Privatisation doesn't mean freedom

For over thirty years the right has dominated the terms of debate on the economy. Privatisation, free market economics, the primacy of business and financial interests have all been key markers for the hegemony of elite vested over that of the common good. This has not been without opposition or resistance of course; from the Zapatistas and the alter-globalisation movement of the 1990s, to the Social Forums of the 2000s and the more recent protests against IMF led austerity and Occupy Wall Street.

I would argue that the dominance of the right is not because it has the best tunes to play. Privatisation policies have never been as popular as is often claimed and across the world are increasingly discredited, despite their continued advocacy by the IMF, OECD and the pro-competition elements of the European Commission. These powerful institutions are also bolstered by a compliant and business friendly media which takes too much of the neoliberal narrative at face value rather than applying a more trenchant critique. This hegemony can best be explained by a triumph of political narrative over economic reality. Privatisation suits the wealthy; it opens up vast areas of the public realm for private profit and rent-seeking activities, whilst universally leaving public services, the needs of the environment and the public worse off.

We know all this on the left, as do most users of privatised services who would not describe themselves as socialists. Hence the stubborn continuing support for public ownership; in a poll of British voters carried out by think tank CLASS, huge majorities favoured the renationalisation of energy, water and rail sectors with a majority of Conservative voters also in favour of the latter. We also know that the onward march of neoliberalism, and further privatisations in response to the financial crisis across Europe, are further concentrating economic decision-making power in fewer hands.

To deal with this situation, those on the left need to change the narrative, rather than forever being in a defensive mode against right wing pro-market attacks on the state and public ownership for their past failings (even when this is a simplistic caricature of a more complex reality!). This is easier said than done, but the place to start is with fresh thinking about how public ownership in the twenty first century can learn the lesson from the twentieth century’s two failed dogmas of unfettered free market capitalism and totalitarian forms of centralised state socialism.

This project has already begun and there are some interesting new ideas emerging about how we can develop more democratic, egalitarian and environmentally sustainable forms of economy as an alternative to the current political economy of neoliberalism. As part of this debate, I have written a report for the think tank CLASSi that argues for a range of hybrid forms of collective ownership geared to social and environmental ends rather than private profit. The report draws from a range of examples around the world to advocate a diversified mixed economy geared towards democratic, participatory and decentralised public ownership rather than either state centralisation or the growing corporatisation and financialisation of the economy currently on offer.

A key theme underpinning my argument in the paper and expounded at greater length in a recent book,ii is the need to tackle head on Fredreich Hayek’s dominant and pervasive narrative of the superiority of markets, private ownership and the heroic individual as defenders of democracy and liberty against the perceived evils of state centralisation, ownership and central planning. The latter were associated with growing tyranny and a new “road to serfdom” and have in different forms been effectively rolled out by opponents of state intervention ever since. Hayek’s thesis is largely discredited, given the vast inequalities of global capitalism and the increasing centralisation of power produced by free markets. The market and private ownership are no more defenders of democracy and liberty than Soviet style state planning. But his demonization of all things public and reification of all things private remains deeply rooted in the collective consciousness.

To counter Hayek from the left, we need to emphasise the way that collective and more participatory forms of ownership can provide better defences of freedom and liberty than more privatised forms. In particular, the CLASS paper argues that there is a need for a more democratic approach to the ownership and management of basic resources and network infrastructures which re-distributes economic decision-making power beyond its capture by financial, corporate and foreign interests. New forms of public ownership that involve both the state and non-state forms such as worker and consumer cooperatives working in tandem are the best way to ensure an economy designed to serve social needs and environmental concerns over private gain.

i Cumbers, A. 2014 Renewing Public Ownership: Constructing a Democratic Economy in the Twenty-First Century (CLASS).

ii Cumbers, A. 2012 Reclaiming Public Ownership: Making Space for Economic Democracy (Zed).

This article is part of the Modernise: de-privatise series.

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This article is part of the Modernise: de-privatise series.