For policy elites in most nations, there are only two alternatives for the provision of public services: State ownership and management (the preferred model of Social Democrats and liberals/progressives) or corporate “privatization” (pushed by neoliberal heirs of Reagan and Thatcher). Commons governance (about which more later) isn’t even on the radar.
There’s little practical difference between state- and corporate-owned services, despite the theoretical difference in ownership. Both are governed by the same top-heavy managerial culture, the same bureaucratic “best practices” and the same high-overhead business model. Both serve the same interests, regardless of whether a particular service is nationalized or “privatized.” Nationalization amounts to “lemon socialism,” in which some input is of vital importance to the interests of capital as a whole but corporation interests either find it insufficiently profitable or have difficulty overcoming the prisoner’s dilemma problems of funding and coordinating it themselves. And “privatization” is just the opposite — lemon capitalism — in which the state’s performance of a function has outlived its usefulness for capital and corporate interests see the opportunity to extract a profit from it (but still with the state’s help, of course).
The two are frequently parts of the same life-cycle. Initially the state creates an infrastructure that’s necessary for capital’s realization of profit. For example, the majority of foreign aid and World Bank loans since WWII have gone to building the transportation and public utilities infrastructure needed to make Western capital’s overseas investments profitable. Quite often public debt is undertaken to fund such infrastructure as the result of collusion between multilateral institutions or corporations and unaccountable elements within the debtor government, without any taxpayer feedback.
Once undertaken the public debt, in turn, serves (much like company store debt in American mining towns) as a lever for enforcing desired behavior on the recipient. Ultimately, if servicing debt becomes too big a burden, it may be used to blackmail governments into adopting neoliberal austerity policies (e.g. the “structural adjustment” programs imposed on much of the developing world, the European Central Bank’s squeeze on Greece, or the corporate coup which put an “Emergency Manager” in charge of Detroit).
The cycle is complete when neoliberal elites use debt from creating the publicly funded infrastructure to blackmail governments into virtually giving away that same infrastructure to the corporate interests it was created to serve in the first place. Such “privatization” typically involves insider deals by which it is priced at a tiny fraction of the cost of creating it, or of what it would cost for those corporations to build it from scratch themselves. In fact governments often spend as much money upgrading the infrastructure to make it saleable as they realize from the sale. And the first order of business for the corporations that acquire these infrastructures at fire sale prices is usually asset-stripping and hollowing out. Finally, far from functioning in a “free market,” newly “privatized” services continue to exist in a web of state protections and de facto monopoly status.
It’s an overall process in which the state socializes operating costs and subsidizes inputs to make capital artificially profitable, and disaster capitalists seize on the resulting fiscal disaster to loot taxpayer-funded assets and subsequently gouge the public.
The principles are basically the same, with minor changes in details, in the kinds of “public-private partnerships” where a service or infrastructure remains state-owned and -funded, but some aspect of service delivery is outsourced to a for-profit corporation (the corporate model of “educational reform” the disaster capitalists imposed on New Orleans is an example). As Cory Doctorow (“Go digital by all means, but don’t bring the venture capitalists in to do it,” The Guardian, Feb. 6) points out in the case of museums, libraries and schools as “market-driven public institutions,”
it’s we, the public, who are the angel investors. We paid to keep the archives growing, to put a roof over the museum, to amass and catalogue all of our nation’s cultural treasures (and the treasures of many other nations). The internet now makes it possible for those institutions to reach wider audiences than ever before, at lower costs than ever before – once their collections are digitised. When Siemens or another big company comes along to digitise our investments, they are the VCs putting in late-stage capital after we’ve borne all the risks, sometimes for centuries.
Both variants of “privatization” are everywhere to be found. In countries like Iraq that are militarily defeated by the United States, or countries like Chile and Russia where US-backed dictators come to power, entire economies are auctioned off to global corporations. The same is true of debtor nations like Greece that international vulture capital has over a barrel, and cities like New Orleans and Detroit that experience one kind of disaster or another that renders them vulnerable.
Chicago mayor Rahm Emanuel, who was born without a sense of ethics, filled a vacancy on the school board with Deborah Quazzo, co-founder of GSV Advisors, a firm that raises venture capital for outsourcing public school functions (“teaching math, educating disabled students, even writing report cards”) to for-profit businesses. (The seat was previously held by billionaire Penny Pritzker when she was appointed to Obama’s commerce department — I’m not sure whether that says more about Emamuel’s Chicago or the Obama administration.)
GSV Advisors’ sister firm, GSV Capital, owns educational technology companies that sell teaching software and extracurricular materials to public schools. Since accepting her school board seat Quazzo has continued to invest in such firms. “In other words, a key decision-maker for Chicago’s public schools makes money when school boards decide to sell off the functions of public schools” (Rick Perlstein, “How to Sell Off a City,” In These Times, January 21).
Fortunately, we have alternatives beyond ownership of public services and resources by governments or corporations. Commons governance of common pool resources (like the lakes and aquifers that city water systems depend on) and social (not state) ownership of public services is one of them. Social or common ownership can be reflected in public utilities organized as stakeholder cooperatives, with the ratepayers themselves directly governing the use of resources and distribution of services.
Fortunately, too, the communities being stripped of their rightful ownership rights by states in collusion with capital aren’t taking it lying down. In Detroit, for instance, the Detroit Water Brigade (an organization former “Emergency Manager” Kevyn Orr denounced as a “tool of Occupy Wall Street,” and accused of putting manufactured victims on display as a gimmick to villify him and the corporate looters) is resisting the corporate parasites who’ve taken over the city water system and put the screws to the public. Detroit Water Brigade, among other things, stockpiles and distributes drinkable water to Detroit residents in danger of dehydration, and likewise distributes portable rainwater collection systems as an alternative for those whose water has been cut off. And it’s conducting a public awareness campaign to shine the light on the scavengers picking Detroit’s carcass clean.
More generally, there’s a movement to reclaim the commons as a public inheritance against both state and capital (“Ciudad furor: The public, the commons and the democratisation of the city,” Provisional University, Dec. 4, 2014):
- People are fighting privatization by refusing to recognise the state as the owner of public services and resources, instead claiming that they belong to the people.
- Where public services are gone, people are organising themselves, locally and democratically, to provide the services they need. This included the provision of healthcare in the Greek example and the provision of housing in the Spanish example, but there are millions of others.
- But there are also forms which kind of bring together both elements of the first two. These are struggles which both defend or demand the public provision of services while at the same time vesting ownership of services in the people and getting people involved in the democratic control of services.
The manufactured struggle between “government” and “business” conceals a real alliance. The claims of business interests to favor “free enterprise” are as fake as government claims to represent the “public interest.” It’s time for us to reject this false choice and instead turn to the real alternative of cooperating with each other in our common interest.
