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16 J.L. & Soc'y 129 (1989)
The Privatization of Industry in Historical Perspective

handle is hein.journals/jlsocty16 and id is 137 raw text is: JOURNAL OF LAW AND SOCIETY VOLUME 16, NUMBER I, SPRING 1989 0263-323X $3.00 The Privatization of Industry in Historical Perspective JAMES FOREMAN-PECK* The sale of state-owned industrial assets by the Thatcher Government promises to be the most radical restructuring of British industry at least since 1951. About £13 billion had been raised by the end of 1987 with an average of £5 billion a year until 1990 planned from the future sale of the water and electricity industries. The great public utilities of gas and telecommunications have been returned to the private sector and even industries which have made losses for decades- coal and railways - look as if they may become candidates for privatization. How fundamental the Thatcher Government's privatization policy is may be appreciated by noting that state ownership of industrial assets has been advancing from mid-Victorian times. It is true that the nationalizations of the 1945-51 Labour Governments marked a quantum jump in the process, but the subsequent Conservative Governments accepted the changes, with the exceptions of road haulage and iron and steel. Having been elected with a doctrine of rolling back the frontiers of the state, the Heath Government of 1970-4 left office with a larger portfolio of state industrial assets than that with which it had begun. In this perspective the Thatcher Government's reversal of the process by privatization appears a thoroughly reformist policy. The purpose of this essay is to offer an explanation for and an evaluation of the previous trend and for the reversal after 1979. Three broad possibilities offer themselves. First, the long-term tendency was based on errors that were only fully appreciated after 1979; secondly, privatization is a mistaken policy that neglects the lessons of history; and thirdly, the underlying conditions that had warranted state ownership had changed by the beginning of the 1980s and new policies were therefore justified. In a nutshell, the first option most closely accords with the evidence. The explanation for the long-term trend in the nineteenth century is that there were genuine problems with the performance of certain industries, especially with gas, water, telegraphs, and railways. Competition did not seem to work and, in the absence of controls, private monopoly appeared to provide unsatisfactory levels of service at excessive prices. When controls were imposed, other forms of inefficiency emerged. Municipalization was an effective short-term solution *Department of Economic and Social History, School of Economic and European Studies, University of Hull, Hull, Humberside HU6 7RX, England. 129

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