Last month, I travelled to Inverness to speak at a book festival.

My fare, a Standard 2nd Class Any Time Return bought at a Waverley ticket machine, cost an eye-watering £87.30. On the way up, the train was overcrowded and half the toilets didn't work. On the way back, there was no wi-fi - not that I could have used it because there were no electricity sockets anywhere on the train for me to charge my laptop. This is the age of the train, as disgraced Jimmy Savile used to say on those adverts.

The privatised rail service has done what none of us thought possible 20 years ago: it has made us long for a return of bad old nationalised British Rail. Rail is as clear an illustration of monopoly pricing as you could wish for. There can be no meaningful competition on a service like this which has exclusive control of the means of transportation. It has become little more than a means for private companies to syphon public subsidies while charging rip-off fares - the highest in Europe.

It is emblematic of the fallacy at the heart of the privatisation in Britain: public bad; private good. Capitalism is great at making things like iPads and no one would want to have state-owned farms - though most farms are heavily subsidised and it was our universities that gave us the internet. But it was always a peculiar kind of ideological madness that led successive governments to place services which are natural monopolies into private hands.

The final irony of this policy is that not only is most of our rail system now in foreign hands, much of it is owned by state-owned companies in Germany, France and Belgium. And it's not just rail. Most of our electricity now comes from state-owned companies such as EDF in France. How in heaven's name did a policy that was supposed to make our state industries efficient, and owned by small shareholders, leave us with broke-back monopolies owned by foreign governments?

This is the privatisation paradox that James Meek explores in this polemical but well-informed condemnation of the policy Britain gave to the world, before the world came and bought up Britain. When Margaret Thatcher rose to power in 1979, a third of UK homes were still council-owned. Most of our economic infrastructure was in state hands, including rail, power, telecoms, steel, oil - even banks such as the Trustee Savings Bank. All gone. Sold off after state-funded advertising campaigns. Remember those "Tell Sid" billboards everywhere advising the man in the street of the opportunity to buy British Gas - a company he already owned?

The fire sale is still going on. Royal Mail was privatised last year at a knock-down price which allowed private buyers to make hundreds of millions of pounds in profit within weeks of the sale. Meek is convinced that the National Health Service is next. "The NHS has been commercialised and repeatedly reorganised," he says, "with competition introduced in such a way as to create a kind of shadowing of an as-yet-unrealised private health insurance system." The chapter comparing the health systems of America, Britain and France is fascinating and salutary. Anyone who thinks that Scotland, through devolution, can be immunised from this creeping privatisation is either naïve or disingenuous.

In Margaret Thatcher's fantasy, privatisation was creating a new shareholding democracy called "popular capitalism". But according to Meek, share ownership has become even more exclusive. In 1979, 40% of shares in British companies were held by individuals, he says, but by 2013, this had fallen to under 12%. "The result has been 35 years of denigration of the concept of duty and public service, as well as a squalid ideal of all work as something that shouldn't be cared about for its own sake, but only for the money it brings."

Privatisation and tax cuts were supposed to go hand in hand, but Meek shows that the tax cuts have only benefitted the richest 1%, whose wealth has tripled. The middle classes have been hit by VAT and higher prices for essential services that used to be state-owned - gas, rail, electricity, water. "We are a human revenue stream; we are being made tenants in our own land, defined by the string of private fees we pay to exist here."

It's hard to argue with Meek's central thesis that Britain has been left with "a rapacious culture of private monopoly". However, he admits that while privatisation has been a disaster for the UK, it is not at all clear that all the old state industries could have coped with the competitive pressures of the international markets.

Meek doesn't really explore areas of the economy where privatisation has been a success. Britain actually makes more cars now than in the days of British Leyland. He clearly does not advocate wholesale renationalisation. He has no nostalgia for communism, even though he condemns the bandit capitalist privatisation of the 1990s that left Russia an economic wasteland.

As we all know, capitalism is the best and the worst economic system ever invented. The best, because competition drives down prices and encourages product innovation. The worst, because it leads to wealth inequality and has an inherent tendency to monopoly, as Adam Smith observed 200 years ago. But surely, social democratic governments of Europe have managed the contradictions of capitalism more effectively than we have by keeping key sectors - like rail - in state hands while regulating the rest. That's why France has the TGV and we have Scotrail's expensive, smelly, plodding service to Inverness.