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By J.H. Jeans, LL.D., F.R.S.

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This argument restores the literal meaning of nationalization as an instrument of making the economy "national". Socialist authors, moreover, sometimes regard nationalization as an instrument for achieving "genuine" industrial democracy. T h e keyword is "self-government"; and, as J. Delors (1978) puts it, "at the base of the pyramid, in the enterprise, the essential self-government function should be assigned to workers and management to extend the idea of community life". T h e basis of such ideas seems to be a sort of mystical belief that nationalization might substitute co-operation for conflict and competition, a belief which has an old tradition in the socialist discussions of national7 ization ) .

Another allocational argument favors the entrance of public enterprises into competitive markets to maintain or restore decentralization of political and economic control. T h e public enterprises are conceived as centers of largely independent decision making authorities orented towards welfare optimization instead of profit maximization. Such ideas influenced the French nationalization activities in 1982 and the Labour Party Green Paper (1973) b) T h e basic distributional 9 \ argument in favor of nationalization stresses the more equal distribution of incomes or wealth which may be brought about by switching from private to public ownership.

W e could expect the size of the public sector to be endogenously determined, depending on the demand for public supply. This idea could be handled by a theory of nationalization which explicitly gives consumers and private firms the option to decide whether they prefer public or private compliance with their demand. T h e typical economic theory of public enterprises excludes this problem. T h e models assume there axe public enterprises acting according to some given technology. Consumers and private firms axe not given the option to establish or abolish public production; they are only given the option to buy or not to buy publicly supplied goods, and to sell or not to sell to existing public enterprises.

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The Dynamical Theory of Gases. Third Edition. by J.H. Jeans, LL.D., F.R.S.

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