Nationalisation:
| Author | R. H. Thornton |
| Date | 01 March 1947 |
| Published date | 01 March 1947 |
| DOI | http://doi.org/10.1111/j.1467-9299.1947.tb01964.x |
Nationalisation
Administrative problems inherent in a State-owned
emerprise
By
R.
€1.
THORNTON
WHERE the tasks to be Ferfornled by a State-owned instrument can be
discharged with a minimum of initiative, the economies of large-scale plan-
ning
and
wide standardisation may prove to
be
almost pure gain. The problems
of
State-owned undertakings arise substantially when it is proposed to engage in
a
type
of
commercial or industrial enterprise which needs the dynamic of personal
character and direction.
2.
Administratively, the public (Corporation can be virtually identical with
its
co;nmercial counterpart. The various deprtments are grouped under
two,
lhree or four Senior Executives,
and
these
in turn are cuordinated and con-
trolled by
a
Chief Exmtive, usually called in commerce
a
General Manager
or Managing Directw. He is responsible to; and
in
the latter case a member
of, the Directorate or Board, which is concerned primarily with plicy and
finance but, by virtue
of
its
powers
of
appointing its Executives, accepts full
responsibility for the success
or
failure
of
the venture.
3.
The constitution of the Board
of
a
State-owned undertaking has
been
discussed by Herbert IMorriscn in his
“
Socialisation and Transport
”
published
in
1933.
He distinguishes three alternatives,
1.
The Board
of
whole-time experts.
2.
The Board
of
part-time interested persons.
3.
The Board
of
part-time hsinterested persons, which he calls the
“
Corporate Board
of
Ability.”
He :elects the last as
best.
No.
2,
the
“
Board of interested persons”
is
well
trounced
by Morrison
and indeed
has
little to commend it.
It
rests on
a
number
of
fallecies, such as
“
Worker’s’ ccntrol,”
“
Consumers’
control,”
or an ill-digested conception of
democratic Ferfection, which advocates control by a body representative
of
every
inztitution, from Learned Societies to Housewives, which could conceivably claim
any
sort
of
interest
in
the
activities
of
the propsed undertaking. The fatal
defect
of
all such proposals is that
they
fail to ensure the two essential charac-
teristics
of
any governing body, namely functional integrity and a corporate
character and conscience.
No.
3,
the pari-time
“
Corporate Board
of
Ability
”
is selected by Morrison
for just that reason, namely, that it is capable
of
becoming a corporate body,
while, not being compsd
of
“experts,” it can comprix a variety
of
ability
and judgment drawn from other fields of experience and enterpiis:.
Those,
however, who favour
No.
1,
the whole-time Board
of
Experts, attack Morrison’s
selection on the grcund that it must inevitably
be
a dilettante body
d
part-time
amateurs. It is n3 reply
to
this criiicisrn
to
suggest-making them whole-time
instead of part-time amateurs.
If
they served whole-time, either they would not
have enough work to do
to
justify that status, or they would in due course
become
“
experts
”
themselves and the distinction between the two alternatives
10
NATIONALISATION
would merely lapse. The Coal Board,
if
it
be conceived
(I
do not know whether
it
is)
as a Board of whole-time amateurs, however gifted and experienced in other
fields, will be faced with
just
this dilemma.
The case for the part-time Board must clearly be argued on
its
merits, and
these
in
turn must be looked for
in
the
very
fact that its ncmbers are neither
whole-time nor experts. What should these merits be? First, the members
of
such
a
Board can become sufficiently intimate with the undertaking to under-
stand the nature
of
its problems, both domestic and external, while retaining
a
judgment sufficiently independent to be wholesomely critical
of
the way their
own
Executive is handling them. In short, they can see both the wood and the
trees. Second, they can provide the Executive itself with
a
useful sounding board.
New ideas can be tried out on the Board before being risked, at far greater
cost,
upon the public. Third, ‘they
can
do, what only a body of laymen can ever do,
namely, when the expert executives differ among themselves, decide which of
them is to be regarded as right
and
which is wrong. For the idea that a team
of experts is always both
unanimous
and right
is
one
of
those attractive ideas
which exI;erit?nce unfortunately fails to confirm.
Fourth, being prt-time and independent, they can do, what no Board of
experts could readily do, namely, resign.
If,
for example, a State-owned under-
taking were being
so
hampered by Ministerial
‘‘
shadowing
”
or
so
hamstrung by
Treasury control, as
to
stifle all corporate enthusiasm and initiative, the resigna-
tion
of
the Board would bring the issue to a head without implicating the liveli-
hood and careers
of
expert
executives who, in the absence
of
such a Board, would
clearly have
to
do
the
resigning themselves.
As
against these merits, the presurred demerit of arnsteiirishness, attributed
to this
type
of Board, is really based on a misconcepion, and comes very ill from
those who believe in infallible teams
of
experts. For the bogey
of
a
team of first-
class executives being frustrated by
a
Board of inept amateurs
sim~ly
is
not true
to life. The
experts,
if
unanimous,
would make mincemeat
of
the amateurs.
Frustration would be far more likely
to
be felt in the reverze direction.
The issue, therefore, seems
to
be this. Those who advocate a Board
of
experts really advocate no Board at all. They advocate
a
governing bcdy
of
whole-time sFecialist civil servants-a perfectly tenable Fosition. Those who
advocate a part-time Board
of
disinterested
persons,
advocate
a
body which is
alone capable
of
prforming certain functions, including that
d
a
shock-absorber.
If ncie
of
the% functions are useful, there
is
no need
for
such
a
Board. And
their usefulness
can
only be determined when it is
known
how much practical
latitude the undertaking
will
be
allowed
to have both in framing its policy and
in
carrying it out.
If
this is to
be
closely restricted, whether by the formal
pwers
d
its parent Minister or by his personal interest and FreSsure, it is
probable that the functions referred to will have little or no scope for their
fulfilment.
4.
Assuming
the
part-time “Board
of
Corporate Ability”
to
have been
selected, the only variation in its constitution
from
that
of
its
commercial
counterpart commonly recommended is
that
it should have a highly paid whale-
time Chairman. Such a man
(pace
Lord Reith) can hardly exist side by side
with a Managing Director or Chief Executive. He will become the Chief
Executive himself. His whole-‘time status renders
this
inevitable.
It
must clearly
be
his
character and personality which w;ll permeate the organisation. For the
idea that the head figure
of
any vigorous, enterprising undertaking can remain a
self-eflacing round
peg
fitting conscientiously into
a
round hole of identical
dimensions,
is
a fallacy.
If
it
is derived from the admirable tradition
of
self-
effacement found in the administration
of
the Civil Service, then it is derived
from a tradition wholly inappropriate in this context.
11
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