I hate to write another post based off Monica Prasad’s book, but the damn thing is just so full of insights that I can’t help. Fabio can have his Skocpol Zone, I’ll take Prasad any day of the week! This one stems from her discussion of the French and British steel industries in the 1950s and 1960s. The private American system was the most productive, the state-run French industry was almost as productive, and the British industry was least productive. Why was this? According to the studies cited by Prasad, much of it had to do with the history of nationalization in Britain. The steel industry was nationalized in 1951, denationalized in 1953, and then renationalized in 1967! By this point, the lag in productivity was huge. According to Alasdair Blair:
This can be attributed to the uncertainty of the individual company managers and owners as to whether their firm would be nationalized again. And with this feeling of uncertainty, there was an unwillingness to adopt the new techniques, as they rightly assumed that the industry would return to government control and that they would not be rewarded for their expenditure by the public purse.
Prasad points out that sometimes either private or public ownership is a better policy than flip-flopping between the two of them. Most libertarian writers put an emphasis on both liberty and the rule of law as requisites for development and growth, but I wonder if they put too much emphasis on the former while neglecting the latter.
- Josh McCabe
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