I don't think even the most well-intentioned state have the incentives to properly allocate resources in the market. Usually, when state-owned industries fail, the taxpayer suffers, so the administration has little to no incentive to actually do good in the long run.

It's not a 1D spectrum. You can have laissez-faire arrangements that still preclude massive concentration of capital (and thus effectively gut capitalism) without going all in on public ownership of everything. The key thing to remember is that private property rights themselves require some kind of government to maintain by using force when necessary - i.e. the existence of private property is inherently a step away from true "laissez-faire". Thus the government doesn't need to aggressively collectivize anything to avoid concentration of capital; it just needs to refuse to protect such concentrated capital.

> somewhere in-between laissez faire capitalism and mandatory state-ownership of all industry >

Yes, which describes both the US and Europe. It just comes down to where to fall on that spectrum.