THOMAS
NOWOTNY
Public Policy and the Future of Europe
The 1988 Wodd Bank report deals at length with the problem of the
public sector, showing that it tends to grown faster than the wealth of
nations. In fact, the higher the per capita income, the greater the share
of wealth that in one way or another is distributed not according to
economic, but according to political criteria. Conservatives are not
alone, however, in believing that the public sector works inefficiently,
that its costs are less controllable, and that civil servants are not equal to
industrial managers in producing goods and services. When comparing,
for instance, the cost of bus transportation by public and private carriers,
the costs incurred by public carriers are consistently higher. Occasionally
the public sector scores better than the private one. The British national
health system, for instance, is only half as expensive as the private Ameri–
can one. But it is equally efficient when measured by the "production"
of health. Between Britain (with its "socialized medicine") and the
United States (with its still largely private system of health care), the
average life expectancy does not differ very much. And sometimes even
nationalized enterprises are as well run as private ones. Nationalized Re–
nault still produces cars in France, whereas many privately owned British
or German automobile producers had to close down. But we assume
these cases to be exceptional and are ready to accept the conventional
wisdom that private enterprise is more cost-effective.
Nevertheless, the public sector tends to grow, although a few en–
trenched conservatives might believe its development, with the help of
enlightened and hard-headed politics, to be reversible. The Reagan ad–
ministration, for instance, was rather hard-headed, and yet did not suc–
ceed in reversing the trend. In fact, the share of the public sector in the
Gross National Product increased further during the Reagan years. How
is one to explain this evident connection between the growth of wealth
and the growth of the public sector?
According to Marxist rhetoric, the modern "capitalist machine of
production" is highly efficient and creates "surplus value" which has to
be disposed of This could be done through various means: through ar–
mament or through the export of capital. Might it be that ambitious
welfare programs, like the Scandanavian ones, are also but a disposal of
surplus value? This explanation is of doubtful use. The public sector can–
not be seen as a mere "waste product" of capitalist production - as a
