This is Richard Wolff responding to another Ask Prof Wolff question from our Patreon community.
This question comes from Darren, and Darren asks about public enterprises, sometimes called
public option enterprises, and how they exist in capitalism and what difference they might make,
what impact they might have, with particular reference to inflation. So let me begin.
I understand this question to mean "What's the status of public enterprises,
enterprises owned and operated by the government inside what we call capitalist
economies? Have they existed, do they exist now, and what is their impact?”
Well let me answer the first part really quickly, “Have they existed?”, and the answer is: oh boy,
you bet, and to an enormous degree. I’m going to give you just one of many examples. I'm going to
pick France, an unquestionably capitalist country, and I'm going to talk about the last 50-60 years
of French history. In that period of time in that capitalist economy there were (and
there still are) loads of public enterprises. I’m going to give you a list of just a few.
Automobiles in France were for much of this time produced by the government (at least, some of
them). The Renault corporation that many Americans know because those cars came to the United States,
at least for a while, was a publicly owned and operated enterprise for much of that period. Many
banks in France, including some of the largest nationwide banks, were publicly owned and operated
by the government in France. Utilities were notably publicly owned and operated: gas,
oil, water, transportation, the national railroad system,
subways, buses. All enterprises owned and operated by the French government, and I could go on.
Here in the United States there are also enterprises owned and operated by governments
that compete with private enterprises just as the ones I listed in France competed with private
enterprises there. There’s the United States Post Office here competes with FedEx and other private
postal delivery systems. In the United States, noteworthy in my life experience,
I have taught in both private universities and in public universities. The public ones,
for example the University of Massachusetts in Amherst is owned and operated and run as a public
enterprise by the state of Massachusetts. So yeah, they coexist and they always
have. In Europe they're much more extensive than in the United States; the United States has been
anti-public enterprise even though we have leaned on public enterprises. For example,
the Tennessee Valley Authority for a century provided utilities in that part of the country.
So can they be a force against inflation? Absolutely, and there are two reasons why.
Number one, it's a public enterprise which means it doesn't have to earn a profit.
There are no private owners, no private shareholders who have to be sent dividends (which
are a share of the profit), so a public enterprise has an advantage in that it is not required to
make a private profit because there are no private enterprise owners involved. And the second is
that in the minds of a public enterprise is this reality: we are the public, we serve the public,
we are owned by the public, we have to take care of the public. A private enterprise isn’t
run by people who are concerned about the public. They are concerned about the private enterprise,
they get paid to make money for that enterprise, they get fired if they don't make money for that
enterprise, they are told your job is not to worry about society, your job is to worry about
this company. It's exactly a different mentality for the public enterprises because they are much
more held accountable to public objectives. Since an inflation is a problem that affects everybody,
you can expect that to control an inflation, pressures would be put on public enterprises
that would be responded to more than those pressures put on private enterprises. So yes,
I think public enterprises could and would take steps to slow or stop an inflation that
are not available to us in a society like the United States that is so lopsidedly private.
So if there were in the United States public banks, I don't think private banks would
behave the way they do. If there were public enterprises, the private would have a competitor.
Yes, the heads of private enterprises give speeches on the Fourth of July about the
wonders of competition, but the last thing they want and the last thing they allow with their
political influence is for public enterprises to actually compete with them. The best example are
banks in these countries who have hobbled the credit unions that people have set up because
they don't want the competition from something that serves people arguably better than they do.
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