Classic socialism advocated state ownership of the “commanding heights” of the e

Question

Classic socialism advocated state ownership of the “commanding heights” of the economy. We can assume these are industries with huge returns to scale (steel production is a traditional example). Can you think of any reasons why non-socialist economists would think this is not a crazy idea? What are some dangers? (not the obvious political ones--assume that the nationalized firms are run by honest and dedicated public servants who will set prices according to the world market and sell to all customers, pay workers world standard wages, etc. The historic example would be the UK after World War II, which did a lot of nationalization of this sort).

Explanation / Answer

The leading industries which are critical in running and growing an economy are commanding heights of the economy so most of the social economist would find it their first choice that these crucial industries should be owned and run by government bodies keeping in mind the public welfare associated with it and the type of heavy investment these companies need would be easier for government arrange such large funds.

But a non-social economists will not see this as one of the best idea as they have few reasons showing the disadvantages of state-owning of commanding heights like:

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