The Public Sector

May 21

The ownership and control of the material resources of the community are so distributed as best to sub serve the common good and ensure that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. The elasticity that these statements provide came in handy in policy formulations to project the public sector as something of countervailing power to the private sector. Hence, the primary question was to be determination of the optimum mix of the private and public sectors in order to preserve the balance of the system.

When it became clear that the public sector enterprises were turning out to be losing concerns, it was argued that the mix was still required to reconcile the opposite considerations of efficiency and equity, the private sector representing the former and the public sector symbolising the latter. Underlying this view has also been the frequently aired, but inadequately examined, opinion that state ownership in itself is socialism and hence a factor in favour of more equitable distribution. Because of this the discussion of the role of the public sector often moves out of the realm of economics into dogmatism.

In the production process, the links of the public sector have to be examined with the rest of the economy. The goods and services produced have to be assessed to trace their linkages. There is a division of industries between private and public sectors. In an economic sense the public sector industries are those that supply overhead facilities for the economy as a whole and provide it also some of the crucial inputs and amenities. An important function of the public sector is to serve the private sector with goods and services it requires, but would not find attractive to produce. Thus the private sector is heavily dependent on the public sector. Hence, even the growth of the public sector has not in any manner altered or perhaps even tried to alter, the basic structure of the economy; rather it has reinforced the existing structures.

The benefits of the policies pursued by the public sector; in a predominantly privately owned and private-operated economy even if the production process is socialised meaning non-private, the appropriation process are still private. This means that not only that the income accrued in the public sector goes to private individuals, but that even the principle of appropriation is similar to that in the private sector. For instance, for its managerial cadre the public sector has to compete with the private sector and hence the principle and quantum of remuneration in the two sectors have to be more or less similar. Hence whether or not the public sector is complementary to the private sector in the production process, through its distribution process it directly augments the private sector. The growth of the public sector replenishes the non-producing primary units of the want-based economy, substantially. The public sector provides an indirect support to the private sector whose quantitative magnitude is directly related to the size of the public sector.

The impact of the public sector on the dynamics of development can be easily assessed. Whatever may have been the intentions with which the public sector has been established and strengthened, it has served little social purpose, if by this is meant at least the economic welfare of the majority of the people. On the other hand it has conferred special advantage to a select number of individuals and groups, increased production for their sake and enabled them to augment their hold over resources and thus to exercise greater economic power over others. Given the structure and working of the system, it is an inevitable consequence, however strong the claims may be to contrary.

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