment trusts. We therefore need to 
know the factors which govern their investment policies and bow they 
react to changes in the bank rate and hire purchase regulations and to 
restrictions on credit. 

The Radcliffe Committee's view of the efficiency of monetary techniques 
was largely unfavourable. 'The decision to spend thus depends upon liquidity 
. .. spending is not limited by the amount of money in existence, but is 
related to the amount of money people think they can get hold of... .'3 

On the question of the control of rates of interest the Committee 
reported.• 'When we confined our questions strictly to the direct effect of 
interest rate changes in making business men alter their decisions to buy or 
sell goods and services, we were met by general scepticism . .. the executive 
heads or financial directors of several great industrial firms' said 'in their 
plans for capital development they assume a more or less steady interest 
charge and would not alter their existing plans even if they thought somewhat 
higher rates had come to stay.' The Nationalised Industries and the 
Local Authorities thought likewise. 

Radcliffe states5 : 'we have not found sufficient evidence to justify a 

1 Op. cit., p. 501. 2 Op. cit., p. 504. 
3 Report of the Radcliffe Committee on the working of the Monetarv 
System, 1959, Cmd. 827, H.M.S.O., para. 390. 
4 Op. cit. para. 451. s Op. cit. para 453 . 

• 


THE FUTIJRE OF PUBLIC OWNERSHIP 9 

conclusion that in the conditions of the 1950s the rise in interest rates would 
by itself have directly provoked a worthwhile curtailment of demand. . .. 
Nor did we hear any evidence that the reductions in 1953-4 directly stimulated 
any appreciable increase in demand'. 

The Committee found the 'credit squeeze' somewhat ineffectuaP. 'Firms 
denied credit often had' recourse to other sources of credit.' . . 'only 10 
per cent of the firms bad had their overdraft facilities seriously restricted.' 

... 'Nation-wide survey in March, 1958, indicated that the further squeeze 
from September, 1957, had only slight effects.' . . . 'The National Union 
of ManufactUTers collected evidence mainly from small firms, and believed 
these had been affected more than big firms', but that the effect had been 
rather that they had been driven to other and generally more expensive 
sources of credit than that they restricted their activities. 'The large industrial 
firms whose executive heads and financial directors gave evidence to 
us were individually unaffected.' 

Some fi·rms contemplated the extra cost of alternative credit with 
equanimity, expecting to be able to pass it on to their customers.2 

... 'We have not been able to find that the squeeze had any marked 
effect upon holdings of stocks of commodities' . . . 'There was no sign 
that consumer spending was forced down.3 

But the credit squeeze checked projects in their early stages, a nonspecific 
effect not necessarily in the country's best interests. 

During the credit squeeze of 1960 and 1961 the sales of cars,4 and o.f 
TV and radio sets,5 were rising and reached a higher level than in the same 
months of previous years. 

So these financial measures had l:ittle effect upon private industry and 
it was public bodies whose .funds were under the direct control o.f the 
Government who bore the brunt o.f the credit squeeze, but not, be it noted, 
because of these particular financial controls. 

When bank credit is cut people resort to hire purchase and Governments 
try and control that too, either by increasing the deposit, raising 
the :interest, or shortening t!he time .for repayment. However, the Radcliffe 
Committee .found their effects limited because6 'private persons are as a 
rule quite unconscious of the rate of interest upon which their H.P. charges 
are based and are governed only by the amount ·of the down payment and 
of the monthly (or weekly) mstalment.' 

As regards capital goods the Committee said7 : 'Though industria-lists 
acquiring plant and machinery pay some regard to the cost of credit, in 
that they compare the charges quoted by different companies, there is no 
evidence that any appreciable number of industrialists were prevented from 
entering into a hire purchase transaction.' 

The Committee concluded that monetary action alone could not be 
relied upon to keep our economy in nice balance.8 

1 Op. cit. para. 456-7. 2 Qp. cit. para. 456-7. a Op. cit. para. 460. 

4 The Observer, 9th October, 1960. 

5 The Guardian, 16th August, 1961. 

a Op. cit. ·para. 465. 7 Op. cit. para. 465. sOp. cit para. 514. 


THE FUTURE OF PUBLIC OWNERSHIP 

Fiscal Measures 

Radcliffe commented: 11 'Fiscal measures have advantage over monetary 
measures in having a more certain impact effect' and then went on to say 
that the effects of investment and initial allowances, were no more predict· 
a~ble than those of monetary measures, and the evidence from industrial 
quarters suggested that there was little to choose between these ·and the 
more conventional monetary inducements to change the demand for capital 
goods. Broadly fiscal measures are long-term ones, as there are real 
administrative difficulties in making frequent changes in many tax rates. 
However, it has been pointed out that Purchase Tax and National Insurance 
contributions could be effectively and quickly changed. 

There is great difficulty in knowing how and where to apply any fiscal 
controls. Economic analysis has not yet reached such refinement that all 
the factors and indicators are well understood. Many complex problems in 
this field have yet to be solved. 

Ideally control should be applied to anticipate rather than to correct 
fluctuations. Forward planning is needed to make the economy run smoothly. 
The time-lags inherent in the monetary and fiscal techniques so far applied 
render planning nugatory. They consist of: 

(a) 
Inevitable delay in securing statistics. 
(b) 
Delay in making diagnoses-is a wobble a change of trend? 
(c) 
Delay in policy decisions Qare the policy makers away grouse shooting?) 
(d) 
Further delays before levels of current spending alter (e.g. interval 
between investment decision and major investment spend~ng). 
If monetary or fiscal measures can only be taken when indicators 
suggest corrective action is needed, and are then themselves subject to 
furbher time-lags before they alter current spending, we can never extricate 
ourselves from our present four to five year economic cycle. The monetary 
measures taken in 1961 directly and indirectly led to the 1962 slackening of 
demand. Again, to base a consumer durable boom on credit (as in 1959) is 
inevitably to lead those industries at a later stage into a recession as consumers 
cannot for long increase indebtedness sharply in relation to their 
incomes. Such post-hoc monetary and fiscal measures have probably amplified 
the swings of the cycle. It should be possible to gear fiscal measures, as 
inducements or penalties, to systems of forward planning. 

We agree with Lord Oromer, former Governor of the Bank of England : 
'Constant recourse to disproportionate use of monetary measures is no substitute 
for a consistent and a,ppropriate national economic policy.'2 Monetary 
or fiscal measures by themselves will not provide sufficient means for planning, 
but will need support by other instruments. 

Subsidies and Physical Controls 

Large subsidies have been paid to the ship-building, steel and cotton 
industries for capital development and to reduce the aircraft and cotton 
industries to a practical size. Our comment on these measures is not one 

IQp. cit. para. 516. 

2 Th e Observer, 8th October, 1961. 


THE FUTURE OF PUBLIC OWNERSHIP 

of political ideology· but of ordinary commercial prudence. It is stupid to 
sink your money in someone else's business without getting some share in 
its ownership and control, or at least a fair share of profits. 

Physical controls have been used to direct resources to those points 
in the economy where they are most needed. In a private enterprise 
economy this involves complex measures of licensing, inspection and 
restriction. Such schemes were used during the war, and by the 1945-50 
La>bour Government. They were clumsy, bureaucratic and unpopular and 
were gradually abandoned. Such controls, to be effective, require cooperation 
from the ' controlled' and this did not <;:ontinue after the war. 
Criticisms of such controls may nevertheless be exaggerated, and they may 
sometimes have to be used. 

The techniques used for planning in the past have not achieved their 
aims ; detailed consideration should be given to this. Developments in the 
selecting and collection of suita~ble data and its processing by computer 
should assist in the development of fi scal devices. 

However, we may also have to increase the size of the public sector 
of industry to achieve all our social aims. The more the Government controls 
directly, the less it will need cumbrous indirect controls-monetary, fiscal 
or physical. 

3. Real and Imaginary Failings 
BEFORE discussing the various forms of public ownership can take, we 

must look at the general objections to it which may be felt quite 
strongly by people whom we may otherwise have so far carried with us 
in our argument. People may share our belief that industry should be made 
more humane and more responsible to the community, but fear that public 
ownership means 'nationalisation', and see this as some~hing which has 
failed them. 

Industrial Relations is a sphere where a feeling of failure-the gap 
between pre-war ideal and post-war achievement-has been strong. Now 
criticism of industrial relations in public industries is especially damaging 
because in many it was their· own workers who demanded nationaLisation. 

Despite its opening up of huge schemes of expansion and exciting 
technical change, t:here is widespread belief that nationalisation makes for 
dull uniformity and stifles initiative. Bureaucracy is always a danger in 
concerns as large as the major nationalised industries. The Labour Pa:rty 
has not yet solved the fundamental problem.of making people feel that they 
are participating in the life of the country, and are not mere cogs in the 
machine. 

Wilfred Brown has suggested that the workers' feeling of powerlessness 
in industry is a fantasy, that -it is a cause, not a result of thei:r failure to 
receive some of the benefits of modern industrial methods.1 There may be 

1 W. Brown. Can there be Industrial Democracy? Fabian Journal, No. 18, 
March, 1956, p. 14. 


12 THE FUTURE OF PUBLIC OWNERSHIP 

truth in this. Joint consultative machinery is often ineffectual partly becauEe 
so many people have little idea how democracy can work. Dissatisfactions 
also arise from failure of communication,1 or because of procedures by 
which decisions are reached, or because of the decisions themselves. 

Through Government influence the pay· for most levels of worker in 
the public sector has lagged behind that in private enterprise. This has meant 
the loss of able people to public service and has affected relations with the 
public and management. There has, however, been an improvement in 
conditions of work although there may be disappointment that the pace of 
improvement has not been faster. Joint consultation is fuller and more 
genuine in most of the public sector. The exception, railway workshops. 
was the result of introducing private enterprise methods. 

Administrative and Management Shortcomings. 

A major problem in both public and private industry is poor managemenU 
It is an important cause of industrial unrest and low productivity. 
Hughes3 has criticised the administrative and executive structures in coal 
(after the Fleck Report), and in transport. The narrow ' span of control 
in management in his view means a rigid hierarchical structure which 
denies significant responsibility to lower levels, involves detailed interference 
in their work and creates a shortage of adequately trained managers. 
But Fleck was Chairman of I.C.I. and his methods those of large-scale 
private industry. The Herbert Report on the Electricity Supply Industry 
later made opposing recommendations, probaJbly derived from smaU-scale 
private industry. 

In the Health Service there has been no break with standard com


mittee and administrative attitudes, and frustrating practices taken over 

from local government. Committee members and managers are tradition-

bound and fear change. In the Hospital Service there is often delay by 

higher authority over matters originating at the bottom of the hierarchy. 

This contrasts with the speed at which upper administrative levels expect 

things they pass downwards to be dealt with. Medical advice has some


times been sought post facto . Such methods of administration are un


dignified and exasperating. They lead to withdrawal of clinicians and 

scientists into a relatively closed world of clinical or laboratory medicine, 

where they are more their own masters and life situations are less capricious. 

Hospital administrators are often overworked but the calibre of adminis


trators and committee members is too often inadequate. The result is 'l. 

pusillanimous approach to pressing problems with decisions put off. 

There is certainly much bad management in nationalised concerns. 

but there is much bad management everywhere. Training and research 

in administration is still a new idea in most public and private concerns. 

1 The Workers' Point of View. The Acton Society Trust, 1952. 

2 Nature (Land.) (1961), 191, 133'1. 

aJ. Hughes. Nationalised Industries in the Mixed Economy. Fabian Tract 

No. 328. 

oo 


''fHE FUTURE.LOF PUBLIC OWNERSHIP 1'3 

Sweeping assertions that nationa'lised concerns are 'inefficient' (in the 
sense of wasteful) are seldom supported by firm evidence. Figures show 
that the proportion of the Gross National Product spent on our Health 
Service is less than in the U.S.A. and other 'advanced' countries which have 
less comprehensive services of medical care1 2 • We take no pride in tbe low 
level of our health expenditure, but at least it refutes the charge of financial 
waste. 

There are other forms of inefficiency. In Local Government there may 
be unconsciona!ble delay in passing items through the ' democratic' machinery 
of committees. Anyone who has had experience, for example, of the 
architect's department of a Local Authority which can be unbelievably 
inefficient, unhelpful and obstructive, will know what we mean. Although 
the Committee structure inevitably means there will be delay, it is aggravated 
by the employment of many second-rate officers occasioned by low 
salary scales and the dislike by many professional people of the slow pace 
of Local Government. The determination of the doctors that the National 
Health Service should not be administered by Local Authorities was an 
expression of their distrust, from experience. 

Sufficient facts on which to base judgments about efficiency in the 
public sector are commonly available. Private enterprise is not properly 
accountable to the public and inefficiency is easily concealed. Occasionally, 
however, really damning evidence about inefficiency in private business is 
plllblished.3 

Financial Disabilities. 

Financial stringency (a blunt instrument) causes rigidity, stagnation, 
and demoralisation, yet the Minister of Health's Scrooge-like slogan is 
'Efficiency through Stringency'.4 Fifteen years after the inauguration of the 
Health Service, slum hospitals are still in use.5 Yearly budgeting in the 
Health Service has proved false economy and has made the work of 
Regional Hospital Boards and especially Hospital Management Committees, 
dull and frustrating. No wonder they do not contain more intelligent and 
energetic people. 

Industries which are no longer expanding carry special liabilities. The 
rail~ays, essential to the community, not only have obsolete machinery and 
equipment, they lack the morale, glamour and general elan of a new and 
expanding industry. To cap it all they are crippled with huge compensation 
charges which even the present Conservative Government now realises must 
be largely taken over by the Treasury. Such charges should be met by the 

I J. R. Seale (1960), Assumptions of Health Service Finance. Lancet, 1,1399. 

2 Cost of Medical Care. International Labour Office, p. 152. Geneva, 1959. 

a Tibor Barna. Investment and Growth Policies of British Industrial Firms. 
Cambridge University Press, Cambridge, 1962. 
4 Enoch •Powell, at Conference of Chairmen o.f Hospital Management Committees, 
October, 1961. 
5 J. H. Sheldon (1961), Report to the Birmingham Regional Hospital Board 
on its Geriatric Services. 


14 THE FUTURE OF PUBLIC OWNERSHIP 

Treasury taking ordinary shares in the undertaking and paying dividends 
when there were profits. 

The policy of stop and go over expansion in the nationalised industries, 
and Government vetos on price and wage increases, have been demoralising. 
The Government seems to be trying to illustrate the failure of public ownership 
by manufacturing difficulties for these industries. 

Financial arrangements must be more flexible. It is essential for financial 
planning to cover four of five years, or 10-15 years for major projects. In 
the case of services such as roads and hospitals the money alloted might 
be a percentage of the national income arranged by Parliament over 5-year 
periods.l Removal of rigid Treasury control from the Health Service, as it 
has recently been removed from the Post Office, would allow better housekeeping 
at all levels and would result in more effective use of available funds. 

The 'equity' technique, with the State as 'quasi' ordinary shareholder 
should be used as one of the procedures when a nationalised industry has 
to borrow from outside to finance investment projects that the State has 
agreed are appropriate. 

Other Factors 

The nationalised industries have not, as was hoped, redistributed wealth. 
Hughes2 has indicated how the public sector has financed private capital 
formation and supplied the capital gains of shareholders, and in effect subsidised 
certain industrial users. Instead of re-distribution of income nationalised 
industry pricing has swelled payments to rentiers. 

British Railways have been forbidden to build locomotives and rolling 
stock for export. Nationalised industries should be encouraged to compete 
with the private sector and to produce for any market they wish. Such 
competition would be good for all parties. 

Many people wish to be their own masters ; among these are nearly 

1.5 million in small businesses, etc., who have net incomes of less than 
£250 p.a.3 (Tax evasion cannot be the only explanation of these figures.) 
·"!ndependence' matters more to them than financial reward, they pay 
for this privilege by hard work, long hours, poor health and a low 
standard of living. They often come to grief, but others take their place. 
Yet one wonders if such people realise that there are all kinds of responsible, 
independent and exciting jobs in the public industries and services. 
But the very large number of public servants who are justifiably content 
with the scope which their work gives them are usually too busy or too 
discreet, to say so publicly. They should be encouraged to speak up. 
Relations with the Public 

In relations with the consumer, public industries have sometimes been 
weak, foolish and unforthcoming. The Transport Commission, like the rail


1 J. H. Seale (1961), Management Efficiency in the Health Service. Lancet 

~ 476. • 

2 Op. cit. 

3 A. Shonfield. The Nation's Business. The Observer, 27th March, 1960. 


THE FUTURE OF PUBLIC OWNERSHIP 


ways before it, neglected the canals and when they became impassable 
cried to close them on the pretext of lack of demand. The Ministry of 
Aviation seems impervious to representations about the steadily increasing 
noise from aeroplanes using London Airport. Such things make people feel 
that it is more difficult to obtain redress from a public than a private body. 

There is, of course, no reason why this need be so. If existing means 
of communication and redress have failed, new machinery can and must 
be devised. Public industry has an impressive story to tell. Its annual reports 
and accounts give far more detail than secretive company reports, which 
hardly ever disclose the profitability of separate services or products or the 
cost and detailed progress of particular capital projects. 

The failings of public ownership, such as they are, must be faced. They 
are not fundamental, and they can be remedied. 

4. Possible forms of Organisation 
OWNERSHIP of any industry may be vested in: 

(a) 
the community at large (either of the whole nation or a particular 
locality). 
(b) 
any group of persons who are able to buy its shares. 
(c) 
groups of consumers or users, or people working within the concern 
itself. 
Category (a) is public ownership as usually understood, but (c) is also 
alternative to private ownership (b). Ownership exemplified by (a) and (c) 
has taken various forms in this country (see Appendix). 

Government Management 

The simplest form of (a) is direct management by a Government Department. 
The Post Office, the Admiralty, H.M. Stationery Office, and the 
Ministry of Aviation all run large industrial undertakings. Apart from civil 
airports no one suggests that any of these should be taken from ~hem and 
the gibes of the popular press that Government Departments cannot run 
business concerns can be discounted. Government Departments, however, 
need Ministers as their heads and very few men have the rare combination 
of political judgment and large scale business acumen which Ministers need. 
A few Government Departments, like the Stationery Office and the Board 
of Customs, share their Ministers with other Departments, but direct 
responsibility to Parliament remains. Now Parliament is already short of 
time for detailed discussion and scrutiny of existing Government Departments. 
To create more would surely clog the Parliamentary machine and 
unbalance government. 

The first answer to this difficulty was the public corporation-an invention 
not, as is often alleged, of Herbert Morrison, but of Stanley Baldwin's 
Government in 1926, in the form of the Central Electricity Board and the 

B.B.C. Its alleged faults may be summed up as excessive size and rigidity, 

THE FUTURE OF PUBLIC OWNERSHIP 

but usually these characteristics were rooted in technological reasons which 
might not apply in manufacturing industries1 although they probably would 
in services such as water supply and road transport. The relationship between 
Parliament and the public corporations was a problem at first, but 
it seems now to be on a fairly reasonable basis Qwith bhe Select Committee 
on Nationalised Industries as intermedliary2). There is a good case for having 
Government-appointed boards in charge of very large industries and essential 
services which need technological integration. 

There is much less to be said for nationally appointed boards for local 
or regional services, especially when, as in Area Electricity Boards, power 
seems to rest largely with technocrat chairmen. 

Local Authorities 

Do we want our public services and industries to be 'democratic' in 
the sense of being run by people directly elected to represent local workers 
or customers~ or both; or only in the sense of working within a policy laid 
down by a Minister responsible to Parliament? Probably only the latter in a 
nationally integrated service like railways, telephones, or coal mining (where 
the total resources and the markets need to be dealt with nationally), but 
it is by no means certain that a national management is essential for other 
industries. A business concern obviously can be run by locally elected 
amateurs, because that is just how some of our most vital public services 
have been run for years. There are indeed complaints that local government 
is not democratic enough, but that is probably beca:use it has insufficient 
responsibilities and consequently too few people are interested in it. 

If it were decided to place some industry under public control the best 
method might be to put its locdl units under Local Authorities subject to 
the usual policy direction from Westminster that local aut;horities receive 
in fields like education and roads. Some Local Authorities are, of course, 
too small to control the largest units. This, however, is only an additional 
reason for the already urgent need to reform local government, and create 
larger units for at least some of the major functions, as proposed for 
Greater London. (A regional council ought to be more like a Parliament 
with paid members and some sort of Ministerial system such as exists in 
Northern Ireland.) Suppose we had councils or local Parliaments for Greater 
Clydeside or Tyneside, could they not take over various kinds of local 
engineering works or even shipyards?-and control the local distribution of 
gas and electricity? 

Local Government is too readily ignored in current discussions of public 
ownership. Despite its obvious illogicalities it works-sometimes very well 
-and many of its failings could be remedied without interfering with its 
basic local and democratic features. For example, local authority powers 

1 Nevertheless "I.C.I. is convinced that a British man-made fibre industry 
can only be competitive in the long-term if the maximum of integration both 
vertical and horizontal . . . is possible " (" Man-made Fibres Industry : the I.C.I. 
View," at the time of the Courtauld take-over bid, 1962). 

2 Sir Toby Low (1962), the Select Committee on Nationalised Industries. 
Public Administration, 40, 1. 


THE FUTURE OF. J'UBLIC OWNERSHIP 


should be less permissive and more mandatory, and they should have some 
sources of revenue other than from rates on property. Many professional 
and other people, capable of giving disinterested service, are not attracted to 
Local Authority work as it is at present organised. Yet it is the specialised 
knowledge and abilities of just such people who would provide a transfusion 
of ideas and ideals into Local Government which it so badly needs to 
make it more effective. This might be a preliminary to full-scale local 
political work as elected representatives. 

Co-operative Societies-Producer or Oonsumer 
Ownership and control need not, however, be either 'public' in the 
sense o{ the whole public, or 'private' in the sense of haphazard groups of 
shareholders and self-appointed directors. There are also the various forms 
of co-operatives-too easily dismissed as inefficient and old-fashioned simply 
on the experience of consumer co-operatives in retail trading in Britain (and 
in the light of a good deal of artificially fostered prejudice). We certainly 
have little experience here of producers' or manufacturing co-operatives. 
However new types are emerging, for example among farmers, and many 
kinds of co-operative organisations exist abroad under all kinds of political 
systems and in all kinds of societies in the British Commonwealth and elsewhere_ 
We should examine the possibilities of applying them to manufacture, 
agriculture and distribution in this country. Mutualisation of insurance companies 
as a form of co-operation would bring partial public control to 
these vast financial empires. 

Joint Boards with User Representatives 
There are other alternatives to 'private' ownership, for example, various 
kinds of Joint Boards representing both public authorities and user interests, 
such as the Port of London Authority. Why not an Aircraft Construction 
Corporation with members nominated by the Defence Departments, by the 
public civil air lines, by the private airlines, by some of the local authorities 
where its factories would be sirnated, and by its own employees? Or a 
Medical Supplies Corporation (to manufacture and import drugs), with 
members representing the Hospital Boards, the doctors and the retail 
chemists? There is, of course, a danger that such indirectly elected boards 
might become remote from the public they served and difficult to control 
-like some joint sewage boards. But these are wholly or mainly appointed 
by Local Authorities and their work is not very newsworthy. Any such 
joint body will be kept on its toes if its job is considered sufficiently vital 
by the people who nominate its members. But the inclusion of some representatives-
they need not be a majority-from central or local government 
or its own employees, would ensure that the wider public interest was considered!, 
thaJt all important facts were published and that the concern did 
not degenerate into a medium for hole-in-corner bargaining between sectional 
interests. 


THE FUTURE OF PUBLIC OWNERSHIP 

Adaptation of the Companies Acts 

Some public control of industry might be obtained by amendment of 
the Companies' Acts. By these Acts management powers (with a very few 
exceptions) are vested in a Board of Directors formally elected by, and 
required to act in the interests of, the shareholders. If the object of a change 
in ownership is to require concerns to act in the public interest it is arguable 
that all that is needed is an amendment to the statutory duties of directors. 
There would have to be a general requirement to comply with ~he directions 
of Parliament or some central economic planning organ. There 
are difficulties about this suggestion. Either it would give the Government 
or its planning organs vast undefined and uncontrolled powers or there 
would be all kinds of limitations and exceptions which could only be 
interpreted by the Courts and hence the country's economic policy might 
sometimes be decided by the judges. In any case simply to require directors 
of companies to comply with economic planning controls would only produce 
a complicated network of evasion. 

An industry might, however, be brought under public col1ltrol by simply ' 
replacing the directors by others chosen to act in the public interest. This 
could be brought about by direct Government appointment of directors 
-as in the case of Cable and Wireless Ltd.-or through a public holding 
company as in the steel industry-or perhaps in some cases by an elected 
local or regional authority. Whether directors so appointed were the same 
as before, or new ones, would depend on their personal suitability. Former 
directors re-appointed would have to understand the change in authority. 

Increased control of industry could also be achieved by amending the 
Companies' Acts in other ways. For example, a Registrar of Companies 
could have power to demand fuher information (if necessary in confidence) 
and to conduct enquiries. 'Jlhe mere existence of these powers of inspection 
without their use might suffice to improve industrial practices. 

Public Enterprise Steps in Where Private Enterprise is Lacking 

Some of the most significant technological developments in this country 
have had to be undertaken by public bodies because no private concern 
could have done so effectively-for instance telegraphy (nationalised by 
Disraeli), broadcasting (nationalised by Stanley Baldwin), nuclear energy 
and the nationwide (as distinct from early local) development of telephones 
and electricity supply. Television was built up-technically, artistically and 
organisationally-by a public body and private 'enterprise' only came in to 
collect the profits when it was established. 

There are several kinds of human need that private enterprise alone 
does not seem able to meet. The aircraft industry has had to be repeatedly 
supported by Government action. Even in risk~bearing finance of trade-a 
function at which private capitalism is supposed to excel-important burdens 
are carried by the Exports Credit Guarantee Department. When the Cunard 
Company wanted to replace the 'Queen' ships it expected to be given most 
of the money by the Government and not to have to return any share of 
the profits; even when the Government agreed the company backed out 
at the last minute. 


THE FUTURE OF PUBLIC OWNERSHIP 

The National Research Development Corporation has had to exploit 
some pioneering inventions which were too risky for private enterprise. 

We suggest that for some new projects and particularly for industries 
supplying a basic human need the government should set up publicly owned 
productive agencies, to pioneer new production techniques such as the prefabrication 
of houses and other buildings or their components. These agencies 
could be Government Departments, Public Corporations, Local Authorities 
or Joint Boards. They could construct schools, houses, hospitals and factories. 
Such public enterprise is badly needed to stimulate, conduct and 
exploit research into cheaper, quicker and better building methods. 

Organisation for Co-ordination and Economic Planning 

In our discussion so far we have assumed some machinery for formulating 
economic policies and defining the responsibilities of economic institutions 
on a basis which is fundamentally democratic. There is at present 
no such machinery which is in any way adequate. The policies of nationalised 
industries have from the outset been defined, if at all, by different 
Government Departments each with much else to do. National economic 
planning until recently has nearly always been a matter for ·the Treasury. 
But the Treasury was designed for a different purpose-a negative organisation 
for stopping people spending money. Even the Conservatives now seem 
to realise its inadequacy. They have put new Ministers in it and! regrouped 
its departments. They have set up 'Neddy'-the National Economic Development 
Council-with economists and representatives of employers and trades 
unions. It is too early to say how effective all this will be; but it seems very 
doubtful if Neddy will have what we regard as the three essentials of an 
economic planning body:


1. Power to get information. 
2. Power to get its decisions carried into effect. 
3. Responsible democratic control. 
If 'Neddy' is to direct our economic lives, who is to direct 'Ned<ly' (or, for 
that matter, N.I.C.)? 
It may be argued that 'Neddy' should be run like the economic planning 
organisation in France. But planning there started with a high proportion 
of industry under public ownership and the French system, even 
before de Gaulle, was autocratic and bureaucratic: it lacked lively and 
effective democratic control (as M. Mendes-France, a former Premier, ha3 
stated).

Whatever success in economists' terms planning in France has achieved, 
there is no evidence-indeed it is not claimed-that it has brought much 
economic equality or goodwill between different classes of society. The most 
we can learn from France is information about certain administrative and 
statistical techniques. Even these we shall need to apply with caution to 
our more democratic society. 

We must remember our principal objects-to be humane and democratic. 
Any planning organisation must be not merely formally responsible 
to Parliament but so close to Parliament that it can, like any Government 


2P THE FUTURE OF PUBLIC OWNERSHIP 

Department, be constantly kicked and prodded by disrespectful M.P.s fresh 
from angry meetings in the constituencies. This means a Department or 
Commission under the direct orders of a Minister (which 'Neddy' is not). 
Who should staff it? Economists, business men, trade unionists, people from 
existing n•ationalised industries and local authorities, or civil servants? Probably 
a mixture of all these. They should be headed by a Cabinet Minister 
with a Minister of State and two or ~hree very capable Parliamentary 
Secretaries. 

We do not, of course, suggest t!hat before such a Planning Department 
could be effective all or most industries need be taken into public ownership. 
The Department could do much if, through some form of public ownership, 
it had control of those industries most crucial to the whole economic 
system. New forms of public ownership (including worker-and! consumer 
-participation) could be worked out so as to make possible more public 
control without excessive centralisation. Although the most important industries 
to control would be capital goods manufactures such as steel, we should 
not rule out some consumer industries of special value, or special danger, 
to t:he community-for instance, the motor car and pharmaceutical industries, 

5. The Workers' Place 
puBLIC ownership was first advocated to raise the status of workers 
and give them a share in the control of policy. It was hoped to see an 
end of strikes, lock-outs and class warfare. Have these hopes been dashed? 

Under capitalism, although the worker depends for his livelihood on 
his industrial labour, his mind is frequently engaged elsewhere and his heart 
is often not in his job. In fact masses of humans in our highly industrialised 
society lead sterile colourless working lives. The boring and repetitive nature 
of individual jobs and lack of individual responsibility in factory or office 
constitute an outstanding scandal of modern industry. Automation begins 
to remove the most soul-destroying tasks, but the lives of many people outside 
their work are drab, unexciting and without creative possibility. The 
machine can do many things so perfectly that man has given up trying 
to do them himself. Married women with families, in contrast, often have 
greater responsibilities than their husbands experience in a life-time. Such 
differing forms of synthetic adventure as Outward Bound Schools, motor 
car rallies, and gang fights, are attempts to experience adventure and excitement 
not provided by the environment. 

Christopher Brasher commented at the end of the Rootes, Acton, strike ; 

"What must be learnt is that it is no longer enough to pay men high wages 

(the Acton men have been earning nearly double the national average). It 

is also vital to engage the hearts and minds of ~men, to give them pride 

in their work and to treat them like responsible human beings instead of 

as so many units producing X number of car bodies and components every 

week".1 

1 " Calculating the profit and loss of a strike." The Observer, 3rd Dec., 

1961. 



THE FUTURE OF PUBLIC OWNERSHIP 

Attitude of Trades Unions 

Nowadays most trades unions refuse to be involved in management 
decisions either in public or priva•te industry. They feel this would divert 
them from their proper role of fighting simply for the interest of their 
members. There are exceptions to this attitude1 lbut on the whole schemes 
for some sort of workers' participation in management have come from 
the management side, although no management, public or private, has proposed 
to hand over full sovereignty to the workers' representatives. 

_Schemes for worker participation range from full and genuine 
consultation about management decisions in their formative stages, to those 
of a largely bogus nature, but final power of decision is always reserved 
to management. The only exception is where the unions are so powerful that 
certain types of action cannot in practice be taken without their agreement. 

Industrial Relations Under Existing Public Ownership 

There have been a number of major disputes and many minor troubles 
in the public sector since 1945. All have been well pubLicised by the enemies 
of democratic socialism on the Right and on the extreme Left. We must 
ask firstly, is the general state of industrial relations worse in the public 
than the private sector, secondly could it be better, and thirdly could a more 
extensive and thorough-going application of socialist principles bring about 
far-reaching improvement? 

To answer the first question adequately w:ould require very extensive 
research-analyses not only of working days lost, but of the whole cLimate 
of industrial relations and morale. Industrial morale and productivity can 
fall to very near zero without anyone actually going on strike! However, 
despite serious difficulties in certain coalfields the coal industry, for example, 
has had nothing like the nation-wide disputes, strikes and lock-outs of the 
worst inter-war years. Where there has been good leadership on both sides 
industrial relations ·and mutual confidence between management and workers 
have improved enormously. 

In the publicly owned service industries if industrial relations had anywhere 
fallen to the level common in the motor industcy thousands of people 
would often have had no electricity, trains or telephone services. The industries 
and services so far nationalised have, however, mostly been among 
those suffering the greatest economic strains •and those where failures in 
morale would have the quickest and most obvious effect on the public. In 
two soundly based and expanding industries with a tradition of public service, 
electricity supply and the Post Office, we find remarkably well~d'eveloped 
effective, and harmonious systems of joint consultation. These are two con


1 The Union of Post Office Workers has always •been critical of the attitude 
wherebv "the Trades U~on Movement becomes no more than a defence 
mechan-ism which at best squeezes concessions from a reluctant management. 
By leaving management to the managers the Trade Union forfeits its right to 
mould and shape in their formative stages the policies which have such ·profoundeffects on the rights of its members . . . . " The U.P.W. prefers "to see Trade 
Unionism as a dynamic constructive force in the organisation of industry and 
the embodiment of creative energies, skills and ex;perience of its members." 
The Post (Official organ of the u..P.W.), 22nd September, 1%2, p. 465. 


THE FUTURE OF PUBLIC OWNERSHIP 

cerns requmng detailed and intricate organisation to provide a 24-hour 
seven-day week service. In both there has been bold and imaginative leadership 
on all sides and practical co-operation in post-war re-organisation and 
expansion. (The periods of trouble both have had have resulted largely 
from the general wage-restricting policies of a Conservative government.) 

New Forms of Ownership and Management 

Under the present system of rprivate ownership professional, man::tgerial, 
and office employees are dealt with on a basis of 'divide and rule'. 
There are seldom fair, efficient and systematic arrangements for selection 
and promotion. People doing similar work are paid differently and kept in 
ignorance of each others' salaries, and any form of protective associations 
or trade unionism a•bove shop floor level is usually regarded as indecent, if 
not actually treasonable. Nationalisation in most industries, however, has 
brought fair and comprehensive arrangements for selecting, training and 
promoting nearly all gradles of employees and also the fairly general introduction 
of white collar unionism. The significance of these developments 
has been little noticed; but it is fundamental. When people in responsible 
positions in an industry or public service have sat on both sides of the table 
in industrial negotiations the whole climate of relationships is changed. Both 
sides speak the same language and although they are at different levels of 
responsibility the caste division between them disappears. Distinctions between 
'staff' and 'labour' in pensions and security of tenure and in such 
minor matters as separate canteens, disappeared many years ago in the 
Civil Service and local government a nd have largely disappeared in the 
nationalised industries. 

East and West place a different emphasis on the value of the individual. 
Communists subordinate the individual to the good of society to a degree 
unacceptable in the West. Nevertheless socialists believe that in capitalist 
society the freedom given to some individuals is such as to restrict that of 
others. Their efforts to redress the balance are misrepresented as restricttions 
on everyone's freedom. 

In any large and complex society individual freedom is partly an illusion 

for we all depend on others for all kinds of things. Can our society provide 

more effective individual freedom and hence more possibilities for people 

to broaden their lives? 

A professional man usually looks for satisfaction which helps 

him to cope with the duller parts of his work. He frequently has a sense 

of service. He has ~he opportunity to shoulder responsibilities and to show 

initiative. There is a hieraTchy which he may climb, albeit often with much 

labour, and a wide choice of job. With professional advancement ability 

to play a direct part in the chosen organisation increases. A professional 

man's opinion is sought, and often acted upon, both as an individual and 

as a member of a group. He can influence his work environment by his 

initiative, either as an individual or through various groups. A professional 

man arranges his work, within limits, as he wants. He is, to some extent, 

his own master. He works within generally accepted codes of ethics which 


THE FUTURE OF PUBLIC OWNERSHIP 23 

others too must abide by and which provide defences for professional people 
against commercial and other pressures. 

Non-professional workers lead very different working lives. Very many 
reach theiT peak earning potential relatively early in life and can personally 
do very little to improve it. Their jobs are usually dull. Most manual workers 
and clerks have neither responsibility nor scope for initiative--which indeed 
may be discouraged by management, or mates. 

It is now vital, both for the individual and rhe cooot:ry, that the worker 
should feel that his contribution is of importance, that he is a necessary, 
valued and respected member of a work team, and that he possesses some 
power to influence events; in short that he 'belongs' in his place of work. 
If the worker is engaged heart and mind he will derive satisfactions from 
his work which are the basis for mature and responsible behaviour in 
society. 

It may be said that most workers wouldl not respond. Experience refutes 
this. Through the ages, when social stresses have arisen, leadership and 
initiative, often on a massive scale, have emerged from the unprivileged 
social classes. They are certainly not found only in professional and well-
to-do people. The trade union movement is full of examples of men of 
humble origin who have borne tremendous responsibi1ities. There is the 
present upsurge of leadership from the factory floor through the shop 
stewards which, whatever may be thought about it, is certainly vigorous. 
Wars, especially the last, have always produced large numbers of military 
and civilian leaders who in peacetime have no natural outlets. 

Suggestions for the Future. 

The steadily improving level of general Education will cause social 
tensions if workers, particularly the young, are not offered more interest, 
creative possi·bilities and excitement in their work. Only by this can we 
ensure maturity and sta~bility of our society, and cause production to soar. 

The main benefit of public ownership is that it changes the basis of 
industrial relationships. In public concerns there are only the employees 
and the general public to consider ; the shareholders have been eliminated. 

Consider the situation if public ownership was in a majority or occupied 
all the 'commanding heights' of industry, under a sympathetic government, 
and was not unduly hampered by economic or political pressure from 
abroad. The basic conflict of interest between management and employees 
would have disappeared and differences on many secondary matters, which 
would certainly continue, could be much more easily resolved. Publicly owned 
industries would no longer have part-time Boand! members who were also 
directors of private companies. They would be under less pressure from 
their private sector customers or contractors. Their managerial staffs would 
not be so tempted to ape the attitudes of their counterparts in private industry. 
The scene would be set for a degree of industrial co-operation which 
had never been seen before. 

Suppose we went the whole hog and put a complete industry or factory 
under the control of all who worked in it. Is this id'ea inherently absurd? 



THE FUTURE OF PUBLIC OWNERSHIP 

What are the objections to it? Can they be overcome and are they balanced 
by positive advantages? 

For any organisation of more than a few score people, no one would 
suggest direct democracy with mass meetings of all members, in ancient 
Athenian style. All voluntary societies of .any sire work through elected committees 
and conferences. In fact an active minority governs with the financial, 
but inarticulate, support and acquiescence of the majority. Jn local 
government the majority of the voters may be ignorant of financial management, 
road surveying, architecture, etc., but they nevertheless elect those 
who in turn appoint experts to look after these matters. When the voters 
feel directly affected by high rates, road congestion, or bad housing, they 
can exel't effectual pressure. 

There is no reason why t'he same people who elect municipal councils 
to run their public services, should not elect industrial councils to run the 
factories in which they work. Elected councillors would have to establish 
reasonable working relationships with the expert managers, as ,in local 
government. The unions would probably wish to remain distinct from the 
industrial councils. There might be difficulties in finding the right pt!.ople 
(whether full time or part time) to serve on the Councils-people who would 
appeal to, and keep in close touch with, the general mass of employees and 
yet 1have some understanding of the problems of management and a broad 
sense of responsibility. 

Could any industrial unit be responsible solely to its own employees 
and not to the community as a whole? It would, of course, have its financial 
and economic relations with its customers and suppliers, and could be at 
least as responsible •to the community as a company Board of Directors. 
But the very lack of responsibiLty to the community under private ownership 
was a prime reason for industries and services being nationalised and 
municipalised. When any essential services, such as water or railways, were 
authorised to work under private ownership even Conservative and Liberal 
Governments imposed' stringent controls over them. 

It is arguable that an essential public service could be owned and con-
tro~IJ.ed by its own employees subject either to ~his sort of control or to 
the kind of government inspection, control, assistance and indirect pressure 
and guidance that is now applied to Local Auth01ities. However, these controls 
are cumbrous. To extend t<hem now would be retrograde. Many people 
believe that the over-riding public interest in these services is more efficiently 
protected by full Government ownership coupled with independent 
day to day management, and that employees' interests are best served by 
highly developed systems of representation and joint consultation. Others 
believe that these arrangements tap only a fraction of the springs of employees' 
interest and energies. 

However, we should not start by upsetting systems which work reason


ably well. So experiments in direct owt1ership by employees had better be 

reserved for industries: 

(a) Not now in public ownership. 
(b) Not absolutely essential to the life of the community. 
(c) With a number of units which could remain mutually independent. 

THE FUTURE OF PUBLIC OWNERSHIP 

25 

(d) Where little central direction is desirable. 
This would provide an adequate field for imaginative and daring experiments 
of different kinds in the ownership and management of industrial 
units by their own employees. 

There could be--either completely independent or in partnership with 
central or Local Government--councils at factory level replacing boards 
of directors and consisting of representatives of various kinds from the 
different factories in the industry, the managers, the trades unions, and the 
Consumers' Commission (see Chapter 6). Schemes are required which will 
give wocker I'epresentatives initiative in new appointments, a share in overall 
indlustrial policy-making, and substantial responsibility for local policy by 
accountability of the ma:nager and his departmental heads to a worker-
elected Board.1 

Forms of organisation must be judged not only by the efficiency of 
production but equally by the improvement in the quality of people's working 
lives. We doubt if these aims need conflict. 

Private enterprise, with one or two honourable smalJ exceptions2 is 
unlikely to proceed along these lines. Experiment will be needed to evolve 
the best methods of workers participation for each industry and locality. 
Forms of practice common among professional people should be adapted. 
We suggest that sizeable experiment will only be possible in organisations 
free of both private financial interests and detailed Government control. 

It is no more absurd forr an industry to be contmlled by its own 
employees than by haphazard collections of local Government electors or 
distant shareholders. Of course whoever controls the internal affairs of an 
industry has a responsibility to the whole community. These two considerations 
need not be inconsistent and means could surely be found to reconcile 
them-such as representation of the Government or a Planning Commission 
on the Council controlling an industry, and of the industry on a central 
controlling body-accompanied by day-to-day informal consultation, as goes 
on now between Central Government and nationalised industries or Local 
Authorities. Until these ideas have been tried experimentally on the shop 
floor no final answers can be given to the questions posed. 

1 We have examined one proposal (no doubt many arrangements are possible) 
for workers' participation in control of policy and senio·r appointments in 
an industry. This envisages an Industrial Council of employee representatives, 
managers of individual factories, and nominees of the Consumer's Commission. 
Under a chairman nominated by the appropriate Minister this Council would 
plan for the whole industry. Managers would .be appointed by an AppointmentsBoard elected by the employees within the industry and subject to approval by 
the Factory Board. This Board, consisting orf the Manager and his departmental 
heads and employee rep·resentatives, would settle policy for the factory 
within the plan for the industry, and explain its proposals to all the workers. 

' Detailed executive functions would be in the hands of appointed professional 
staff. 
2 Elliott The Changing Culture of a Factory. Tavistock

Jaques (1951),
Publications Ltd .. London. 

THE FUWRE OF PUBLIC OWNERSHIP 

6. Consumer Interest 
pEOPLE not only make and sell, they consume. The conflict between 

these two aspects of the same man has usually been resolved in favour 
of producer rather than consumer, who is the odd man out. His wants 
are met according to the profit of the manufacturers and he can only 
protest, if at all, with his feet. In fact consumers are the raison d'etre of 
industry. 

The present Conservative Government is setting up a Consumer 
Council with relatively narrow powers as recommended by the Moloney 
Committee, but it is likely to be as ineffectual as the Press Council. 

Most proposals for public ownership, have suggested either state control 
or workers' control. Consumers' control is not yet a popular political cry. 
That it is becoming of wider interest is shown by the rapid growth of two 
private organisations.1 2 In 1961 there was a substantial number of Private 
Members' Bills on consumer affairs before the House of Commons. The 
post-war Nationalisation Acts provide for consumer consultation through 
Councils which have members nominated by organised consumers and 
commonly including industrial consumers. 

In competitive industry consumer needs are assessed through consumer 
research, and some attempt is made to meet them within the requirements 
of the profit motive. Existing methods of consumer representation are 
inadequate both in privately owned industry and in the public sector. 

Co-operation 

In Britain the existing Co-operative Movement is ineffectual democratically. 
It does not attract the interest of most of its members. Its structure 
contains a clumsy electoral machine with, at the top, interlocking directorates 
between the Co-operative Wholesale Society, the Co-operative Insurance 
Society and the Co-operative Permanent Building Society. It is a 
great trading and financial organisation, but in the field of production it 
has been successful only in clothing, footwear manufacture, and to some 
extent in food processing. 

This is in contrast to Scandinavia where there are major co-operative 
housing projects and food processing plants, and a wide range of manufactures. 


In this country co-operatives have given a lead in the expansion ot 
self-service, but this initiative was in an area where the Movement is 
traditionally strong. 

Recent proposals to change the structure of the Movement have not so 
far met with success.3 The retail co-operatives are losing ground to expanding 
private enterprise supermarkets. 

1 Consumers' Association Ltd., Publishes a monthly report-" Which." 
2 The Consumer Advisory Trust, through the Cornmarket Press, publishes 
"Shoppers' Guide " monthly. 
a Co-operative Independent Commission Report. The Co-operative Union 
Ltd., Holyoake House, Hanover Street, Manchester, 4. 



THE 
FUTURE OF PUBLIC OWNERSHIP 27 

Need for Expansion of Consumer Interest 
Four things are needed: 

1. 
To find out what the consumer wants and needs. 
2. 
To supply the consumer with what he wants and needs. 
3. 
To educate the consumer. Consumers do not always know what 1s 
available, and some do not even know what they need. 
4. 
To ensure that consumer goods are of satisfactory quality. 
Private enterprise meets these needs in part: 

1. 
Mistrusting the working of the market, industry itself now enquire<> 
directly of housewives what they want (" Market Research "). 
2. 
Private enterprise does, in part, supply the consumer with what he 
wants. It also tries to sell him what suits private enterprise. Hence 
the modern development of advertising with its mendacity, its pres-
sures,1 its emphasis on the gratification of self and its addition to the 
cost of household foods and goods.2 
3. 
Advertising educates the consumer in some degree. In trying to 
persuade him to buy something, it implies that it is available (it is not 
always). But the motivation is profit and advertising does not tell the 
consumer about all that is availa1ble nor does it give reliable information 
on which of a number of products is best. Private industry is 
silent a;bout the things it does not produce but could. 
4. 
Under private enterprise the consumer can often go elsewhere if dissatisfied. 
Indeed there may be too much variety.3 Excessive choice 
is virtually meaningless for the average consumer and leads to a 
maddening lack of standardisation of articles like kitchen equipment. 
or domestic electrical fittings. 
The consumer will need help to counter the cynical concept of planned 
obsolescence.2 

How may deficiencies in consumer satisfaction be rectified? Regular 
meetings of consumers have never been popular. Consumers are often too 
ignorant about the things they use or want to make valid criticisms or 
recommendations, and it is difficult to brief representatives under existing 
arrangements. 

Under whatever system industry is organised a reasonable choice of 
high grade goods and services must be provided. There must be redress 
for the consumer under an all embracing monopoly, public or private. 
Otherwise freedom of choice is lost. Individual rights must not be lost to 
communal interest. 

A Consumer Commission 
Senator Kefauver in America has proposed a Government Department 

1 E. Gundrey. "The Press and 1he Advertiser." Letter to the Guardian, 
3rd June, 1961. And succeeding letters on lOth June, 1961. 
2 M. Cordon suggests measures to restrict its rampant spread-A Tax on 
Advertising Fabian Research Series Pamphlet No. 222. 

a See comments on the excessive variety of manufacture of heavy electrical 
equipment, made by Professor Sir Willis Jackson in his inaugural address at 
the Imperial College. Nature (Lond.), 195, 7, 1962. 



THE FUIURE OF PUBLIC OWNERSHIP 

of Consumers headed by an officer of cabinet rank. Norway already has 
such a cabinet post.l 

The principles underlying the work of official bodies like the Public 
Analyst and the Factory Inspectorate could be usefully applied to the care 
of consumers' interests, in the form of a Consumers' Commission. A body 
of this kind (' Consumer Council ') has already been suggested by the 
Labour Party.2 We suggest an organisation with even wider functions 
and powers. 

An effective consumers' commission would have to be both indepen · 
dent and representative of consumers. It should carry out studies of goods 
provided both by public and private enterprise and should regularly supply 
detailed information about them. 

At present national public corporations are subject to enquiry by the 
Nationalised Industries Committee, and to financial audit. The Committee 
publishes reports and verbatim transcripts of voluminous evidence but only 
tackles one industry each year. The Commission we propose would have 
the duty to perform an annual financial and service audit. The quality of 
the service provided would be assessed. Articles produced by industry 
would be tested. 

The Commission would investigate particular complaints (which might 
reveal general as well as local weaknesses) and make enquiries into the 
work of public bodies and private industry. It would cover a wide range 
of institutions, not only public corporations but the G.P.O. and the production 
divisions of Government Departments and local authorities. Thus 
library services or the quality of coal and gas, could be comparatively 
assessed. Among the Commission's functions would be enquiry into consumers' 
needs covering the who!~ range of common articles. 

The Commission would watch patents, and co-operate with the 
National Research Development Corporation to develop socially useful 
inventions. The Commission should have the power to induce industry to 
produce new articles or to modify old ones. It would be desirable for the 
Commission to work with the British Standards Institution to develop 
standardisation of goods and components. 

The Commission would have Local Regional Boards as sub~idiaries 
of a National Council. The members of the Boards and of the Council 
would serve part-time without salary. The Council and Boards would 
include people from all strata of society of both sexes, and representatives 
elected by local authorities, consumer co-operatives and trade unions. The 
National Council would be elected by the Regional Boards. Power to 
eo-opt might be useful. 

The Commission would require national and local offices with staffs 
including physical, biological, and social scientists, statisticians and trained 
interviewers. The mere publication of its reports might be sufficient to 
achieve results. 

1 V. Packard, The Waste Makers, Longman's, 1960. 
2 Fair Deal for the Shopper. A Labour Party "Looking Ahead " Pamphlet. 
October, 1961. 


THE FUTURE OF PUBLIC OWNERSHIP 29 

The Consumer Commission would be a well-informed and independent 
body. It could brief pl]blic representatives, both local and national, on 
problems concernuing consumer interest in the supply of goods and services. 
Thus the balance in discussion and debate might be redressed in favour 
of the back-1bench member who would have adequate, relia!ble and independent 
information in argument with Government representatives. 

The Consumer Council would represent the consumers' interest directly 
and ipdependently-a commission of inspection on behalf of the consumer. 

7. Man's Industrial Future 
THE material state of millions of our people is better than ever before 

but many are still in poverty. Our prosperity, such as it is, is almost 
entirely .material. Man's work, such an important part of his life, should 
now be so organised that he may obtain from it more satisfaction for mind 
as well as body. The control of crime and the stable development of our 
social democracy depends on it. 

Our various proposals to engage the hearts and minds of people in 
their work should be put into effect now. However we do not know enough 
about the effects of industrial conditions on the worker to allow comprehensive 
suggestions to be made at present and much that is known is 
not made use of. 

That people who suffer dissatisfactions in their work are una;ble to 
describe them or their causes is only partly a matter of education or intelligence. 
It is due more to our social climate. Industry and society provide 
little machinery for elucidating the causes of unhappiness at work, and 
for removing it. Hence the existence of anti-social practices like strikes 
and slip-shod work. People need means of redress and we must provide 
less socially and individually damaging ones. 

The profit motive may produce evil results, but it makes people work. 

Other incentives are more complex and do not command such a wide 
area of agreement. Nevertheless for much of man's history pride of craft, 
ideas of service, or sense of social responsibility as well as desire for power, 
national and clan loyalty, fear, superstitution and mere habit, have all 
been more effective than desire for financial gain. 

If we condemn pursuit of profit as the mainspring of man's labour we 
must find adequate alternatives to reinforce and partially replace it. The 
ideal of service, inhibited by the profit motive should be extended as a 
spur to labour and be taught from an early age. In industry it could only 
develop fully under public ownership. 

The value of any concern as a service to the community should be a 
criterion for consideration of change of ownership. Support for this concept 
comes from unexpected sources. The National Union of Manufacturers 
has asked the Minister of Transport to continue the railways ' as a 
social service.'1 The Federation of British Industries suggested to the Roch


1 The Guardia11, 18th May, 1961. 


30 THE FUTURE OF PUBLIC OWNERSHIP 

dale Committee that all ports should be owned and operated by ' Publi.: 
Trusts.' The principle that the ports should be controlled by representatives 
of their users and of the public in general was accepted.' 1 

To make valid suggestions for improving worker and consumer satis. 
faction we shall need more research into industrial conditions and practices 
to understand the causes of the tensions they produce. In addition we 
shall need to know more a;bout social experiments in related fields in other 
countries. Finally, we shall have to make social experiments ourselves, to 
find which methods of organising and administering industries and services 
will give maximum satisfaction to worker and consumer. Only Public 
Ownership, in differing forms (themselves sometimes experimental) will en· 
able us to do this. There are of course also many subjects whose study 
is a necessary corollary of change in ownership. 

For example we need not only adequate training facilities for manage· 
ment in industry, but also research into new methods of administration 
and management. Some of the nationalised industries have good management 
training schemes and take advantage of those of outside institutions. 
But much of the recent outburst of so-called ' management training' in 
independent colleges and elsewhere is bogus, being conducted by people 
who have never managed anything. 

In the Health Service the most important workers in it, the doctors, 
are near the bottom of the administrative hierarchy, but are among the 
intellectual elite. Because of the importance of their services and the 
extent to which their views are acted upon, the Health Service may be said. 
in respect of the doctors (only), to present a picture of worker participation. 
Few doctors, however, have yet grasped what a fruitful field of social 
research their own service presents. Social scientists are already interested.2 

Similarly in 'technological industries' highly paid scientists (e.g. in 
British Nylon Spinners) now influence control of industry. They do this, 
like the doctors, without leaving the work for which they were trained 
and becoming pure administrators. 

The scientific method must now be adopted to deal with large scale 
social ills. The collection and analysis of data, and the formulation and 
testing of theory, offers greater hope of social advance than rigid adherence 
to doctrinaire capitalism or communism-to one or other of which so much 
of the world is now wedded. We believe that an experimental yet empirical 
approach will suit most Englishmen, and might well carry with it 
sufficient sense of adventure to appeal particularly to young men and 
women. This would be an especially valuable attribute for our relatively 
sophisticated society is deficient in natural sources of excitement and 
adventure for young people. 

1 Report of the Committee of Inquiry into the Maior Ports of Great Britain. 

September, 1962. Cmd. 1824, H.M.S.O., paras. 92-107. 
2 R. W. Revans (1961), The Measurement of Supervisory Attitudes, Manchester 
Statistical Society. 
do. (1962), Hospital Attitudes and Communications, The 
Sociological Review Monograph No. 5, 117. 
do. (1962), The Hospital as a Human System, Physics in 
Medicine and Biology, 7, 147. 


THE Fl:ITURE OF PUBLIC OWNERSHIP 

Various methods of research will be needed: studies of past and present 
administrative, financial and social practices in industry and services and 
their effect on people ; studies of how other countries are developing industrial 
relations ; 1 and sample surveys covering groups of workers, industries, 
and consumers. 

Experiment must become an acceptable tool for social betterment. 
Use of the pilot experiment, common in science, and in industry for production 
purposes, must be extended to the human field. It should be used 
to develop new administrative techniques and to decide the best way of 
organising a factory. To get answers to many of the problems it would 
probably be necessary to build factories to compete with the private sector 
in the same field. 

More special factories, if necessary on Village Settlement lines, must 
be made for the physically and mentally handicapped so as to reduce 
to a minimum the number of unemployables. 

Much sociological research at present is ill-co-ordinatd and often not 
directed to problems of immediacy. There is certainly not nearly enough 
being done in the field we have been discussing. 

We support the suggestion2 that a Social Research Council should be 
set up, rather on the lines of the Medical Research Council. Its main 
functions would be to co-ordinate social research and to initiate work in 
fields where social problems were pressing, as in industry. The Council 
should be adequately financed so that it could conduct experiments on a 
worth-while scale. 

If man is not to be degraded by the materialist environment he has 
created he must now start consciously to direct his own evolution, and 
one of the first steps he must take is to order his relations better with hi'> 
working environment. The purpose of industry is to produce the things 
man needs. Man himself is involved in the process of production and 
this must be so organised that he benefits from the process as well as the 
result. Suggestions for altering the organisation, and ownership of industry 
must be examined against this backcloth and no other. With our advanced 
social democracy and ideas of political freedom we have the opportunity 
in this country consciously to take an exciting step forward in our industrial 
and economic organisation. 

1 See Workers' ConJtrol in Yugoslavia. F . Singleton and A. Topham. Fabian 
Research Series 233, February, 1963. 

2 See debate initiated by Austen ALbu in the House of Commons. Hansard,
4th August, 1961. Cols. 1853-1871. 


32 
THE FUTURE OF PUBLIC OWNERSHIP 

APPENDIX 
Examples of Industrial and Commercial Organisations 
in Varying Forms of Public Ownership. 


1. 
Concerns for which Ministers are Responsible to Parliament Directly 
and in Full. 
a. 
Headed by Ministers, staffed by civil servants, and financed entirely 
from the Exchequer. 
Admiralty, Ministry of Aviation, Ministry of Works. 

b. 
Headed by a Minister, staffed by civil servants and financed partly 
by 
the Exchequer and partly by contributions. 
Ministry of Pensions and National Insurance. 

c. 
Headed by, and staffed by, civil servants, and financed by the 
Exchequer. 
H.M. Stationery Office (printing works). 
Central Office of Information. 
Board of Customs and Excise. 
Board of Inland Revenue. 
d. 
Headed by a Minister, staffed by civil servants but finances 
separate from the Exchequer. 
General Post Office-Postal, telephone, telegraph, and bank· 
ing services. 

e. 
Staffed by civil servants and financed by the Exchequer, but wholly 
or partly directed by BJards appointed by Ministers who are not 
civil servants. 
Forestry Commission. 
Department of Scientific and Industrial Research. 
National Assistance Board. 


f. 
Financed mainly by the Exchequer and run by Boards, or Coun· 
cils, appointed by Ministers, with staffs who are 
not civil servants. 
National Health Service. 
-Hospitals. 
-General Practitioner Services. 

2. 
Independent Public Corporations, not staffed by civil servants. 
appointed by Ministers who are responsible for them in general, but 
not in detail. 
a. 
Financed wholly by the Exchequer. 
Arts Council. 
British Broadcasting Corporation (on basis of licence revenue). 
Commonwealth Development Corporation. 
British Council. 
United Kingdom Atomic Energy Authority. 
National Film Finance Corporation. 

THE FUTURE OF PUBLIC OWNERSHIP 
33 

b. 
Financed wholly or mainly from own earnings, but new capital 
borrowed from the Exchequer. 
National Coal Board. all Electricity Boards, Gas Board'l, 
B.O.A.C., B.E.A., Bank of England, British Railways Board, 
British Waterways Board, London Transport Board, Independent 
Television Authority, National Research Development 
Corporation. 

3. 
Publicly owned Companies Operating under the Companies Acts. 
a. 
With all shares owned by the State and all Directors appointed by 
the Government. 
Cable and Wireless Ltd. 


b. 
With shares owned by, and directors appointed by, a Public 
Corporation (publicly owned holding company) (financed as in 
2 b above). 
Steel Companies (during the period of their ownership by the 
Iron and Steel Corporation). 
Thomas Cook and Sons. 
Dean and Dawson. 
Tillings (buses). 


4. 
Corporations with Members all either Directly Elected by the General 
Public or Go-opted by themselves (Aldermen) with Mandatory and 
Permissive Powers under the Direction of Ministers. 
County, Housing, Schools, Buses, Libraries, Welfare 
County Borough, Services, Public Health, Roads. 
Borough, (In some places many other services including 
District, public entertainment, restaurants, telephone 
Councils service.) 

5. 
Corporations with Members Appointed by Various Local Authorities, 
and sometimes by Government Departments and/or Bodies Representative 
of the Users of the Services Supplied. 
Port of London Authority, Harbour Boards, Joint Drainage Boards. 
Sewage Boards, Water Boards. River Boards. British Standards 
Institution. 

6. 
Corporations with Members almost all Appointed hy those who Work 
in them. 
Universities of Oxford and Cambridge and their Colleges. 
(Most other British Universities include more Government or Local 
Authority appointed members in their Governing Bodiees.) 

7. 
Societies wholly Controlled by Consumers of their Products or Userr 
of their Services. 
Co-operative Societies-retail trading, banking, some manufacture~ 
and farming. 
Mutual Assurance Societies. 
Housing Associations. 
The Consumers' Association. 



Recent Fabian Publications 


RESEARCH PAMPHLETS 

225 THE FARMER AND EUROPE 
Lord Walston 316 
226 A PLAN FOR ROAD SAFETY 
Barbara Preston 2/6 
227 UNITED NATIONS ON TRIAL 
David Ennals 3 I228 
EDUCATION FOR COMMONWEALTH STuDENTS IN BRITAIN 
Patrick Lancaster 2 I 6 
229 NEw ToWNs FOR OLD: the Problem of Urban Renewal 

J . B. Cullingworth 41230 
COMMONWEALTH AND COMMON MARKET : the Economic 
Implications. Tom Soper 3 I231 
THE lNGLEBY REPORT: THREE CRITICAL ESSAYS 
David Donnison, Peggy Jay, Mary Stewart 2/6 
232 Too MANY PEOPLE? 

A . Carter 3 I233 
WORKERS' CONTROL IN YUGOSLAVIA 
Frederick Singleton and Anthony Topham 31234 
TAXES FOR A PROSPEROUS SOCIETY 
Bruce Millan 3 I235 
INDUSTRIAL RELATIONS: SWEDEN SHOWS THE WAY 
Jack Cooper 3 I


TRACTS 
335 TRADE UNIONS IN OPPOSITION 
Ken Alexander and John Hughes 3/6 
336 NoT WTTH EUROPE 
William Pickles 3 16 
337 THE EXISTING ALTERNATIVES IN COMMUNICATIONS 
Raymond Williams 116 
338 THE PRESS AND THE PUBLIC 
John Beavan l/6 
339 THE F'uruRE OF THE UNIONS 
William McCarthy 316 
340 REDUNDANCY IN THE AFFLUENT SOCIETY 
Geoffrey Goodman 316 

.. 

341 THE COMMON MARKET DERATE 
Douglas Jay, Roy Jenkins 1/6 
342 EDUCATION IN A CLAss SociETY 
John Vaizey 2/343 
OUT OF STAGNATION : A PoLicY FOR GROWTH 

J. R. Sargent 
4/6 
• Printed in Great Britain by Devonport Press Ltd. (T.U.J London, W. /2