Investigating an Economic Alternative Part 2
Following on from last month’s article[1] we delve deeper into the transformative potential of public monopolies[2] and the role of cross-subsidisation in building an economy for the common good. The ideological dogma of free-market capitalism has long upheld private enterprise as the pinnacle of efficiency and innovation. Yet the reality is starkly different, particularly when it comes to the essential means of production, which is the focus of this series of articles. From energy and transport to water and housing, private ownership has entrenched inequality, inefficiency, and environmental degradation. Public monopolies and state-owned enterprises offer not only a practical solution to these crises but a pathway to a more democratic and equitable economy.
These are the solutions that can be easily argued for now, without having to win people over to the cause of socialism, whether that is within our trade unions, at workplace discussions, and in everyday conversations at home, in cafes, pubs, and restaurants. These ideas have the potential to resonate deeply with the working class, fostering an inherent class consciousness and instilling patriotic pride in the concept of nation-building. The political and economic battles for an alternative to capitalism, for socialism, starts with the battle of ideas which must win over the hearts and minds of our people.
Public Monopolies: Efficiency through social responsibility
A common criticism levelled against public ownership is that it stifles competition and innovation. This critique rests on the flawed assumption that competition always leads to better outcomes. In reality, the profit motive often conflicts with the broader needs of society, particularly in sectors where universal access and long-term sustainability are paramount.
Monopolies or oligopolies, whether public or private, can achieve economies of scale that reduce costs per unit produced. However, public monopolies go further by achieving efficiencies unattainable by private firms because they operate outside the profit-maximisation imperative as discussed in last month’s article. For example, a publicly owned energy sector can structure pricing to ensure affordability for all while reinvesting surpluses into renewable infrastructure. Public transport systems can prioritise accessibility and environmental sustainability over shareholder dividends. Freed from the constraints of profit, these entities focus on delivering high-quality services and addressing societal priorities.
Public ownership does not necessarily mean a singular monopoly. In virtually any sector, if it was deemed necessary, a few state companies could coexist, fostering healthy competition rooted in service and innovation rather than profit. For instance, different design teams within state-run construction firms could compete to deliver projects, encouraging creativity and ingenuity while maintaining the protections and security of public sector employment. This model shifts the motivating factors from financial gain to pride in one’s work and a shared commitment to the public good.
Such a system instils values of collaboration, excellence, and societal benefit—a stark contrast to the profit-driven ethos of capitalism. Moreover, it counters the narrative peddled by capitalist mouthpieces that the public sector is lazy and inefficient. Without the profit motive, there is no pressure to cut corners or exploit workers, particularly the most vulnerable, such as immigrants and young workers. Instead, public monopolies prioritise delivering robust, high-quality goods and services, with proper pensionable jobs safeguarded by safe practices and fair working conditions.
Cross-Subsidisation: A tool for equity
Cross-subsidisation is a cornerstone of an equitable public ownership system. At its core, this mechanism involves using revenues generated in one area to support operations or reduce costs in another. These could be internally within the industry, as per examples below or could easily be used across sectors, using surplus revenues in transport to fund energy projects and vice-versa. It is a practical means of addressing inequality and ensuring that essential services are accessible to all, irrespective of income.
Practical Examples
- Transport: In a public transport system, fares on profitable urban routes could subsidise services in rural or underserved areas. Profits from freight transport—primarily from the movement of industrial goods—could subsidise passenger services. These could ensure widespread connectivity and affordable travel, ensuring no community is left behind, fostering connectivity and regional economic development.
- Energy: A publicly owned energy provider could charge higher rates to industrial users while maintaining lower rates for residential customers, particularly those on low incomes. This approach not only supports households but also incentivises energy efficiency in industries.
- Construction: A public construction enterprise could utilise profits from large-scale commercial developments to subsidise public housing projects and community infrastructure. For example, revenues from constructing office buildings or industrial facilities could be redirected to fund and build schools, parks, public amenities, or residential housing. This ensures that development benefits all sections of society and addresses critical housing shortages while maintaining high standards of quality.
By redistributing resources within and across sectors, cross-subsidisation embodies the principle of solidarity. It recognises that the true measure of an economy’s success lies in its ability to meet the needs of all its people, not just its most profitable segments. Cross-subsidisation allows for public funds to be directed where they are most needed. The greater the ownership of key sectors of the economy in public hands, the greater the resources that would be at the disposal to meet the needs of our people.
Public monopolies and cross-subsidisation are not merely theoretical concepts but practical solutions to systemic issues. They represent a shift toward an economy that prioritises societal wellbeing over profit margins. By redistributing resources and focusing on the collective good, these models ensure that essential services like transport, energy, and housing are accessible to all. They embody solidarity and equity, creating a foundation for an economy for the common good.
References:
[1]O’Neill, E (2025) “Public versus Private Monopolies – Investigating an Alternative”, Socialist Voice January 2025 issue: https://socialistvoice.ie/2025/01/public-versus-private-monopolies-investigating-an-alternative/
[2]Throughout these articles the term monopolies is used in the wider sense of the word, a public monopoly would not exclude other private firms from competing, but with Public Monopoly price setting, it would be difficult to compete under the profit motive.
