Public sector

Last updated

Employment in the UK Public Sector, December 2013 Employment in the UK Public Sector, December 2013.png
Employment in the UK Public Sector, December 2013

The public sector (also called the state sector) is the part of the economy composed of both public services and public enterprises.


Public sectors include public goods and governmental services such as the military, law enforcement, infrastructure, public transit, public education, along with health care and those working for the government itself, such as elected officials. The public sector might provide services that a non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service. [1] Public enterprises, or state-owned enterprises, are self-financing commercial enterprises that are under public ownership which provide various private goods and services for sale and usually operate on a commercial basis.

Organizations that are not part of the public sector are either part of the private sector or voluntary sector. The private sector is composed of the economic sectors that are intended to earn a profit for the owners of the enterprise. The voluntary, civic or social sector concerns a diverse array of non-profit organizations emphasizing civil society.


The organization of the public sector can take several forms, including:

A borderline form is as follows:


Infrastructure includes areas that support both the public's members and the public sector itself. Streets and highways are used both by those who work for the public sector and also by the citizenry. The former, who are public employees, are also part of the citizenry.[ citation needed ]

Public roads, bridges, tunnels, water supply, sewers, electrical grids and telecommunication networks are among the public infrastructure.


Libertarian and Austrian economists have criticized the idea of public sector provision of goods and services as inherently inefficient. [3]

"Any reduction of the public sector, any shift of activities from the public to the private sphere, is a net moral and economic gain."-Murray Rothbard, The Fallacy of the Public Sector [3]

Libertarians and anarcho-capitalists have also argued that the system by which the public sector is funded, namely taxation, is itself coercive and unjust. [4] However, even notable small-government proponents have pushed back on this point of view, citing the ultimate necessity of a public sector for provision of certain services, such as national defense, public works and utilities, and pollution controls. [5]

See also

Related Research Articles

Anarcho-capitalism is a political philosophy and economic theory that advocates the elimination of centralized states in favor of a system of private property enforced by private agencies, free markets and the right-libertarian interpretation of self-ownership, which extends the concept to include control of private property as part of the self. In the absence of statute, anarcho-capitalists hold that society tends to contractually self-regulate and civilize through participation in the free market which they describe as a voluntary society. In a theoretical anarcho-capitalist society, the system of private property would still exist and be enforced by private defense agencies and insurance companies selected by customers which would operate competitively in a market and fulfill the roles of courts and the police. Anarcho-capitalists claim that various theorists have espoused philosophies similar to anarcho-capitalism. However, anarcho-capitalism was developed in the 20th century and the first person to use the term anarcho-capitalism was Murray Rothbard. Rothbard synthesized elements from the Austrian School, classical liberalism and 19th-century American individualist anarchists and mutualists Lysander Spooner and Benjamin Tucker while rejecting their labor theory of value and the anti-capitalist and socialist norms they derived from it. Rothbard's anarcho-capitalist society would operate under a mutually agreed-upon "legal code which would be generally accepted, and which the courts would pledge themselves to follow". This legal code would recognize contracts, private property, self-ownership and tort law in keeping with the non-aggression principle.

<i>The Machinery of Freedom</i> 1973 nonfiction book by David D. Friedman

The Machinery of Freedom is a nonfiction book by David D. Friedman that advocates an anarcho-capitalist society from a utilitarian/consequentialist perspective.

Market economy Type of economic system

A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.

A state-owned enterprise (SOE) or government-owned enterprise (GOE) is a business enterprise where the government or state has significant control through full, majority, or significant minority ownership. Defining characteristics of SOEs are their distinct legal form and operation in commercial affairs and activities. While they may also have public policy objectives, SOEs should be differentiated from government agencies or state entities established to pursue purely nonfinancial objectives.

Public finance Study of the role of government within the economy

Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. The purview of public finance is considered to be threefold, consisting of governmental effects on:

  1. The efficient allocation of available resources;
  2. The distribution of income among citizens; and
  3. The stability of the economy.

Libertarian theories of law build upon classical liberal and individualist doctrines.

Geolibertarianism is a political and economic ideology that integrates libertarianism with Georgism.

State ownership Ownership of an industry, asset, or enterprise by the state or a public body representing a community as opposed to an individual or private party

State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community as opposed to an individual or private party. Public ownership specifically refers to industries selling goods and services to consumers and differs from public goods and government services financed out of a government's general budget. Public ownership can take place at the national, regional, local, or municipal levels of government; or can refer to non-governmental public ownership vested in autonomous public enterprises. Public ownership is one of the three major forms of property ownership, differentiated from private, collective/cooperative, and common ownership.

Public–private partnership Public project or service which is financed and operated through a partnership of government and one or more private sector companies

A public–private partnership is an arrangement between two or more public and private sectors of a long-term nature. Typically, it involves private capital financing government projects and services up-front, and then drawing profits from taxpayers and/or users over the course of the PPP contract. Public–private partnerships have been implemented in multiple countries and are primarily used for infrastructure projects. They have been used for building, equipping, operating and maintaining schools, hospitals, transport systems, and water and sewerage systems.

Free-market anarchism Branch of anarchism that advocates a free-market system

Free-market anarchism, or market anarchism, also known as free-market anti-capitalism and free-market socialism, is the branch of anarchism that advocates a free-market economic system based on voluntary interactions without the involvement of the state. A form of individualist anarchism, left-libertarianism libertarian socialism and market socialism, it is based on the economic theories of mutualism and individualist anarchism in the United States. Left-wing market anarchism is a modern branch of free-market anarchism that is based on a revival of such free-market anarchist theories. It is associated with left-libertarians such as Kevin Carson and Gary Chartier, who consider themselves anti-capitalists and socialists.

Economic system System of ownership, production and exchange

An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes and patterns of consumption that comprise the economic structure of a given community.

Anarchist economics is the set of theories and practices of economic activity within the political philosophy of anarchism. Anarchists are anti-authoritarian anti-capitalists, with anarchism usually referred to as a form of libertarian socialism, i.e. a stateless system of socialism. Anarchists support personal property and oppose capital concentration, interest, monopoly, private ownership of productive property such as the means of production, profit, rent, usury and wage slavery which are viewed as inherent to capitalism.

The nature of capitalism is criticized by anarchists, who reject hierarchy and advocate stateless societies based on non-hierarchical voluntary associations. Anarchism is generally defined as the libertarian philosophy which holds the state to be undesirable, unnecessary and harmful as well as opposing authoritarianism, illegitimate authority and hierarchical organization in the conduct of human relations. Capitalism is generally considered by scholars to be an economic system that includes private ownership of the means of production, creation of goods or services for profit or income, the accumulation of capital, competitive markets, voluntary exchange and wage labor which has generally been opposed by anarchists historically. Since capitalism is variously defined by sources and there is no general consensus among scholars on the definition nor on how the term should be used as a historical category, the designation is applied to a variety of historical cases, varying in time, geography, politics and culture.

The non-aggression principle (NAP), also called the non-aggression axiom, is a concept in which aggression, defined as initiating or threatening any forceful interference with either an individual or their property, is inherently wrong. It is considered by some to be a defining principle of libertarianism in the United States and is also a prominent idea in anarcho-capitalism and minarchism. In contrast to pacifism, the NAP does not forbid forceful defense. There is no single or universal interpretation or definition of the NAP as it faces several definitional issues, including those revolving around intellectual property, force, abortion, and other topics.

Right-libertarianism, also known as libertarian capitalism or right-wing libertarianism, is a political philosophy and type of libertarianism that supports capitalist property rights and defends market distribution of natural resources and private property. The term right-libertarianism is used to distinguish this class of views on the nature of property and capital from left-libertarianism, a type of libertarianism that combines self-ownership with an egalitarian approach to natural resources. In contrast to socialist libertarianism, right-libertarianism supports free-market capitalism. Like most forms of libertarianism, it supports civil liberties, especially natural law, negative rights and a major reversal of the modern welfare state.

<i>For a New Liberty</i> 1973 book by Murray Rothbard

For a New Liberty: The Libertarian Manifesto is a book by American economist and historian Murray Rothbard, in which the author promotes anarcho-capitalism. The work has been credited as an influence on modern libertarian thought and on part of the New Right.

A private defense agency (PDA) is a theoretical enterprise which would provide personal protection and military defense services to individuals who would pay for its services. PDAs are advocated in anarcho-capitalism as a way of enforcing the system of private property.

Public/social/private partnership

Public/social/private partnerships are methods of co-operation between private and government bodies.

Taxation as theft

The position that taxation is theft, and therefore immoral, is found in a number of political philosophies considered radical. It marks a significant departure from conservatism and classical liberalism. This position is often held by anarcho-capitalists, objectivists, most minarchists, right-wing libertarians, and voluntaryists.

Left-wing market anarchism is a strand of free-market anarchism and an individualist anarchist, left-libertarian and libertarian socialist political philosophy and market socialist economic theory stressing the value of radically free markets, termed freed markets to distinguish them from the common conception which these libertarians believe to be riddled with statist and capitalist privileges. Proponents of this approach distinguish themselves from right-libertarians and strongly affirm the classical liberal ideas of self-ownership and free markets while maintaining that taken to their logical conclusions these ideas support anti-capitalist, anti-corporatist, anti-hierarchical and pro-labor positions in economics; anti-imperialism in foreign policy; and thoroughly radical views regarding socio-cultural issues. Key theorists in this area include contemporary scholars such as Kevin Carson, Gary Chartier, Charles W. Johnson, Roderick T. Long, Chris Matthew Sciabarra, Ryan Neugebauer, Sheldon Richman and Brad Spangler.



  1. "public sector". Investorwords, WebFinance, Inc. 2016.
  2. "The Center for Responsive Politics." Center for Responsive Politics, 16 May 2017. Web. 11 June 2017.
  3. 1 2 Rothbard, M. N. (1961). The fallacy of the ‘public sector.’. The Logic Of Action Two, Application and Criticism from the Austrian School.
  4. Murray N. Rothbard (May 1998). "The Moral Status of Relations to the State", chapter 24 of The Ethics of Liberty. Humanities Press 1982, New York University Press 1998. ISBN   978-0-8147-7506-6.
  5. Ellickson, R. C. (2017). A Hayekian Case Against Anarcho-Capitalism: Of Street Grids, Lighthouses, and Aid to the Destitute. NYUJL & Liberty, 11, 371.