Is Public Ownership or Privatisation Better? Law, Economic Theories and How Data Helps

Ewan McGaughey

Working Papers from Centre for Business Research, University of Cambridge

Abstract: Is public ownership or privatisation better, and when? The 20th century was like a pendulum, swinging between narratives that we must abolish private ownership in the means of production, to saying there 'are virtually no limits on what can be privatised', and hovering as if ready to swing again. By contrast, this paper shows that outcomes improve and costs decrease when enterprises are publicly owned, if property is 'non-accessible'. Otherwise private ownership is better. Property is 'non-accessible' if an enterprise is a skill-based, natural, or network monopoly. Property is 'accessible' if people can buy land or capital, source materials or vehicles, or get skills or knowledge to start up a business. Then, competition channels private greed into the public good. This paper contends that data lets us move beyond ideological clash, and gives answers that practically assist policy, to fill the gaps in human rights and market failure frameworks. For example, water is 90% publicly owned in wealthy countries, with lower bills and better outcomes. For rail, fares are lower with greater electrification if tracks and operators are public. For electricity, bills are lower with more renewables if grids and a retail option are public. For telecom networks, public ownership tends to reduce bills and raise internet speed. Most wealthy countries hold non-accessible property in public hands, and do better for it. Three further principles are crucial if circumstances change. First, technology can change what is accessible property, such as renewables making electricity generation competitive, or big tech data creating new monopolies. So, law must respond to tech. Second, there may be good non-economic reasons, such as protecting democracy and the environment, to change the public/private balance. Third, good governance is distinct from wise ownership choices, and generally supports voice for workers, as well as investors, and service-users where competition fails. Together, good governance and wise ownership socialise the nature of all property, and internally transform the public-private divide. Policymakers should base decisions on the evidence of what works, and this theory helps make those decisions.

Keywords: Privatisation; nationalisation; socialism; capitalism; water; health; electricity; rail; education; media; internet; market failure; property; production; non-accessible; monopoly; democracy; technology; governance (search for similar items in EconPapers)
JEL-codes: I28 J10 K11 K22 K23 K32 L12 L21 L22 L32 L43 L51 L53 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-com and nep-law
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