openEconomy

Privatisation of governance: a multi-stakeholder slippery slope

A tight overlap between economic and political elites creates a massive push to shrink the public sector to accommodate private interests. This amounts to an abdication of state responsibility and a betrayal of the social contract between citizens and the state.

Mandeep Tiwana
2 June 2014
Largest Brazilian stadium will host the Fifa World Cup 2014 final match

Largest Brazilian stadium will host the Fifa World Cup 2014 final match. Demotix/Marcelo Fonseca. All rights reserved. As the world debates the new set of internationally agreed sustainable development goals, influential politicians, technocrats and captains of industry are humming a common tune. They are busy promoting ‘public-private partnerships’ as the panacea to fix governance failures, and as the silver bullet for the post 2015 agenda. Although, innocuous and even benign sounding, public-private partnerships are becoming a pathway - supported by international financial institutions and large corporations - to entrench neo-liberal economic orthodoxy, causing the state to withdraw from its basic responsibilities.    

CIVICUS’ 2014 State of Civil Society Report which draws on inputs from some of the world’s leading civil society voices, warns about the risks of global governance being determined by influential private interests. Already, from Istanbul to Sao Paolo and beyond, mass dissent is being expressed against the forces of market fundamentalism, revealing deep-seated anger against the encroachment of the private sector into the public sphere.

In Turkey, the neo-liberal authoritarianism of Prime Minister Erdogan’s government and the selling of power stations, bridges and state-owned banks to private interests are continuing to fuel resentment against elites seen to manipulate the public sphere towards their own ends. In Brazil, overspending on the development of stadiums for the 2014 football World Cup at the perceived expense of public education, healthcare and mass transportation on which the majority of the population depend, continues to ignite public resentment in a country riven by sharp inequalities. From Kuala Lumpur to Santiago, people are demanding more than just economic growth.

As the contributions to CIVICUS’ report reveal, big businesses are increasingly eyeing the public sector as an avenue for profit making. And governments are only too willing to outsource basic responsibilities to the private sector, increasing the gap between those who are able to pay for monetised access to public services and those who cannot. Apparently, more people are being left behind than are being taken along by this new model of governance.

According to Credit Suisse, a leading financial services company, the richest 10% of the world’s population own 86% of the globe’s wealth. Barely 1% of global wealth is owned by the bottom half.  We see in almost every country of world, politicians with extensive business interests and business leaders dabbling in politics to protect and advance their interests. This tight overlap, indeed collusion between economic and political elites is creating a massive push to privilege big business in governance discourse. Oxfam affirms that the current concentration of wealth in the hands of a few leads to ‘rigged political rules’ to favour the elite. 

The issue of privatisation of the post 2015 development agenda continues to be a major worry for concerned citizens and their organisations. The UN High Level Panel of Eminent Persons’ report on the Post 2015 Agenda strongly favours ‘public-private partnerships’ and the need to create an enabling business environment. Bread for the World, a globally active relief and development agency has pointed out that many of the key channels enabling the corporate sector to influence the post 2015 agenda were not established through regular intergovernmental processes.

At an event organised in April 2014 in New York, several civil society leaders raised the alarm about the privileged access corporate players may be getting over international norm setting and about the possibility of official development assistance being channelled to fat cat corporations. IBON International has raised alarm about private entities in developing countries being encouraged to play managerial roles in sectors previously reserved for public agencies. These include power generation, water supply, sanitation and waste management as well as railway stations and airports.

Notably, ‘multi-stakeholder partnerships’ is becoming the new phrase of choice to disguise increasing private involvement in development activities. A common argument used is that the public sector is unwieldy, therefore in need of being made effective and efficient through privatisation. There are a number of challenges to this line of thinking. First, the notion of making the public sector fit for purpose through better governance mechanisms is discarded out of hand. The ingrained assumption that the private sector brings greater efficiency needs to be scrutinised and tested more. The private sector enters into partnerships not out of charity but in order to turn a profit, thereby passing on an additional cost to the public.

Second, moving public services into the private sphere reduces the potential for accountability to be exercised by citizens. It hives off parts of the public sphere from direct scrutiny and also introduces the potential for corruption in deal making. Third, partnership in delivery breeds elite influence over policy which ultimately works to the detriment of majority interests. The potential for insider access that allows private partners direct access to policy makers is a recipe for increased nepotism in society. 

Finally, the on-going rapid shrinkage of the public sector to accommodate private interests amounts to an abdication of state responsibility and indeed betrayal of the social contract between citizens and the state. Taxes and other forms of revenue are paid to governments in the expectation that quality essential services will be provided to citizens at reasonable cost. When these are outsourced and allowed to become another avenue for profit by elite interests, there is bound to be public discontent.

It’s already playing out on the streets. But are our leaders listening? 

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