The Economic Concept of a Public Utility

SOME justification may seem to be needed for my choice of a subject for this paper, since the term public in the strictest sense cannot be considered to refer to an economic concept at all. Primarily, a public is whatever is defined as such by American statute law. The case for a concept of this kind cannot be adjudicated by economists. But the term public utility is not restricted to this legal meaning. We meet it in official papers referring to English industries,2 in which context the declarations of American law are obviously irrelevant. Behind the legislative concept of public utilities lies in fact a political concept, which may be defined as the idea that certain industries need special Government regulation. Even in America, an industry miglht be a public in this sense without being a public in law. But this political concept is in its turn based upon the idea that there are certain industries in which the ordinary restrictions of individualism are insufficient to ensure the appearance of satisfactorily individualistic results. Thus one term is forced to do duty for three related but quite distinct concepts. When the law of Illinois says that the owner of any property within the State used for the production of electricity is a public utility, it is using the term in the fifst of these senses. When the English Labour Party says that the iron and steel industries ought to be reorganised as public utilities,3 it is using the term in the second or political sense. And when Professor Glaeser says, the world over, public utilities are now considered a thing apart from other commercial enterprises,4 he seems to be using the term in the third or economic sense. It is with the economic concept of public utilities that we are con1 This paper was read, practically in its present form, at a meeting of the Economic Club on February gth, I932. 2 E.g., The Board of Trade Jouynal Supplement, October 6th, 1927. 3 Election Programme, October 1931. 4 Outlines of Public Utility Economics, 1927, p. 4

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• Regulation and the redistribution of income and wealth

  Open Access•W T Stanbury, George Lermer•Canadian Public Administration•1983

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