Tuesday, December 25, 2018

Private and Public Myths (1988)

From the December 1988 issue of the Socialist Standard

The Left-Right divide in this country and many others tends to focus on questions about just what should be in the public domain and what should belong in the private sector. In other words, about the extent and nature of the state's role.

In Britain since 1979 the Government's policies have been aimed at "rolling back the frontiers of the state". The Labour Party however has a preference for certain activities and issues being under the control of Government. not in private hands but in the public sector.

A similar political divide exists in many other countries, where the extent of the state's intervention in the economy and involvement in welfare services distinguishes parties of the Right from those of the Left. This key division on how to run the capitalist system has to be of interest to us.

This is not just because policies of state intervention in the economy or commitment to state responsibility for welfare and social services are normally labelled "socialist" both in the media and in the rhetoric of capitalist political parties. We have frequently explained that socialism is very different from these allegedly more efficient or more humane forms of capitalism.

Any arrangement which leaves most of us having to sell our labour-power in order to scrape a living is not socialism. This point is more than a mere question of the "correct'' definition of yet another political issue. The claim by Labour and other reform parties to have socialist policies has the effect of establishing as fact what is in reality a propagandist myth. This bogus claim bypasses and blurs the essential differences between capitalism and socialism: wage-labour, commodity production, class struggle — all these characteristics of capitalism, however "reformed" and whatever the extent of state control of the economy, will have no place in a socialist society.

Having said that, it is still worth giving some thought to the argument for state or "public" control of certain activities. The case for justifying "public" as opposed to "private" ownership is mostly based on the belief that the activity in question is simply too important to be left in private hands.

Foreign policy, for instance, is normally regarded — even by Thatcherites — as definitely a matter for governments, not the private sector. The really shocking aspect of Irangate was neither the misuse of public funds nor the constitutional problem of the President acting illegally. The "most chilling aspect of the scandal (was) the revelation of an off-the-shelf, stand-alone, self-financing entity which was in the process of being set up to conduct covert foreign policy as private enterprise" (The Economist, 24-30 September 1988). For The Economist, this was incomparably worse than trading arms for hostages, diverting funds to the Nicaraguan Contras, flouting Congress and Senate decisions. or brazen lying about the whole business. The sacrosanct division between what must be public and what ought to be private, if flouted, provokes extremely strong gut reaction.

Take these other examples of the view that certain matters are best in the public sector: water, education and the road system. In Victorian Britain urban water supplies were polluted and cholera epidemics were rife. The expensive and unprofitable task of supplying clean water for major population centres was undertaken by the government.

Similarly the necessity of educating the masses — which the profit-seeking private sector and under-financed religious and charitable organisations were evidently unable to do — became a function of Government, paid for as a collective cost from taxation. The construction and maintenance of highways, tunnels and bridges is also in modern capitalism typically regarded as a public sector service. Regardless of whether the work is carries out by local authorities' Highways Departments or is contracted out to construction and civil engineering firms, it is paid for as a collective necessity from taxation.

In each case the central argument is that water, education, highways and the like are of enormous public importance; so useful and valuable as to be thought essential. Because of this, such matters cannot be trusted to profit-seeking entrepreneurs. The cynic is said to be a person "who knows the price of everything and the value of nothing".

This is also true of the average Board of Directors, and especially true of accountants, company secretaries or auditors. For them the bottom line is what counts: their function is to ensure that their capital investments earn a profit. They are not in the business to serve the community unless, by coincidence, this can be done without harming profits.

In today's political climate it is argued that such public services as water supply should be privatised and made to operate profitably. Privatisation of water authorities means, as film director David Puttnam argues, that "rivers are becoming commodities. A free gift of nature is being converted into a commodity from which you can make profits" (BBC 1, 2 October 1988).

Privatisation is essentially a process by which control of many socially or economically important activities is transferred from elected bodies or organisations responsible to Parliament, to private companies responsible to the interests of their private or institutional shareholders.

Water supply however is the most basic and essential economic activity possible in terms of human needs. Physically we cannot survive a week without water. Falling levels of water in rivers or reservoirs have harmful effects on agriculture, requiring irrigation, on power supply which can be dependant of water; and on many industrial processes.

Inefficiency or cost cutting in water supply will have dangerous consequences for the health of the community, as was recently demonstrated in the West Country. Cost cutting on labour meant that a lorry driver delivered a load of chemicals to an unattended waterworks and poured the chemicals into the wrong tank. This caused serious pollution of the water supply. Many people suffered ill effects; some animals died, as later did fish in the rivers to which the Board diverted their poisoned water. It is expected that the commercial pressures on the water supply industry after privatisation will make pollution control less effective.

However the problem is not so much the issue of private as compared with state control. The real problem is that whoever runs any sort of service or industry within the capitalist economy is operating under pressure to do the job as cheaply as possible. Water supply, health services, education, housing: whether public or private sector, all in the end are subject to capitalist priorities.

Those who believed that nationalised industries (coal. British Rail, electricity supply) would operate free from commercial pressures were mistaken. Costs had to be kept low and workers, while spared some of the worst excesses or private ownership (after nationalisation coalmining accidents were reduced, for example), were still exploited wage slaves, having little say in how the industry operated and very little control over their working conditions.

Workers in nationalised organisations also had a significant disadvantage in pay negotiations. In times of inflation postwar Governments imposed "pay policies" or wage freezes. Public sector employees bore the brunt of such policies. If they went of strike in protest at their falling wage rates, they were vilified by Westminster politicians — Tory and Labour alike — for "holding the nation to ransom". From being "the backbone of the nation", "salt of the earth" and soon, they were denounced as greedy and lazy, a thoroughly bad lot, and obviously very unpatriotic. This happened with the firemen, miners and, more recently, nurses.

There is then no reason for the working class to take sides on this issue. Whether an industry is nationalised or de-nationalised is relatively unimportant. Workers always have to organise themselves to maintain a reasonable standard of living and to protect themselves from disagreeable and too often dangerous working conditions. In the nationalised industries, just as in the private sector, trade union organisation is essential.

But there are lessons to be learnt from the never ending disputes over nationalisation and privatisation. Matters which are thought of paramount importance are not trusted in the hands of any section of the capitalist class: they have to be managed collectively. The only way this can be arranged within the capitalist system is for control and ownership to be vested in the state, which will then act as "the collective capitalist", in Engels' phrase.

Also, this devolving of control to the state indicates clearly for all to see that the capitalist enterprise, operating along commercial lines, being in business to make profits, is not in the business of answering the needs of society. If there is a conflict between doing something useful and something profitable, the argument always comes out on the side of profit. Anything a private company does, which looks both unprofitable and socially beneficial is either a miscalculation or, more likely, a public relations stunt.

The point is that the capitalist system is not in business to make people happy, to build houses for homeless people to live in. to produce food for hungry people, or to care for the sick, the handicapped the old and the very young. It is in business to make profits to keep accountants and shareholders happy. Any coincidence with socially necessary or desirable activities is just that — a coincidence. That is why such matters are not trusted to the commercial self-interest of the private sector. However, reformers who argue for public control or state responsibility for such matters appear ignorant of the economic pressures which the system imposes even on the "collective capitalism" the state. These pressures force governments to provide as cheaply, as stingily as possible such welfare for the workers. The result, as Galbraith put it. is "private affluence, public squalor."

The heated question of whether this or that concern should be privatised or run as a state concern is for the working class a non-issue. The real issue is whether we actually want a society which operates according to an accountant s sense of values or one which operates in terms of satisfying human needs.

There is a real conflict, a tension, in capitalism between what is perceived as profitable, and therefore feasible, and what is known to be necessary, desirable and useful but unprofitable, and therefore impractical That is why there are homeless, hungry and unemployed people. And that is why socialists detest the capitalist principle which puts profits before people. It is time to end this system and create a better world.
Charmian Skelton

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