Everything for sale?

Last September, I wrote with some indignation about a Romanian journal labelling an article I wrote for them "left-wing”. Despite my work as a Labour Party Councillor in the 1970s and 1980s (the last 5 years on a full-time basis), I was always opposed to its statist bias. Put this down to the influence of Karl Popper, Ivan Illich and Paulo Freire. As a result, my main contribution to politics in the West of Scotland was to drive an agenda of support for community structures and inititatives. When the Labour party had its left-right split after its 1979 defeat, I was left feeling homeless – with neither option attracting me. And my suspicion of some attitudes in state professionalism and ambivalence about public sector trade unionism led me to view with some sympathy some of the Thatcher policies on contracting-out and privatisation of public services.

I feel, therefore, I can be fairly objective in assessing the results of the privatisation which has swept the globe in the past 30 years. With the exception of gas and electricity, I think the results have been disastrous. This post is written for open-minded readers who want some guidance on useful material on the issue - particularly from the British experience (which has, after all, been at it for 30 years now).
For how privatisation of water, social care etc have panned out I mentioned recently the Public Services International Research Unit of the University of Greenwich which has been giving great briefings on the consequences of privatisation globally for more than a decade.

Privatising the UK railways is perhaps the greatest disaster story – with subsidies to the private rail and track companies being almost three times (at constant prices) the subsidies which british Rail received – and the level of consumer comfort, convenience and satisfaction at an all-time low. Christan Wolmar is the great historian of UK rail privatisation

The English academic, Julian le Grand, was one Tony Blair’s advisers and promoter of the idea of releasing market forces into British social services such as health and education.
Perhaps the text which best captures the hopes and fears is The House of Commons Select Committee on Public Administration 2005 report - Choice, Voice and Public Services and, particularly the 190 pages of evidence it received from both sides of the ideological fence.

The most prolific writer on (and critic of) the privatisation of the british health system is Allyson Pollock – whose most recent book on the subject is NHS Inc. She also blogs occasionally about the issues. The UK government is now attempting (for England only) the most dramatic set of changes ever seen - wcich would effectively dismantle the public Health Service - here is the view of an independent peer (and medic) who was once a Minister of Health.

The role which market mechanisms do now play in education (and might further in the future) can be followed in the second volume of the House of Commons publication mentioned above. An acadenmic treatment is Education Management Organisations and the Privatisation of Public Education: A Cross-National Comparison of the USA and Britain and an angrier statement from a practitioner in Education for sale.
One of the most formidable books I have on my Sirnea bookshelves is Robert Kuttner’s Everything for Sale – the virtues and limits of markets (1996) which received the following accolade from the late economist Robert Heilbroner "I have never seen the market system better described, more intelligently appreciated, or more trenchantly criticized than in EVERYTHING FOR SALE." A New York Times review gave a useful summary of the book -

Mr. Kuttner's target is the total faith in the market-pricing system held by economists of the Chicago school (and by members of two allied scholarly movements in the fields of political science and law -- public choice and law and economics): their idea that whatever is must be optimal if it is the result of the operation of a market. More broadly, Mr. Kuttner wants to dismantle the view that markets essentially work and government interventions essentially don't. By relentlessly piling on example after detailed example of market failure and government success, he gradually makes the idea that all efforts to modulate the market are doomed seem like a blind prejudice that has been holding the nation inexplicably in its grip. If you're ever challenged to name ''just one thing'' the United States Government has ever done right, you'll be fully prepared to answer after reading ''Everything for Sale.'' There are all sorts of necessary social and economic goods, Mr. Kuttner says, that markets can't be relied upon to provide. Free markets underinvest in pure research, so government needs to finance it, or to structure the economy so that private companies can afford to conduct it. Government made us prosperous by creating the higher education system, railroads, canals, commercial aviation and the Internet. Moreover, markets generate problems -- pollution, dangerous products, economic disasters like bank failures -- so they need to be regulated. Regulation does not retard growth: ''The zenith of the era of regulation -- the postwar boom -- was the most successful period of American capitalism.'' Finally, markets fail to provide all citizens with such essentials as health care, physical safety and basic economic security, so these have to come from government.
Demonstrating an impressive mastery of a vast range of material, Mr. Kuttner lays out the case for the market's insufficiency in field after field: employment, medicine, banking, securities, telecommunications, electric power. This material isn't exactly riveting, but it is presented clearly and convincingly enough to qualify as self-improving reading matter. Then he shows, over and over, how his primary villains, academic free-market ideologues, have pushed society in the direction of abandoning carefully constructed solutions to market failures -- solutions that were working quite well.
Mr. Kuttner is an unapologetic social democrat, a believer in America's moving in the direction of a Western European or Scandinavian-style mixed economy, with a bigger Government, higher taxes and stronger unions. One of the strengths of ''Everything for Sale'' is Mr. Kuttner's complete lack of the usual tendency in journalists and policy intellectuals to keep the discussion within the frame of the political possibilities of the moment. He wants to change the debate entirely. He insistently attributes our economic problems to political, not market, failure. For example, American blue-collar workers are underpaid, he says, because it isn't skills they lack but political power. Conversely, the solution to most of the market's deficiencies is not fine-tuning but ''a redistribution of economic and political power.'' As Mr. Kuttner explains (in italics), ''There is no escape from politics

Kuttner’s book deal, however, with the economic arguments. It does not really go into the politics. For that you have to read Colin Leys’s Market-Driven Politics (2001). It was Leys who helped me understand exactly what is meant by the dreadful word "commodification” and his book shows how it started to be applied in the UK in the 1980s to such fields as health and broadcasting. Leys is actually a development economist and most of his material on the internet is therefore on that topic – although an interesting preface to a new book of his called Total Capitalism is available here

The photograph is of Loch Lomond in Central Scotland - a National Park for public benefit and therefore free from development and market forces.