Discussion of Dr Pryke’s Paper

Abstract

Dr Pryke, in his opening remarks, offered a set of five hypotheses that he had inferred from his investigations:

• (1) Nationalised industries did relatively worse than private industries when the economy performed badly because (a) union resistance to the dismissal of workers was stronger than in private industry, (b) politicians did not want to create unemployment, because of short-term considerations, (c) there was a temptation for ad hoc intervention, and (d) price restraints upon public enterprises designed to reduce inflation led to losses.

• (2) Unconditional subsidies led to loss of control over costs and tended to escalate.

• (3) Nationalised industries should be expected to cover their own costs. Problems of inequality should be tackled by other means, such as taxation and redistribution.

• (4) New devices were needed to increase productivity in public enterprises — means such as productivity targets and five-yearly efficiency audits.

• (5) Monopolies should be avoided where possible. If a nationalised industry was in competition with private industry, the government could let it contract if it did not improve its efficiency.