Modernise: de-privatise cached version 17/01/2019 14:49:44 en Why ban local authorities from running bus services? <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Britain's House of Lords is debating a bill which will ban local authorites from running bus services, despite council-run buses being very successful.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="340" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>A Nottingham council-owned bus. Image,</span></span></span></p><p>Across the country, people rely on buses. In England alone there are over 4.5 billion journeys made on buses each year. Buses might seem like part of the furniture and don’t get much attention – but they are vital.</p> <p>Next week the House of Lords will be debating a new Bus Services Bill. This Bill is aimed at reversing the decades of decline in passenger numbers, as passenger numbers have decreased steadily everywhere apart from London. </p> <p>Whilst much will be made of the parts of the Bill that give mayors franchising powers, less is being heard about the clause that aims to ban any more local authorities from running bus companies. In one go, this small clause – clause 21 – robs communities in England of opportunities to access high quality, low cost bus travel, which evidence suggests authorities are well placed to provide. It is unnecessarily ideological and partisan, and needs to be dropped. </p> <p>This isn’t to suggest that bus services should all be provided by councils. Start-up costs and other factors might make it infeasible, but, at the same time, they shouldn’t be banned from exploring the option. Many councils are able to run effective services and maintain high levels of investment, improving passenger satisfaction and comfort, whilst supporting environmental goals and keeping fares down. If the conditions are right, other councils should be allowed to consider this as an option when designing bus services. <a href="">We Own It is campaigning to have Clause 21 dropped from the Bill</a>.</p> <h2><strong>The current state of local authority run bus services</strong></h2> <p>In the UK, there are 12 local authorities providing bus services. These vary in size and scope, from a small service in rural Dumfries and Galloway focusing on school and social services, to large scale operations in large cities including Edinburgh, Nottingham and Reading. </p> <p>Many of these services perform extremely well. In 4 of the last 5 years, local authority run buses have won Bus Operator of the Year. (In 2013, when it was a private operator that won, Reading Buses was runner up.) <a href="#_ftn1">[1]</a></p> <p>As well as this, it’s worth noting that local authority bus operators perform well when it comes to the environment. Again, the awards are indicative. In the 6 years that the environmental award at the UK Bus Awards has been running, local authority providers have received gold awards twice (Nottingham 2015, Lothian 2013), silver awards three times (Nottingham 2014, Reading 2012 and 2013), and bronze once (Reading 2015).<a href="#_ftn2">[2]</a></p> <p>A few examples from across the UK help to demonstrate the success stories of local authority bus companies.</p> <h2><strong>Edinburgh – Lothian </strong></h2> <p>Lothian is consistently one of the best performing bus operators, with a strong record of investment, and increasing passenger numbers. Recently, they won Bus Operator of the Year at the Scottish Transport Awards. They also won Bus Service of the Year, increasing passenger numbers by 50% on route 113. The Bus Services Bill aims to improve passenger numbers – proving local authorities can do this.<a href="#_ftn3">[3]</a>&nbsp; </p><p>Lothian also won gold in the Environment category in 2013 at the national awards for their investment in diesel-electric hybrid buses and retrofitting busses with ultra-low emission exhausts.&nbsp; Lothian continue to invest in cleaner, better transport, and boast one of the youngest, most environmentally friendly fleets in the country.<a href="#_ftn4">[4]</a></p> <h2><strong>Nottingham – Nottingham City Transport</strong></h2> <p>Nottingham is a real success story. As well as boasting one of the highest passenger journeys per head outside London, they have been awarded Bus Operator of the Year award in 2012 and 2014. </p> <p>They were especially praised for recording high investment, high passenger numbers and innovation in service delivery. In 2014 the judges at the Bus Awards said:</p> <blockquote><p>“The company's successful partnership with the local authorities and other stakeholders has enable the business to grow its customer base for 13 years in a row, enabling it to create a virtuous circle of investment, growth, staff training and rising quality – despite the uncertainties caused by economic troubles and the disruption of tramway construction works.”<a href="#_ftn5">[5]</a></p></blockquote> <p>Prior to this they won gold in the environment category at the Bus Awards thanks to the Electric Bus Partnership. This has led to forty-five fully electric buses being used by partners Trentbarton and Nottingham Community Transport. Thirteen more will be running by September 2016, bringing the total electric fleet to 58 vehicles – reportedly the largest fleet of electric buses in Europe. </p> <p>This demonstrates that some of the arguments about local authorities being unable to achieve growth, innovation or investment are misplaced. And the fact that they work closely with the council enables some of the joined up thinking necessary for quality bus services.&nbsp; </p><h2><strong>Reading – Reading Buses</strong></h2> <p>Reading Buses is another example of excellent service delivery by arms-length local authority companies. When they won the 2015 Bus Operator of the Year award they were praised for their “combination of innovation, strong operational performance and award-winning marketing initiatives” which “has delivered growth, strong partnerships and an engaged and well-motivated workforce.”<a href="#_ftn6">[6]</a>&nbsp; </p><p>Much of this is made possible by increased investment. Reading Buses have been able an additional £3 million a year in the bus network (around 12-15% of its annual turnover) because it doesn't pay out dividends to private shareholders. The extra money means better quality buses, and is one reason why more people take the bus in Reading. Reading Buses are also able to maintain services on Sundays and in the evenings, when commercial operators are less likely to provide due to the lower margins.<a href="#_ftn7">[7]</a></p> <p>Passengers seem to agree:&nbsp;“Reading Buses are run by the Council, they are pretty fantastic. The busses are colour coded by route, they are all pretty new and run regularly. I live on the busiest route and there is a bus every 6-8 minutes during peak hours and hourly all night.” <a href="#_ftn8">[8]</a> <strong>Judi Passmoor</strong></p> <h2><strong>Conclusion</strong>&nbsp; </h2><p>All of this suggests that Clause 21 of the Bus Services Bill goes too far. If the government are really intent on improving bus passenger numbers and improving services, other areas should be able to follow in the footsteps of some of the best operators out there. </p> <p>At the very least, all options should be on the table. And that includes local authorities providing bus services through arms-length companies. This can reduce costs, improve passenger satisfaction, and often helps reach environmental goals. Moreover, it can help to ensure joined up service delivery and maintenance of services in the evenings and on Sundays, services which might fail profitability tests in the eyes of other providers. </p> <p>&nbsp;</p> <p>Whilst some of these issues can be avoided with good franchising, enabling local authorities would offer even more benefit for passengers and this option needs to be open to authorities, particularly if other services are failing to deliver on cost, investment, reliability, or other indicators. These companies are often much more likely to be able to do the necessary joined up thinking that can create and maintain comprehensive service delivery, easy to understand fares across an area. </p> <p><em><strong><a href="">Join We Own It to campaign against Clause 21.</a></strong></em></p><hr size="1" /> <p><a href="#_ftnref1">[1]</a> <a href=""></a> </p> <p><a href="#_ftnref2">[2] ibid</a> </p> <p><a href="#_ftnref3">[3]</a> <a href=""></a> </p> <p><a href="#_ftnref4">[4]</a> <a href=""></a> </p> <p><a href="#_ftnref5">[5]</a> <a href=""></a> </p> <p><a href="#_ftnref6">[6]</a> <a href=""></a> </p> <p><a href="#_ftnref7">[7]</a> <a href=""></a> (p.8)</p> <p><a href="#_ftnref8">[8]</a> [8] <a href=""></a> </p> <p>&nbsp;</p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/joe-guinan-thomas-m-hanna/privatisation-very-british-disease">Privatisation, a very British disease</a> </div> </div> </div> </fieldset> <div class="field field-rights"> <div class="field-label">Rights:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> CC by NC 4.0 </div> </div> </div> uk uk Modernise: de-privatise Matthew Bramall Fri, 15 Jul 2016 16:27:38 +0000 Matthew Bramall 103965 at Here’s what publicly owned energy would actually cost – and why the stockbrokers got it wrong <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Renationalising the UK's energy system would pay for itself in ten years or less.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="306" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Loadmaster (David R. Tribble) </span></span></span></p> <p><em>David Hall is a visiting professor at the Public Services International Research Unit of the University of Greenwich. He is a We Own It advisor and will be speaking at </em><a href=""><em>Own the Future: Public ownership in the 21st century on Saturday 7th May</em></a><em>.</em></p> <p>A substantial majority of people want to see the UK’s electricity and gas services in public ownership. We think that the private companies are charging us far too much; we want to move much faster towards generating electricity from renewable sources like wind and solar; and we want the whole system to be transparent and accountable to the public instead of shrouded in corporate secrecy and double-speak. </p> <p>When Jeremy Corbyn supported this view during his leadership campaign in August 2015, the mainstream media didn’t discuss any of these issues – they just insisted we couldn’t afford it. The Daily Telegraph, the Guardian and the Sun all triumphantly headlined a claim from city stockbroker Jefferies that Corbyn’s scheme would cost £124 billion or £185 billion, and we obviously can’t afford that, and so we have to put up with privatised energy for ever. The Sun rounded off its report with another confident claim, that Andy Burnham was now clear favourite to win the Labour party leadership.&nbsp; </p> <p>Unfortunately, the stockbroker’s claim was about as accurate as the forecast of a Burnham victory. A far more realistic estimate is that compensation could cost about £24-36 billion, in return for which we would save over £3 billion every year, mainly by losing the burden of shareholders’ dividends. That’s a return of nearly 10% or more – not a bad investment, by any standards – but it shows one glaring limitation of Jefferies’ analysis: they completely ignore the possibility of any benefits from public ownership. The detailed justification for this estimate is set out in a paper “Public ownership of the UK energy system – benefits, costs and processes”, available from <a href=""><strong>We Own It </strong></a>. I will be talking about the proposal at <a href="">Own the Future: Public ownership in the 21st century on Saturday 7th May</a>.</p> <p>How could the Jefferies estimate be so wrong? They made obvious mistakes about what would be taken into public ownership. They assumed that the public want to buy everything that National Grid and others own, but we obviously don’t want their subsidiary operations in the USA, or elsewhere outside the UK. They also assumed that every one of the companies generating renewable and conventional electricity would be bought, despite the fact that Corbyn explicitly excluded the small generators. They also wrongly assumed that the Big 6 suppliers would have to be bought from their owners. Under EU law as it stands, there is little point buying their supply businesses, when municipal supply companies can be set up in parallel, and, on the basis of German experience, gain half of the domestic market. </p> <p>They also made a basic mistake about the law on compensation. Jefferies assumed that governments are subject to the Stock Market’s takeover rules when bringing activities into public ownership, and have no option but to buy shares at their full market price or even higher – which is simply untrue. The Court of Appeal and the European Court of Human Rights confirmed as recently as 2012 that democracy is paramount in these matters, and so it is for parliament to decide what is fair compensation. Indeed, the 2012 case concerned the nationalisation of Northern Rock, for which the government paid precisely nothing in compensation to its shareholders, and so we now know for sure that, in principle, even zero compensation can be fair. And in the real world, governments and owners negotiate on compensation, so the final settlement ends up being lower than the shareholders’ initial claims – in the case of the renationalisation of New Zealand rail, for example, the final figure was about 2/3 of the original claim.&nbsp; </p> <p>Finally, to make things worse, Jefferies seem to have made some simple mistakes in their arithmetic, but since they refuse to reveal their workings except to “clients and selected journalists”, we have to infer this from a single graphic and a few quotes. Un-transparent guesstimates make for bad maths as well as bad policy.&nbsp;&nbsp; </p> <p><span class="print-no mag-quote-right">public ownership would pay for itself in 10 years or less</span></p><p>The upshot of my report is a more realistic estimate of about £24 billion for the parts of the private companies worth taking into public ownership: a lot of money, but still only a third of what we spent rescuing Royal Bank of Scotland. That figure may well be much smaller by the time of the next election, because the market value of some of the major companies has been falling rapidly, and the value of their coal, oil and gas fired power stations is falling even faster. The savings that would be made from a publicly owned system mean that public ownership would pay for itself in 10 years or less. After that, the savings could be reinvested in lower prices, renewable energy or both. </p><p>Is the proposal just a left-wing fantasy, or do other big countries have public ownership of energy?&nbsp; And can it really be 10% cheaper? Yes it can. Most of the system in France is publicly owned, and in Germany most of the distribution networks are publicly owned, nearly half of all households get their energy from a municipal supplier, and the city of Munich has committed itself to having all the electricity in the city 100% generated from renewables, all generated by the municipality, by the year 2025. Across Europe as a whole, the most comprehensive research on prices found that the price of energy from public sector companies is 20%-30% lower than the price charged by private suppliers; while in the USA, 48 million people get their electricity from public sector companies, at a price which is 12% lower than the private companies charge. </p> <p>The processes involved in bringing services into public ownership are complex. There is a need for wide-ranging open public debate about what should be done, the benefits to users and to public policy on climate change, the financing of the transition and of future investment and operation – and the cost of various options – and critical voices and challenges should be a part of that process. But let’s be clear about this – the Jeffries estimate is wrong, and so is the idea that we can’t have an energy system that puts us ahead of shareholders. Public ownership of energy is possible, affordable and happening in many countries around the world. It’s time to talk about how we can get there.</p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/uk/thomas-hanna-joe-guinan/democracy-and-decentralisation-are-their-watchwords-for-corbyn-and-mcdonn">Democracy and decentralisation are their watchwords: for Corbyn and McDonnell, it’s municipal socialism reinvented</a> </div> <div class="field-item even"> <a href="/ourkingdom/joe-guinan-thomas-m-hanna/dont-believe-corbyn-bashers-economic-case-against-public-owners">Don&#039;t believe the Corbyn bashers - the economic case against public ownership is mostly fantasy</a> </div> <div class="field-item odd"> <a href="/ourkingdom/joe-guinan-thomas-m-hanna/privatisation-very-british-disease">Privatisation, a very British disease</a> </div> </div> </div> </fieldset> <div class="field field-rights"> <div class="field-label">Rights:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> CC by NC 4.0 </div> </div> </div> uk uk Modernise: de-privatise David Hall Mon, 25 Apr 2016 23:00:02 +0000 David Hall 101615 at Don't believe the Corbyn bashers - the economic case against public ownership is mostly fantasy <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Though cowards flinch and traitors sneer, Jeremy Corbyn is putting public ownership back on the political agenda. Time to examine frequent claims that public ownership is inherently bureaucratic and inefficient.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Flickr/ Some rights reserved.</span></span></span></p><p>E.P. Thompson, the great historian of the English working class, <a href=";q=the+enormous+condescension+of+posterity#v=snippet&amp;q=the%20enormous%20condescension%20of%20posterity&amp;f=false">famously warned</a> of the need to rescue our labour movement forebears from “the enormous condescension of posterity.” Today, with Jeremy Corbyn poised to take over the leadership of the Labour Party on a wave of popular acclaim, we can appreciate Thompson’s injunction all the more. Virtually the entirety of the Westminster political class and their hangers-on in the house-trained media have lined up to denounce Corbyn – and the economic ideas he represents – as a ridiculous throwback, a ghost or <em>revenant</em> from Labour’s troubled past who must be exorcized in order that the party may again, as a famous manifesto <a href="">once put it</a>, face the future. Centrist technocrats always fetishize the future – “our comfort zone,” as Tony Blair has <a href="">proclaimed</a> it – not least because, unlike the past, it holds no dangerous lessons. “History teaches,” <a href=";focus=searchwithinvolume&amp;q=history+teaches">Gramsci</a> wrote, “but it has no pupils.”</p> <p>In the last few weeks the struggle has been joined, not only for the future direction of the Labour Party but also for the recovery of historical memory. An ideological ice age is coming to an end, but as the neoliberal permafrost breaks up we should expect great efforts to preserve the power of the economic narratives that have served our masters so well for the best part of four decades. Every myth and threadbare cliché is being dusted off and put to service by a shrieking commentariat unnerved by the prospect of a major breach in the ruling consensus. The <em>Daily Telegraph</em>, abandoning earlier - and childishly obvious - attempts at reverse psychology, now editorialises that <a href="">Jeremy Corbyn must be stopped</a>, not least because “he offers a return to the 70s when he imagines Britain was happier and more equal. Those who struggled to bury their loved ones or climbed through piles of rubbish during the Winter of Discontent remember it less fondly.” </p> <p>First, the evidence shows that Britain actually <em>was</em> a happier and more equal place in the 1970s. 1976, <a href="">according to the New Economics Foundation</a>, was the happiest year on record. And while the Winter of Discontent has become the stuff of legend, it was (as John Medhurst has documented) to a large degree a propaganda device manufactured by the right-wing media. For example, there were in fact only <em>two</em> instances (one in Liverpool, the other in London) of bodies being kept on ice because of strike action. Derek Jameson, the editor of the <em>Daily Express</em> at the time, admitted to politically motivated fabrication: “We pulled every dirty trick in the book. We made it look like it was general, universal and eternal, whereas it was in reality scattered, here and there, and no great problem.” (Medhurst, 2015, 2-3)</p> <p>Brush away the surface vitriol directed at Corbyn and much of the opposition stems from outrage at his temerity in challenging perhaps the most important edict in the neoliberal canon, the automatic superiority of the private over the public. This is especially true when it comes to the ownership of capital. In this credo, public ownership must always be less efficient than private ownership. But even a cursory glance at the record (contemporary and historical) shows that the army of hacks parroting this line haven’t the faintest idea what they’re talking about. In the words of Richard Pryke, whose massive <a href=""><em>Public Enterprise in Practice</em></a> pioneered the disinterested survey of the economics of the nationalised industries, the belief that they underperformed “is a dogma which arose during the first and most difficult years of public ownership, and has lived on to become a serious obstacle to rational inquiry and rational conviction.” (Pryke, 1971, 443-44)</p> <p>For the newly re-emergent British left, stumbling blinkingly out into the sunlight after long hibernation, today’s heroic attempts to overhaul an ossified politics must be accompanied by deep substantive challenges to the official version of history. Only in this way might we regain access to the vast accumulations of learning and experience that once made up the political economy of everyday socialism. There are reasons why, time and again, new generations of activists return to and rediscover the appeal of particular institutional forms and approaches. Not everything has to be created anew, and a careful sifting of the past will uncover powerful lost traditions and practices for the remaking of society and the economy. </p> <p><strong>Public versus private ownership</strong></p> <p>Before turning to the matter of a renewed programme of public ownership, it is worth dispelling the most obvious myth peddled about its economic performance. For this we need to clarify the actual historical record of public ownership, principally in the United Kingdom but elsewhere as well.</p> <p>The nationalisations of the postwar Labour government brought the Bank of England, coal, steel, civil aviation, and all the major utilities into public hands. This was conducted in the teeth of vehement political opposition, including interventions on behalf of the British private sector by the United States government. Nevertheless, by 1951 Labour had reorganised large chunks of British industry and assembled a public sector workforce of 4 million, 18 per cent of the total. A fifth of the economy was in public hands, with the government sector responsible for a third of net fixed capital formation (Saville, 1993, 37-60). It remains today the most radical economic programme ever implemented in Britain. Unfortunately, highly partisan interpretations of the decades that followed, up until the Thatcher privatisations of the 1980s, form the basis upon which widespread claims about the relative merits of public and private ownership in the United Kingdom largely rest.</p> <p>There is no doubt that the political economy of nationalisation in Britain bequeathed a problematic legacy for the left. There were major drawbacks to the form of public ownership adopted. Responsibility for delivering Labour’s nationalisation programme fell to Herbert Morrison, who on the strength of his experience with the London Passenger Transport Board in the 1930s favoured a model of large, top-down, centralised public corporations at arm’s length from democratic control. This dismal managerialism was a far cry from popular calls for worker self-management, while the centralisation involved had the malign effect of supplanting older and more plural traditions of municipal and cooperative ownership (Cumbers, 2012). Just as significantly, the policy framework within which nationalisation took place compromised the profitability of public firms from the outset. </p> <p>To begin with, nationalisation in Britain largely took the form of “lemon socialism,” extending for the most part to industries that had not been particularly profitable in private hands, and for which their owners were richly compensated. HM Treasury doled out £2,555,000,000 to the former owners of nationalised companies, an extraordinarily generous sum (as was recognised at the time) given chronic underinvestment across the board, with the steel industry only a partial exception. The failure to incorporate industrial democracy into nationalisation had a particularly debilitating effect upon political support among workers, as Raymond Williams pointed out, with public firms reproducing, “sometimes with appalling accuracy, the human patterns, in management and working relationships, of industries based on quite different social principles.” (Williams, 1965, 330) </p> <p>To make matters worse, government policy dictated their subordination to the needs of private industry in the form of unrealistically low pricing of outputs. This meant that the nationalised industries provided large and continuous subsidies to the private sector, making them in effect “sinks” that disguised the poor performance of the British economy overall while reinforcing existing industrial power relations (Cumbers, 2012, 20). The result was low profitability, an altogether inadequate measure of their overall performance, but one that fed into widespread perceptions of inefficiency and bureaucratisation and eventually made them sitting ducks for privatisation. </p> <p>And yet, for all their problems, the data on the performance record of the nationalised industries simply do not bear out such negative verdicts. There are significant methodological difficulties in making comparisons between public and private firms, especially when it comes to profitability, which analysts have found to be a not particularly illuminating metric. Profits are strongly affected by prices, and (as noted above) public sector firms were often subjected to price controls and related interventions – imposed both to hold down prices as part of wider counter-inflation policies and to provide hidden subsidies to private industry. As a result, academic studies aimed at making public-private comparisons have tended to adopt measures other than profitability as an index of efficiency, especially <a href="">total factor productivity</a>.</p> <p>Robert Millward, Professor Emeritus of Economic History at the University of Manchester, is perhaps the dean of economic historians working on comparisons between public and private enterprise. A comprehensive 1983 survey of the evidence by Millward and his colleagues, <a href=""><em>Public Sector Economics</em></a>, offered as its first conclusion that “there is no systematic evidence that public enterprises are less cost effective than private firms.” (Millward et al, 1983, 258) In the energy sector, for example, none of the cost studies examined supported the argument that public electricity providers had higher unit costs or lower productivity than private firms (<em>ibid</em>, 244). Of course, as was acknowledged, the data and time series then available were limited. But Millward’s later work using additional data has confirmed his earlier conclusions. In fact, remarkably, it appears that the nationalised industries actually <em>outperformed</em> both the rest of the British economy and their privately-held equivalents in the United States: </p> <p>“On the new evidence, the British total factor productivity growth record in most of the nationalized industries was significantly better than that of their U.S. counterparts and better than that in the whole of the British economy. To be more specific, the average annual rate of total factor productivity growth from 1950 to 1973 was higher in Britain than in the U.S. for airlines, electricity, gas, and coal… The proposition that privatisation in Britain led to an improvement is contradicted by a comparison of these figures with those for 1973-1995, when the growth rates for airlines, gas, and electricity were lower… The state enterprise in Britain compared favorably in productivity growth with comparable sectors in (the more privately owned) U.S. industries and with the privatised regimes which followed in Britain.” (Millward, 2011, 24-27)</p> <p>Nor is Millward alone. “Although it would not sit comfortably with the beliefs of new Conservatism,” observes Michael Oliver, an economist not known as an advocate of public enterprise, “economic historians have found that the long-term trend of productivity in Britain’s nationalized industries was no lower than that for private firms.” (Oliver, 2014, 271) Similarly, the late British economist and journalist Christopher Johnson – a supporter of privatisation –found that “many of the improvements in manning and productivity claimed for privatisation took place in nationalised industries before privatisation and in those not privatised.” (Robinson and Rubin, 1998, 17)</p> <p>University of Glasgow professor Andrew Cumbers, drawing upon examples from around the world, found that “contrary to the current received wisdom, the experience and performance of statist public ownership was highly varied.” For instance, “Korea, Taiwan and Singapore all used state-owned enterprises to fuel spectacular economic growth.” (Cumbers, 2012, 33-34) “The conviction that public production is inefficient has been sufficiently strong for empirical evidence to seem irrelevant,” economist Johan Willner wrote in 1996. “Successful counterexamples do not make headlines… The empirical research has been unsystematic, but there exists by now a fairly large number of industry studies which throw light on the relative efficiency of public ownership.” (Willner, 2005, 28) Similarly, Tel Aviv University Professor Yair Aharoni concluded that “[t]he assumption that ownership <em>per se</em> creates an environment that is conducive to high or low performance is not proven, and empirical research on this point has yielded conflicting results.” (Aharoni, 2000, 50) </p> <p>A plethora of other studies draw similar conclusions. In 1997, University of Chicago economist Stacey Kole and University of Georgia professor J. Harold Mulherin studied U.S. government ownership of seized American subsidiaries of German and Japanese companies during and after the Second World War. They found no difference between these publicly-owned firms and their private counterparts, and stated that the “results stand in contrast to the typical results regarding the inefficiency of government enterprise.” (Kole and Mulherin, 1997) In 2006, writing in the <em>World Bank Economic Review</em>, Colin Kirkpatrick (University of Manchester), David Parker (Cranfield University), and Yin-Fang Zhang (University of Manchester) concluded that, with regards to African water utilities, “the results for cost efficiency and service quality fail to show that privatised water utilities perform better than state-run utilities.” (Kirkpatrick, et al., 2006) Moreover, these results supported similar prior research on the sector. In 2014 the OECD summarized a number of studies of publicly-owned German banks and <a href="">wrote</a> that “[s]avings banks appear to be at least as efficient as commercial banks.” And writing in the <em>Harvard International Journal</em>, Francisco Flores-Macias and Aldo Musacchio maintain that “[t]he world has changed” and modern public enterprises can be “efficient, even in comparison to their private counterparts.” (Flores-Macias and Musacchio, 2009) </p> <p>How efficiency is defined and conceptualized is rarely discussed, yet crucial. For instance, a 2000 review of empirical studies by University of Oklahoma privatisation expert William Megginson and University of Georgia Professor Jeffry Netter states that “to a large extent we ignore the arguments concerning the importance of equitable concerns such as income distribution… The effects of privatisation on productive efficiency, or at least observable variables that are proxies for productive efficiency, is the focus of most of the empirical literature we review here.” (Megginson and Netter, 2001) However, because public enterprises often exist to fulfill social – not just market – requirements, traditional measures of efficiency are not adequate. According to Aharoni, “it is not enough to measure performance in strict economic terms. One has to measure the stimulus provided to other socioeconomic activities and other externalities… Financial measures are misleading for those who see [a public enterprise] as a government instrument that should strive to achieve objectives such as a more egalitarian distribution of income, regional development, technological self-sufficiency, poverty reduction, or development.” (Aharoni, 2000, 52-53) </p><p>Even the World Bank summarizes the efficiency argument with an important warning about its focus on the profitability measure: “[A]n enterprise’s profitability summarizes all the indicators of economic efficiency as seen from the viewpoint of its private owners,” it <a href="">states</a>. “But from the point of view of national economic growth and development, social costs and benefits, which are not reflected in profitability, can be no less important. For example, when a privatized enterprise achieves profitability by dismissing its excess workers, the economy as a whole does not necessarily become more efficient. If economic conditions prevent the fired workers from finding other employment or starting their own business, this downsizing might lead to an overall economic loss for the country because people were moved from low-productivity jobs to zero-productivity unemployment.”</p> <p>Additionally, as previously indicated and contrary to the dominant perspective, comparing the efficiency of public and private enterprises is highly problematic. “In comparing [state owned enterprises] to privately owned firms,” Megginson and Netter write, “it is difficult, if not impossible, to determine the appropriate set of comparison firms or benchmarks…” (2001) In one of the few studies to investigate roughly comparable firms – in this case, public and private railways in Canada – Douglas Caves and Laurits Christensen announced that “[o]ur principal conclusion is that public ownership is not inherently less efficient than private ownership.” </p> <p>Another instance facilitating direct comparison is the utility sector in the United States, where public enterprises operate alongside private investor-owned companies. Aharoni again: “Overall, the studies of electricity utilities in the United States do not provide support for the assumed superiority of private ownership…” (2000, 57) Harvard University Professor John Donahue is even more emphatic. He found that “[t]he evidence broadly contradicts the common presumption that private utilities will operate more efficiently than their public counterparts.” (Donahue, 1989, 76) A recent <a href="">American Public Power Association</a> study, for example, found a median net revenue transfer to municipalities of 5.5 per cent of revenues for public utilities. By contrast, the median tax payment of investor-owned utilities was roughly 25 per cent less, or 4.2 per cent of gross revenues. </p> <p><strong>What form of public ownership?</strong></p> <p>On the basis of the evidence available, then, public ownership is decidedly not<em> inherently</em> less efficient. Sweeping claims to the contrary should be treated as ideologically motivated. The question for the British left at this point should not be a technical economic one about efficiency but a political one about power, democracy, the social benefits of ownership, and which particular forms of collective enterprise we might wish to promote. </p> <p>Today, increasing inequality, poverty, environmental degradation and the catastrophic threat of climate change, together with a general sense of an impoverished public sphere and loss of local economic control wrought by decades of privatisation and globalisation, are pushing activists and theorists once again in the direction of the institutional structure of public enterprise. As calls for common ownership grow, many activists and thinkers engaged in its recovery and rehabilitation have already decided against a simple return to the top-down centralised public corporation model of the postwar Labour governments. Here Jeremy Corbyn has been very clear:</p> <p>“I believe in public ownership, but I have never favoured the remote nationalised model that prevailed in the post-war era. Like a majority of the population and a majority of even Tory voters, I want the railways back in public ownership. But public control should mean just that, not simply state control: so we should have passengers, rail workers and government too, co-operatively running the railways to ensure they are run in our interests and not for private profit. This model should replace both the old Labour model of top-down operation by central diktat and Tories favoured model of unaccountable privatised operators running our public services for their own ends.”</p> <p>In this, Corbyn is very much in line with recent trends around the world in which the fightback against neoliberal privatisation of public services has been accompanied by the adoption of innovative new approaches to collective ownership. In this view, worker ownership, consumer cooperatives, municipal enterprise and a host of kindred institutional forms all represent ways in which capital can be held in common by small and large publics, including through hybrid models that draw upon two or more institutional forms. From the <a href="">We Own It</a> campaign to the <a href="">Municipal Services Project</a>, we are seeing the emergence of a more pluralistic approach to public ownership, one that is already finding practical application in attempts by governments, municipal authorities and social movements to reclaim the commons and bring back social ownership in the form of “<a href="">public-public partnerships</a>” and the like. By way of example, <a href="">Paul Salveson</a>’s thoughtful vision for returning the railways to public hands would avoid the old nationalisation model and move instead to a devolution of rail responsibilities to the regions, accompanied by strong direct involvement by local communities. (Salveson, 2013)</p> <p>Public ownership, then, can take many forms, of which the public corporation model adopted by the postwar Labour governments is but one – and hardly the most appealing. Dig a little deeper into the history of public ownership and some far more interesting precedents are to be found. In particular, as the search commences for ways to re-embed the economy and provide an expanding zone of decommodification to buffer against the market, there is a very substantial but somewhat forgotten history of local public ownership and municipal socialism upon which to draw for inspiration. This history demonstrates that public ownership can indeed serve to decentralise economic power, rebuild and stabilise local communities, allow for the possibility of real democracy and participation, and provide the institutional support for political and social movements dedicated to genuine systemic change. </p> <p><strong><br /></strong></p><p><strong> </strong></p><p><em><strong>In a second article we will turn to the history and future of municipal ownership. This article is part of our <a href="">Modernise: de-privatise series</a>. </strong><br /></em></p> <p>&nbsp;<strong>References</strong></p> <p>&nbsp;Yair Aharoni, “The Performance of State-Owned Enterprise,” in Pier Angelo Toninelli (ed.) <em>The Rise and Fall of State-Owned Enterprise in the Western World</em> (Cambridge University Press: Cambridge, 2000)</p> <p>Douglas W. Caves and Laurits R. Christensen, “The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads,” <em>Journal of Political Economy </em>Vol.<em> </em>88, No. 5 (October 1980)</p> <p>Andrew Cumbers, <em>Reclaiming Public Ownership: Making Space for Economic Democracy</em> (Zed Books: London, 2012)</p> <p>John D. Donahue, <em>The Privatization Decision: Public Ends, Private Means </em>(Basic Books: New York, 1989)</p> <p>Francisco Flores-Macias and Aldo Musacchio, “The Return of State-Owned Enterprises,” <em>Harvard International Review</em>, April 4, 2009.</p> <p>Colin Kirkpatrick, David Parker, and Yin-Fang Zhang, “An Empirical Analysis of State and Private-Sector Provision of Water Services in Africa,” <em>World Bank Economic Review</em>, Vol. 20, No. 1 (2006).</p> <p>Stacey R. Kole and J. Harold Mulherin, “The Government as a Shareholder: A Case from the United States,” <em>Journal of Law and Economics</em>, Vol. 40, No. 1 (April 1997).</p> <p>John Medhurst, <em>That Option No Longer Exists: Britain 1974-76</em> (Zero Books: Alresford, 2014)</p> <p>William Megginson and Jeffry Netter, “From State to Market: A Survey of Empirical Studies on Privatization,” <em>Journal of Economic Literature</em>, Vol. 39, No. 2 (June 2001). </p> <p>Robert Millward, David Parker, Leslie Rosenthal, Michael T. Sumner and Neville Topham, <em>Public Sector Economics</em> (Longman: London, 1983). </p> <p>Robert Millward, <em>Private and Public Enterprise in Europe: Energy, Telecommunications and Transport 1830-1990</em> (Cambridge University Press: Cambridge, 2005)</p> <p>Robert Millward, “The Nature of State Enterprise in Britain,” in Franco Amatori, Robert Millward, and Pier Angelo Toninelli (eds.), <em>Reappraising State-Owned Enterprise: A Comparison of the UK and Italy</em> (Routledge: London, 2011)</p> <p>Michael Oliver, “The retreat of the state in the 1980s and 1990s,” in Francesca Carnevali and Julie Marie Strange (eds.), <em>Twentieth-Century Britain: Economic, Cultural and Social Change</em> (Routledge: New York, 2014) </p> <p>Richard Pryke, <em>Public Enterprise in Practice: The British Experience of Nationalisation over Two Decades </em>(MacGibbon &amp; Kee: London, 1971)</p> <p>Peter Robinson and Marcus Rubin, “The Future of the Post Office,” <em>Institute for Public Policy Research</em>, 1998. </p> <p>Paul Salveson, <em>Railpolitik: Bringing Railways Back to the Community</em> (Lawrence &amp; Wishart: London, 2013) </p> <p>Richard Saville, “Commanding Heights: The Nationalisation Programme” in Jim Fyrth (ed.) <em>Labour’s High Noon: The Government and the Economy 1945-51</em> (Lawrence &amp; Wishart: London, 1993)</p> <p>Raymond Williams, <em>The Long Revolution</em> (Pelican: Harmondsworth, 1965)</p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/ourkingdom/35-economists-back-corbyn%27s-policies-as-sensible">35 economists back Corbyn&#039;s policies as sensible</a> </div> <div class="field-item even"> <a href="/ourkingdom/ian-sinclair/what-jeremy-corbyn-supporters-can-learn-from-margaret-thatcher">What Jeremy Corbyn supporters can learn from Margaret Thatcher</a> </div> <div class="field-item odd"> <a href="/ourkingdom/ben-margulies/why-is-corbyn-campaign-%E2%80%9Cgesture-politics%E2%80%9D">Why is the Corbyn campaign “gesture politics”?</a> </div> </div> </div> </fieldset> <div class="field field-rights"> <div class="field-label">Rights:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> CC by NC 4.0 </div> </div> </div> uk Can Europe make it? uk Modernise: de-privatise Thomas M. Hanna Joe Guinan Tue, 08 Sep 2015 23:11:11 +0000 Joe Guinan and Thomas M. Hanna 95777 at Bringing power to the people, through the statute book <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Scotland's Community Empowerment Bill aims to help bring the spirit of self-determination unleashed during the referendum into the day-to-day running of neighbourhoods across the country.</p> </div> </div> </div> <p dir="ltr"><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>The Isle of Eigg, famous for its community buy-out.</span></span></span></p><p dir="ltr">The origins of Scotland’s Community Empowerment Act 2015 predated Scotland’s independence referendum, but like all things touched by that referendum, it grew in scale and imagination. What started as a few lines in the SNP’s 2011 manifesto about giving communities more power over eyesore land has become just one in a whole range of measures, united by one common thread – decentralising to communities at the most local level possible greater say and even direct control over what matters to them. </p><p dir="ltr">For far too long conventional social democratic thought focused on inequalities of income or wealth to the exclusion of concern about inequalities of power. Deprivation is also marginalisation. In those places where incomes are lowest so too often are hope and confidence. Without addressing one progress on the other is always going to limited. A line of thinkers from radicals like <a href="">Jimmy Reid</a> to <a href="">Harry Burns, the previous Scottish Chief Medical Officer</a>, point to the danger of this pernicious sense of alienation. The lesson we must all learn is that if regeneration used to be something done to people, instead today it must – it can - only be done with or by communities.</p><p dir="ltr">So the manifesto core remains. The Act creates a legal procedure for community takeovers, giving communities a proactive power to transfer assets into community hands. The idea at their heart is that public land or buildings can serve the public interest by being owned and therefore guided by the public in the most local and immediate way possible.</p><p dir="ltr">There have been many trailblazers. Scotland already boasts examples of community-owned sports centres, parks, nurseries, shops – even an <a href="">airport</a>. Each of these solves a problem recognised and defined by local people themselves. Each is to the credit of the superhuman efforts by small teams of volunteers. But people shouldn’t have to be superhuman to do it.</p><p dir="ltr">The safeguard has to be that the body must be genuinely controlled by that community. The purpose is to empower people who come together and work through collective action. Private interests, including charitable groups, can take part only as servants of that public control. No matter how well-meaning, a representative does not speak for a community if they are only self-appointed.</p><p dir="ltr">And as a land reform measure alongside, if there is private land that is abandoned, neglected or a blight on the local environment, the community will be able to buy it out, even without a willing seller. To help support communities make the budgets stack up, Scotland’s Land Fund is being tripled, by removing the exemption from business rates previously enjoyed by rural sporting and hunting estates and putting that revenue to a rather apt use.</p><p dir="ltr">Post-referendum Scotland has a society where citizens are engaged and vocal like never before, where turnouts are at their highest in decades and where people have shown that if they are afforded real power they take part. So community representative bodies – whether standing for localities or for communities of people sharing an interest, activity or characteristic – also through the Act gain a new route to take part in decision-making. This is focused on improvement – in part to avoid it becoming a blockers’ charter. If you think you can do better, then with community empowerment by all means you can try.</p><p dir="ltr">Indeed, one of the great advantages of Holyrood over Westminster is that we can practice governance at a more human scale. Scotland is a goldilocks nation, where the representatives of our communities can know each other and know their relevant government ministers and senior officials and all can work in partnership. That ‘Scottish Approach’ to decision-making needs to be embedded at the municipal level too.</p><p dir="ltr">Community Planning Partnerships, the statutory bodies that bring together the key players in each local authority area – like the council, the NHS, the police and Scottish Enterprise - are receiving a range of new duties to require them to support public participation in their decisions. They will also have to work at a more neighbourhood level too – coming together at levels like individual towns. Not only does this help ensure work tailored to the needs of individual communities, it creates structures that grassroots organisations can access more readily – just as Scotland-wide organisations can engage so much more easily with Holyrood than Westminster.</p><p dir="ltr">New powers will also allow the government to more easily introduce further innovations in participative democracy for these bodies. Chief amongst them is participatory budgeting, where communities decide directly on key local spending priorities running into hundreds of thousands of pounds. Real participation means entrusting groups of ordinary people with decisions, just as ordinary people had the decision over Scotland’s future. And participation also differs from consultation by bringing people in at the start when ideas are being conceived, rather than just asking for comments on proposals already drafted. </p><p dir="ltr">So the Community Empowerment Act is a big Act. It has to be. And there are other provisions, extending access to allotments, community woodlands, and greater supporter involvement – or even ownership – in football clubs. Even then, this Act is unlikely to be the last word on the matter. </p><p dir="ltr">Community Empowerment is more than a weighty statute, it is an agenda. The Act signals intent for how we as a government believe the public should be involved – not through the formulaic, almost ritualised process of certain consultations past but genuinely, truly involved. Scotland’s democracy is healthier than it has been in any of our lifetimes. We all have to see that for the wonderful, flowering marvel that it is, and make real the democratic promise that we all govern in partnership with the people.</p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/od-blog/adam-ramsay/on-my-holiday-heroes-of-highlands-including-other-david-cameron">On my holiday: the heroes of the Highlands (including the other David Cameron)</a> </div> </div> </div> </fieldset> <div class="field field-rights"> <div class="field-label">Rights:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> CC by NC 4.0 </div> </div> </div> uk uk Modernise: de-privatise Marco Biagi Mon, 10 Aug 2015 23:11:11 +0000 Marco Biagi 95106 at Who owns the wind? <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>As nature's greatest commons powers ever more of our economy, is it time to start asking who owns it?</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Drumderg wind farm - over the hill from my parents'</span></span></span></p><p>If you head out of the back door of my parents’ house, trudge up the dirt drive and past the crumbling farm steading and hop over a gate then you soon find yourself on open hill. Keep climbing and sheep field green becomes steep heather purple. Drag burning thighs and pounding heart upwards, only a couple of hundred more feet, and turn around, and the first thing you usually notice is the wind. <br /><br />The farm I grew up on straddles the Highland Line and although Balduff, the hill, is only 1394 feet high, it’s among the first that the wind hits as it sweeps across Scotland. At the top is a whirring anemometer, marking a failed application for a wind farm which would have joined its neighbour at Drumderg, dancing on the horizon for those travelling North into Highland Perthshire or up to Glenshee: gates to the Highlands.<br /><br />Stood at that spot, it’s easy to understand that Scotland’s greatest natural resource is not that which lies beneath the North Sea, but that which soars over it; not that which may be buried beneath the beds of the North Atlantic, but that which makes exploring there quite so perilous. It’s that which ensures an umbrella is useless in Edinburgh; that standing on the cairn on the top of any Munro with your arms outspread feels like you’re flying; and that the mighty Forth Road Bridge can be shut for hours on end. It can take your breath away, sweep you off your feet, and turn rain drops into stinging weapons. <br /><br />The prevailing <a href="">Westlin Winds</a> have always played a pivotal role in shaping Scotland, from its landscape to its songs to its <a href="">prayers</a>. But since the invention of the steamboat - in large part <a href="">developed in Scotland</a> - nature’s greatest force has had little role in the economy.<br /><br />That’s starting to change. In 2001, renewables only provided slightly over 10% of Scotland’s electricity, most of which was hydro-power. By 2012, that figure was 39.9% and in 2013, <a href="">it hit 46.4%</a>. The Scottish government believes it is on target for 100% by 2020. A huge portion of that growth has been, and will be, wind power.<br /><br />All of this poses a question which goes back to the dawn of human civilisation. By whom is the bounty of the earth owned? To whom should income derived from it be returned? <br /><br />This is a conundrum most famously faced by oil rich states. Norway has its sovereign wealth fund, paid for from the revenues from its oil: a fund which invests in the broader global economy and which is intended to be kept aside for future generations of Norwegians, once the oil is gone. Alaska similarly has a sovereign wealth fund which invests in stocks and shares, the returns on which are paid equally to all Alaskan citizens <a href="">as a Basic Income</a>. <br /><br />There are negative examples too. In much of the Middle East, arguably, <a href="">rentier states</a> have formed, where governments can survive on the revenues of the oil they sell rather than depending on taxing their people. Because there’s rarely representation without taxation, the region of the world with the most oil is the region of the world with the most dictators. <br /><br />When our economies depended largely on land, political and literal battles were over chunks of the map. From the Enclosure Acts and the Charter of the Forest in England to imperial conquests and wars across the planet, the arc of history was dominated by who controlled which physical areas. Such debates will, of course, always apply. But their dominance has slipped.<br /><br />Today, in a global economy which runs on fossil fuels, battles over their control and ownership predominate. From the oil shocks of the early 1970s when OPEC asserted its power in the post-imperial age to the coal miners’ strikes; from the invasion of Iraq to gas in Ukraine; from ISIS’ dependence on black-market-black-gold to sanctions against Iran; from the fight for public control in Venezuela to battles over land in Alberta. One way or another, these must become the struggles of the past. The carbon in the lithosphere cannot be allowed into the atmosphere. The oil rigs must go silent; the coal mines must grow over. Civilisation depends upon it.<br /><br />In the future, if we are to have a future, our communities will be powered by those things which are more abstract: computer codes, online space, the rays of the sun, the crashing of waves, and gusts of wind.<br /><br />And in such a context, isn’t it important to ask another question: who owns the wind? Ownership, of course, is a complex concept over which philosophers have wrestled for centuries. But there is another way to ask the question: who has a right to use? Do large companies have a right to erect turbines and allow the force of moving air to turn them?<br /><br />In some ways, this question seems silly. After all, isn’t wind essentially superabundant? It’s not like using it to turn a turbine stops someone else doing the same, apart perhaps from a near neighbour. Certainly there’s more of the stuff than land to build turbines on. But looked at another way there’s an important principle at stake. What right has anyone to profit from a resource which is the property of everyone and no one? An infinite number of copies of “All You Need Is Love” can be downloaded on iTunes. That doesn’t mean that we get it for free. Why should that principle only apply when businesses provide us with something, but not when they take something? And are they not using their magnificent contraptions to capture something which is perhaps already ours, and certainly not theirs, and sell it back to us?<br /><br />To make profits, capitalism relies on being given, for free, a huge number of social and natural resources: a labour force of human beings that someone has given birth to, cared for, fed, and educated; languages to communicate which we have all produced together over generations; social conventions developed over centuries.<br /><br />These things are all commons - just like the atmosphere we are filling with carbon, the woodlands we have chopped down and the seas we have turned from flourishing aquatic forests to greyed out underwater carparks; the rain which feeds the crops we eat and the sunshine they photosynthesise; like the scientific process; the writings of Socrates; Wikipedia; OpenOffice and, we like to think, openDemocracy. Without free access to commons of some sort or another, almost every private company on earth would collapse. Those who claim to create our wealth almost all depend first on being gifted access to the bounty of the earth and of civilisation. <br /><br />In the past and all over the world to this day, as the Nobel winning economist Eleanor Ostrom catalogued, different types of commons have been and are managed, successfully, in a vast plethora of ways. And in the future, as photographs of Pluto perhaps demonstrate, we are going always to have plenty of new debates about the management of new kinds of commons. And one of those is the wind: a force of nature which we must tap if civilisation is to endure.<br /><br />I would prefer that, as in the countries who are most successful in powering themselves with the rush of air across their land, the firms which capture the UK’s wind and use it to turn the magnets which create our electricity be democratically owned. But however we arrange control of the machinery, it is important for our understanding of the true operation of our society that we recognise that the electricity flowing from the turbines is the product of a collision between technology which grows from hundreds of years of labour and the learning of scientists and engineers; workers who were once raised and cared for applying that knowledge, and a force of nature over which only someone with extraordinary delusions of grandeur can truly claim ownership.<br /><br />Sometimes, privatisation is a process of turning things which are in the public sector over to shareholders or individuals. But often in history, it has involved the enclosure of commons - people taking something which belonged to everyone and no one, putting fences round it, and stopping others from using it.<br /><br />The shape of our future will therefore depend in part on how we deal with the new commons which emerge; which start to become more and more vital to our lives. The wind is but one example. But it’s one which helps blow away some of the extraordinary lies we are told about wealth creation in our society - and, standing at the top of Balduff, it’s the one which hits you in the face.</p><p id="docs-internal-guid-73e5a73d-b6cd-bd65-7190-f66b3e49940a" dir="ltr"><em><strong><span>Liked this piece? Please support us with</span><a href=""><span> £3 a month </span></a><span>so we can keep producing independent journalism.</span></strong></em></p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/ken-worpole/law-of-forest-and-freedom-of-streets">The law of the forest and the freedom of the streets</a> </div> </div> </div> </fieldset> <div class="field field-rights"> <div class="field-label">Rights:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> CC by NC 4.0 </div> </div> </div> uk uk A new charter of the forest Great Charter Convention Modernise: de-privatise Adam Ramsay Mon, 27 Jul 2015 08:01:14 +0000 Adam Ramsay 94658 at "Canary Wharf might as well be in a different world" <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>A talk with Steve Stride, the chief executive of Poplar HARCA, on why in his area of London 'regeneration' isn't a dirty word but something the community supports.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="293" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Flickr/Defence Images. Some rights reserved.</span></span></span></p><p>When organising our <a href="">Housing in Crisis</a> series I was directed to the housing association <a href="">Poplar HARCA</a>, and told what they were doing in Poplar was worth looking at. Despite ringing endorsements for their innovative work the prospect of a three hour tour of Poplar on a Monday morning was still not filling me with overwhelming enthusiasm. When I got back, the tour had been so interesting I went along and did it a second time, and arranged an interview with Steve Stride - the tour guide, HARCA's characterful chief executive, a man very much from the Bob Crow school of frank discourse and a lifelong Londoner.</p> <p>What makes HARCA's work interesting is two things. Firstly, Poplar captures so many of the nation's problems in microcosm: unemployment, poverty, community tensions, health problems, housing pressures, inequality, education problems, Islamism... The second is HARCA's approach to dealing with them, and particularly in contrast to 'regeneration' as London tends to experience it. Considering the range of problems in question the idea that they fall under the remit of a Housing Association seems strange yet HARCA seems to get involved in every facet of the community; they see their role as transforming not just the housing but the locality and the local community as a whole - and that community seem largely behind them.</p> <p>Poplar seems like at least one part of London where 'regeneration' is not simply a byword for dispossession and 'social cleansing'. HARCA gets schools built, medical centres, youth centres, public art, cafes, secures apprenticeships and training, it refurbishes thousands of homes as well as building hundreds of new homes, and it runs just about every sort of programme for local people that can be imagined. Walking around Poplar with Steve almost every building or initiative seems to bear HARCA's mark, 'that's coming down and being replaced, that was refurbished, that was refurbished, we built that park, we're taking over this medical centre, we got this built, we had all that built', and so on. HARCA seems to pick up bucket loads of awards and it's hard to recall a regeneration scandal from Poplar, despite their prevalence across London. But this seems to be the big question for regeneration - is it possible to reinvent a place, to plough in money and resources, to transform it so thoroughly for the better without succumbing to the usual problem: money moves in, the poor are pushed out or simply no longer recognise their locality or their neighbours. On all these issues Steve has plenty to say. </p> <p><strong>OH: HARCA is very active in the community, but how do you ensure the things you're building and providing are what residents want, and not what HARCA <em>thinks</em> they want?</strong> </p> <p><strong>Steve Stride</strong>: Very good question. We are a resident led organisation, so we have a resident majority board, we are run by our residents and our governance is by resident majority. There's four ways our community gets involved: firstly there's the governance process, secondly, there's our communities and neighbours process - 250,000 visitors a year at our centres, engaging in activities, so we engage with residents and find out what they need. A classic example is the community budget programme, where we said to them all, 'we're going to have a community budget - what's the top priority?' and they said 'diabetes'. The third thing is service delivery, they get involved in our service delivery, so we have resident inspectors that we've trained up and who are accredited. Finally there's partnerships, we are a partners organisation, often local partners and residents groups, and one aspect of that we have is an access programme - arts, culture, creativity, employment, training and so on, establishing independent community groups with the community, to be the voice for green issues and the built environment, for example. The community said we need more school places - so we're building a new school. The community and the NHS said we have some health issues in Poplar so we're building new health centres with the NHS.</p> <p><strong>OH: Are community tensions something Poplar struggles with?</strong> </p> <p>SS: We've always had community tensions, that is one of the reasons why from day one, HARCA stands for housing and community regeneration, so we give more priority to community regeneration than any other housing association in the country. When we took over in the late 90s there had been a BNP councillor in the Isle of Dogs, but (they) didn't last a year. That stoked racial tension at the time. So coming in, community cohesion was a big issue, 50% ethnic minority, 35% Bangladeshi community, so we put a lot of effort into community cohesion and have been very successful, so it's now much less of an issue. Of course now we have the Islamist issue. </p> <p><strong>OH</strong>: <strong>Wasn't it in Poplar the ISIS flag was raised, and the old nun took it down?</strong> </p><p>SS: It was, Sister Christine. So there is that. But again, we have ten mosques within our stock, we are in partnership with all of them, and they work with us to ensure there is no Islamist type thinking. Clearly it's there, but generally it's not an issue and we have a great, cohesive community here. </p> <p><strong>OH</strong>: <strong>So what is your approach to the radicalisation of young Muslims?</strong> </p> <p>SS: We work very closely in partnerships with mosques, and the local churches, we are actually replacing two of the old mosques and building new ones. So close partnership but also with our other partners, so the wider faith community in Tower Hamlets, we work closely with the police, the home office, the Local Authority, there's various programs, so a broad range. The most important thing we do is firstly the partnerships with mosques but also the community regeneration programme - we're engaging with the young people, so we're making alternatives for them. Instead of drugs, or Islamism, they're getting involved in a whole range of youth activities and training - not just young people but their families as well, so we're constantly working to get people to a positive rather than negative position and that reduces their vulnerability to exploitation. </p> <p><strong>OH: Which two things best demonstrate what HARCA does in Poplar?</strong> </p> <p>SS: Firstly, infrastructure, for example the Langdon Park DLR station we got built, and the crossings across 2 motorways. Secondly, the St Pauls Way transformation project. This was the worst street in Tower Hamlets, worst health, worst crime, worst housing, and it's been transformed, not just physically - a new health centre, a brand new school, a new primary school being built - its also a new headteacher, a new trust and governance structure, with four top universities including Queen Mary and ourselves, and it's now getting 70% of kids reaching 5 A-Cs, including English and maths.</p> <p><strong>OH: Over last 10 years, what's been the most challenging social change, in terms of providing for a good community?</strong> </p> <p><strong>SS</strong>: There's two, one is mixed communities. We were predominantly a social rented area, and that has knock on effects - there isn't economic infrastructure in the area, in terms of jobs and facilities, the coffee shop we built is the first in Poplar. Secondly - crime and anti social behaviour, it's such a downer in an area like Poplar, it can have such an impact, we've had to have a real complex policy of carrot and stick - we're a national leader on that. We've made radical change, the amount of people 'feeling safe' has gone from 50% up into the 60s, 70s and into the 80% level now. We have the highest youth density in Europe here, which we see as positive but it's a major challenge, so we have major investment in youth, we're engaged with 2,000 young people, we work with the LA to deliver youth services, we built the Spotlight flagship centre, getting young people into positive activities. So these are carrots. And there's sticks - we have a good size anti-social behaviour team. We pay for our own police team. Every new initiative that has come out in the last 2 years we have led on, whether its shutting down a tenancy, restricting territorial gangs, we've led nationally and completely transformed the area, but it has to be carrot and stick. </p> <p><strong>OH: If you could repeal a single piece of housing legislation what would it be?</strong> <strong>SS</strong>: Strangely, I would say the <a href="">Homeless Persons Act 1977</a>, going back a long time. <strong>&nbsp;</strong></p><p><strong>OH: This is the one dictating homeless people must be housed as priorities?</strong> </p> <p>SS: Yeah. Accidentally it made a statement that social housing is only for the most vulnerable, it's not about mixed communities and people from a whole range of backgrounds and needs, and that accelerated the residualisation of social housing to the point now where social housing is a dirty word with stigma attached to it. If Ken Livingstone says he grew up in a mixed community, on a council estate, when he was growing up in the 60s there was lots of people at work on that estate, and that's what it should be, a mix of people. And the homeless person legislation accidentally in a way accelerated that residualisation process. </p> <p><strong>OH: What's been your experience of Right to Buy (RTB) in Poplar, and how has it impacted on your work to get everyone into good housing?</strong> </p> <p>SS<strong>:</strong> There's 2 completely different sides to this, which is why all parties support RTB, but clearly it does economically empower people who are in lower socio-economic income brackets. It gives them access to assets, control over their own home, so on paper there's a lot to speak for it. Again, going back to 1978-79, the RTB was actually a Labour party policy, it was included on the basis that for every home sold one would be built, which the Tories finally introduced recently but they haven't implemented it. So though they say they are building a new home for every one lost, they are not. If that had happened from '79 onwards I don't think anyone would be against RTB, but because they've just taken the money away from housing, you got a net significant loss to social housing and no gain. So it's great for the individual, and it <em>could</em> have been good for the community if it was a one for one replacement. </p> <p>The other negative is when you come to do regeneration you've got to buy those properties back, and with values as they are now it's potentially stopping regeneration happening. So you get the ludicrous situation where you've got an area that desperately needs regeneration and has lots of problems but you can't afford to buy out the leaseholders, so you can't change it. So RTB has one big benefit, and one big disadvantage that could be overcome. If you know you're going to do a regeneration scheme you can already freeze RTB but you should be able to do that a lot earlier to stop regeneration being held back. </p> <p><strong>OH: What's been your experience of the current government's Localism reforms?</strong></p> <p>SS: We always say about Poplar HARCA that we were localists before localism. We were setup in the late 90s, the whole basis of our model was to experiment with a local model. So we've been doing a lot of localist approaches, not just housing but health and education. We're a pilot for the government's community budget program, one of their aspects of localism, we're one of ten partners nationally, we've done that on St Pauls Way where we came together in partnership with all local services, the police, the local authority (LA), and we decided to focus on diabetes, we had a whole programme on that and got excellent results not just in diabetes but economic empowerment. We are taking localism forward now, we strongly believe in the approach.</p> <p><strong>OH: And how helpful have the localism reforms of this government been?</strong> </p> <p>SS: Well... We welcome national policy on localism, we think it's the key way forward. The previous government had the National Strategy for Neighbourhood Renewal, focused on neighbourhoods being renewed, and we were a key partner in that. So there has been changes, there has been devolvement of some powers to LAs, so we do welcome it but the impact is yet to be seen in many ways. Because when it's against a background of [austerity] then the ability to have that localist impact is, you know... As an LA we are very pro development here, they have done well on the new homes bonus, which is part of the localism agenda, and that's benefited the LA, so overall we welcome it but want to see a lot more.</p> <p><strong>OH: 'Gentrification', is this something that has touched Poplar yet?</strong> </p> <p>SS: No, not yet. </p> <p><strong>OH:</strong> <strong>But you see it coming in?</strong> Well, we welcome mixed communities as long as a net increase in social housing is protected, we welcome mixed income communities. The danger is that social housing gets completely pushed out. Because we've historically had such high levels of social housing in Poplar it will be a long time before anyone has to worry about gentrification. The fact we now have a coffee shop - all of which we set up with social enterprise partners, the local community welcomed that - one could say that's a sign of gentrification but actually that's quite basic, to have a coffee shop. We want the benefits of gentrification but not the disadvantages. Linked to that is the whole question about rising property values, and that isn't just gentrification it's also about the property market and that's a big issue for us. We welcome high values in some ways because it introduces a mix and allows us to build more social housing, but clearly a lot of people can end up being pushed out the area. The 'squeezed middle' is a big issue, too rich for social housing, too poor for the private market - that's a massive issue, so needs to be much more around shared ownership and low cost home ownership as a better option. </p> <p><strong>OH: What sort of impact does big money have on what you want to achieve in Poplar, whether its City money buying up houses to let, or investors leaving flats empty, how does that affect what you want to do?</strong> </p> <p><strong>SS:</strong> Because it was such a deprived area, and social housing so predominant, it was at least bringing in value. So for us the fact we were getting that mix was good, but also you need economic power to drive change, so we welcome big investment and the higher values, but you've got to manage that disparity. At the moment, not just in Poplar but Tower Hamlets generally, I think there's a good example of where this is working well, you've got a complete mix of people, ethnic mix, mix of backgrounds, so its a success story, the infrastructure gets improved, facilities get improved. Just getting a Tesco Metro was for us a big step up, at least it was a reasonably priced supermarket selling decent stock. All we had was run down shops, overcharging for out of date products. People with no cars, elderly, vulnerable people, they were all stuck with it. Now they've got a Tesco Metro. And it makes them lift their game - there are now some really good Bangladeshi supermarkets. We didn't have cash machine facilities here and now we do. Generally it's been successful but you've got to watch it because it can marginalise people. On the Isle of Dogs, where I live, it's safer, more shops, better quality, but it could have been a lot better integrated, there's quite a few gated communities. So it's something you've got to watch. But generally here it's been successful. </p> <p><strong>OH: 'Regeneration' in London often means the displacement of poorer residents, or segregation where some level of social housing is retained - famously the "poor doors" or more recently the case of One Tower Bridge barring social tenants from the communal garden. How does HARCA's model differ?</strong></p> <p>SS: We were built on the premise that residents need to shape the regeneration of their local areas for any investment to make a real difference. Residents voted to transfer their homes to us because they helped us develop the ten year plan for their homes and community, they met the architects, they agreed on the design and scale of work and approved the costs. What we learnt is that some residents will always welcome the opportunity to get involved in regeneration and it's relatively easy to set up governance structures to make sure they're represented. The difficult bit was getting the other residents engaged,&nbsp;who were naturally cynical or not certain of their role in the regeneration process, and the answer was a community regeneration strategy working alongside our physical regeneration plans.&nbsp;</p> <p>So our resident are actively involved in our regeneration and most importantly they trust us. This is because we have never seen community regeneration as a fluffy bolt on service. For us it’s integral to our engagement and long term regeneration strategy. When we first started many of our younger residents told us they wanted to leave Poplar and move to the country or Essex when they grew up.&nbsp;Now they see their future in&nbsp;Poplar,&nbsp;they want to stay in their area, get jobs nearby and build families in Poplar.&nbsp;You can only change a perception of a place in a generation if people feel they can influence things and are&nbsp;part of the change.&nbsp;We’re not alone in our community led regeneration approach,&nbsp;there are other organisations across the UK with a similar ethos,&nbsp;the Placeshaper network is a great example.</p> <p><strong>OH: And has HARCA ever done something which has caused a local backlash?</strong></p> <p><strong>SS:</strong> There's only one that I can think of, a specific group of locals opposing us building a new primary school, saying we've built enough already, but there's a lot of specific political issues on that one, sort of "village politics".</p> <p><strong>OH: What is the single biggest barrier to social mobility, for want of a better phrase, in Poplar?</strong> The complication is that it's multiple problems here. Historically, educational attainment has been low, the LA has done very well but it's still a barrier. University take up was the lowest in the UK here for a long time, but it's changing now. And all this is coupled with health problems. Aberfeldy (the Aberfeldy estate) has the worst health in England except a place near Liverpool. So it all combines. It's about accessibility to opportunities, there's very little facilities in the area so that's why we're doing regeneration in Chrisp street, creating a new town centre is key to that, but also transport - we're sitting next to Canary Wharf, but it might as well be in a different world because of the barriers, physical barriers, this is why the new DLR station was so important to us. </p> <p><strong>OH: What about the barrier of expectations?</strong> </p> <p><strong>SS</strong>: There's been a massive issue of aspirations historically, we've done a lot of work on that, we've got a big project, a million pound project, called Raising Aspirations, especially for people who've got multiple barriers, so we're concentrating on families where there's young 'NEETS' (<strong>N</strong>ot in <strong>E</strong>ducation, <strong>E</strong>mployment or <strong>T</strong>raining), the government calls them 'troubled families', so we have a family intervention project, focused in on those families facing multiple barriers, and we've had loads of success stories of turning people's lives around, as a partnership. So it's a <em>combination</em> of barriers that's the issue, and that affects aspirations, so once you start to remove each barrier aspirations start to rise. If young people come to our Spotlight Centre their aspirations are lifted straight away, the facilities are the best in the country, and we're getting some of the most elite national groups, whether its the National Ballet or Tate Modern, they're coming in and doing a lot of classes, so their eyes are being opened wide to these possibilities for them. </p> <p><strong>OH: What are your biggest concerns from an incoming government?</strong> Housing and regeneration have got a low priority. Health and education are up there, people's concerns might be immigration, whatever, so my big concern is to get housing and regeneration up the political agenda. I think regeneration has the potential to do that. </p> <p>&nbsp;</p> <p><em>Poplar Harca is a partner and supporter of OurKingdom's <a href="">Housing in Crisis</a> series. </em></p> uk uk Housing in Crisis Modernise: de-privatise Oliver Huitson Wed, 06 May 2015 09:30:33 +0000 Oliver Huitson 92569 at Renationalisation: the Argentine case shows it can be done <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Argentina has completed multiple, successful renationalisations in the past decade. It can be done... when the political will is there.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="300" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>President Kirchner. Flickr/Ministerio de Cultura de la Nacion</span></span></span></p><p>Many South American countries are currently going through a period of so-called post neo-liberalism, a quest to re-establish the state as the principal mechanism of social integration. The path chosen, however, has varied in many respects, one of which is exemplified by nationalisation. Argentina, Venezuela and Bolivia all deployed measures to change company ownership, but each country’s policy was based on its own particular rationale. Venezuela directly expropriated and nationalised hundreds of private businesses that had not been previously privatised, the impetus to do so having been very weak during the 1990s. Bolivia undertook nationalisation of strategic sectors, most importantly hydrocarbons and telecommunications, a policy Evo Morales had anticipated during in his presidential campaign. It also took over four power companies and a metallurgy plant. Brazil, Ecuador and Uruguay, on the other hand, reasserted state control in the economy but not through significant nationalisation. </p> <p>Argentina’s case is noteworthy in this regard. It begins back in the early 90s with the Freudian slip of erstwhile Minister of Public Works Roberto Dromi, who, on unveiling his privatisation plan, famously declared that nothing that should belong to the state would remain in state hands. So began the sale of an unprecedented number of state-owned assets. Radio, television, telephone, tolls, roads and railways, and the national airline passed into private hands along with steel, petrochemicals, shipbuilding, electricity and hydroelectric plants, oil and gas, mortgage lending, and social security. Not for nothing was the country considered the IMF’s top student. The neoliberal explosion of 2001 inaugurated a new period, in which private enterprises were not renationalised across the board but on a case-by-case basis. For the most part, this occurred in response to poor management that jeopardized the businesses in question and sometimes, in a more indirect manner, the nation’s socio-economic stability. </p> <p>In November 2003, the newly minted government of President Néstor Kirchner tackled the first transfer of a private company back to the public sector. Argentina’s postal service, which had been in the hands of the Macri group, was nationalised in response to mounting unpaid license fees and the discovery that the severance pay of 3,000 laid-off workers had been recorded in the company books as an investment. The radio spectrum was nationalised a few months later after its owners defaulted on a promised $300 million investment. &nbsp;The two moves were decisive because the country was still recovering from an economic crisis and the government needed to send a confident message that it was determined to initiate policy.</p> <p>But the icing on the cake came in 2006 when, after years of corporate neglect, Aguas Argentinas, the water supply and sanitation system run by the French group Suez, allowed contaminated water to be distributed throughout the southwest region of Buenos Aires. The government seized the opportunity to shift water management to state-owned Aysa, and from that moment on progress was dramatic. Where there were 3 million inhabitants without access to potable water in metropolitan Buenos Aires in 2006, the company now aims to achieve 100 percent coverage by the end of this year and complete sewage coverage by 2019. </p> <p>In addition to public service industries, the state recovered control in 2007 of both the Tandanor shipyards—the privatization of which was a scandal because the owners never honoured the contract they agreed to—and the aircraft manufacturer Fábrica Militar de Aviones. The latter was purchased for 67 million pesos from Lockheed Martin in order to create a new entity under the name Fábrica Argentina de Aviones and the control of the Ministry of Defence. </p> <p>Still, the four most important cases of renationalisation took place later, during the successive mandates of Cristina Fernández de Kirchner (CFK) between 2008-2011 and 2011-2015, namely Aerolíneas Argentinas, the pension fund, the national oil company, and the railway. &nbsp;</p> <p><strong>Aerolíneas Argentinas</strong></p> <p>On December 10, 2007, CFK replaced her husband Néstor Kirchner as President.&nbsp; Barely six months later, she unveiled her bill to expropriate the flagship Aerolíneas Argentinas for failing to pay its employees and its suppliers, which had left it facing imminent closure. Sale of the airline in the early 90s to the Spanish Marsans group had marked the beginning of a series of privatisations and was emblematic of the practice of asset stripping. In 1990, for example, the company owned 28 planes and rented one. By 2008, it had only two international-class aircraft, a handful of domestic planes, and a rental fleet of 30. Its offices in Rome, Paris, New York, Miami, Madrid, Bogotá, Lima, and Caracas were transferred to Spanish hands. The airline had boasted three flight simulators used to train personnel—the only Latin American company with access to such technology—and they all were swallowed up by Iberia, along with lucrative routes to the Netherlands, France, Germany, England and Switzerland and the airline’s data processing network and reservations system. </p> <p>In 2008, the airline’s assets were in the red by some $1.2 billion. The Tribunal of Accounts of the Nation evaluated the company as having negative net worth, so for legal reasons the Argentine government paid a symbolic amount of one peso to represent compensation for expropriation. Marsans in turn filed a 1.2 billion-dollar claim with the ICSID tribunal, the <a href="">international arbitration</a> institution operating under the auspices of the World Bank. </p> <p><strong>Pension funds </strong></p> <p>That same year the social security system was nationalised; it was one of the most strategic measures undertaken by the Kirchner government. Although the nationalisation took place against the backdrop of the global financial crisis, it is significant because it was not a response to an urgent domestic issue. It consisted in transferring pensions from a privately funded corporation to a framework of intergenerational liability in which actively employed workers subsidize passive ones. This is how it operates insofar as cash flow is concerned, but another key element is capital. The previous retirement and pension fund administrators (AFJP in Spanish) managed—charging enormous commissions in return—substantial assets derived from the contributions of workers who, in effect, were financing their own retirement. In December 2008, this capital was worth some $23.347 billion; today it is called the Sustainability Guarantee Fund (FGS in Spanish) and is worth $54.534 billion, as measured by the official exchange rate.</p> <p>Much of FGS is invested in the shares of the country’s most important companies. After the renationalisation, the government invoked its shareholder rights and nominated many directors to the boards of these firms, something that the local elites have never forgiven it. AFJP had also invested heavily in public securities; as a result, some of the debt passed directly from private to state hands. Meanwhile, the government modified the investment strategy to focus on domestic companies and infrastructure funds, at times acting much like a development bank. </p> <p>More important still, by recovering the pension fund, the state was able to tap into the substantial fiscal resources that stemmed from the contributions of active salaried workers and the profitability of the FGS. In this way, the government financed its Universal Allocation per Child, an employment insurance program that provides monthly benefits per child to unemployed workers and those without access to benefits under the registered employment plan known as the “Family Allowance.” The FGS funds were also used to establish <em>Pro.Cre.Ar.</em>, a program that helps subsidize home buying and <em>Prog.R.Es.Ar.</em>, a stimulus plan that targets young people between the ages of 18 and 24 who are neither working nor in school and helps them complete their studies from primary school to university. </p> <p>Finally, nationalising the retirement program enabled the government to strengthen social security, which covers close to 95 percent of those of retirement age. This in turn has produced a “flattening” of the retirement pyramid, which means there are more people receiving minimum pension benefits. In other words, having been nationalised, the system has gained a redistributive bias that operates at the expense of high-income earners and the financial system and in favour of poorer pensioners. Many complaints were filed by former AFJP members who tried to lock in the benefits earned under the privately funded system, but these were dismissed in court. At the same time, there have been several judgements in favour of retirees who are hoping that their benefits turn out to be higher than the basic minimum. </p> <p><strong>YPF</strong></p> <p>On May 3, 2012, the Kirchner government took the most controversial of its renationalisation decisions and announced it was taking over the oil company YPF, the country’s largest privately owned corporation, by expropriating 51 percent of the shares held by Spanish energy giant Repsol. The move came after a flurry of divestment by the company, which brought Argentina’s energy trade deficit to unimaginably low levels and set the course for an economy plagued by a severe shortage of dollars, a situation that continues to this day. The numbers speak for themselves: the balance of exports and imports in the energy sector was $4.104 billion in 2007, $3.514 billion in 2008, $3.830 in 2009, $1.759 in 2010, and -$3.114 billion in 2011 when the decision to expropriate YPF was taken.</p> <p>The decline in the energy sector was the result of Repsol’s policy of maximizing earnings: it made money in Argentina by exploiting mature oil fields and selling gasoline and then investing the profits in exploration in other parts of the world. So, oil and gas reserves decreased continuously while company profits and the dividends it paid out increased. From the time Repsol acquired YPF in 1998 until the end of 2011, oil reserves dropped by 54 percent; and gas reserves, by 97 percent. This did not happen overnight. The practice took place quietly over time such that the Kirchner government itself was a silent observer, a fact that underscores the serious lacunae in its regulatory policy. </p> <p>Unlike the case of Aerolíneas or the AFJP, the government agreed in February 2014 to pay compensation to Repsol. &nbsp;Some $4.670 billion was transferred using a variety of financial instruments within the framework of an overall strategy on the part of the state to align itself with international markets. In exchange, Repsol withdrew the pending case against Argentina, which it had filed with the ICSID. </p> <p>Today, YPF is spearheading an effort to recover the country’s energy self-sufficiency with the exploitation of the unconventional Vaca Muerta field in the Neuquén basin. It is estimated that it will take at least five years before the country can regain its balance of trade in the energy sector. </p> <p><strong>Railway</strong></p> <p>At the opening of the legislative session on March 1, the President announced a measure that, for the moment, is the latest salvo in the Kirchner renationalisation arsenal: the railway. The story goes back to February 22, 2012, when, at 8:30 in the morning, a commuter train, unable to brake, slammed into the buffer stops of the Once de la Ciudad de Buenos Aires railway station. 51 people died, and more than 702 were injured. </p> <p>The tragedy drew attention, once again, to a lack of government oversight with respect to private companies that had been awarded rail contracts in the 90s. Thanks to a generous subsidy, rail passengers paid low fees and the operating companies received money from the state without any obligation to invest or even adequately maintain cars and lines. The Once accident was the most recent and most serious in a string of mainly small-scale accidents. </p> <p>The disaster provoked a radical change in the government’s rail strategy, and it soon began to rescind contracts and replace private operators. It also led an ambitious investment initiative that turned the railway into a political asset - so much so that Transportation Minister Florencio Randazzo has become one of several presidential hopefuls for the October 2015 elections. The state paid $1.2 billion to China for the renovation of urban passenger trains. The latest news on this topic is that the government has now reclaimed the last of the lines awarded to private operators. It plans to place the entire rail system under the banner of the newly rehabilitated state-run Ferrocarriles Argentinos.</p><p>&nbsp;</p><p><em><strong>This article is part of our <a href="">Modernise: de-privatise</a> series. Translation by Victoria E. Robertson.</strong></em></p> uk uk Modernise: de-privatise Javier Lewkowicz Fri, 20 Mar 2015 08:27:04 +0000 Javier Lewkowicz 91364 at A citizen’s income and wealth fund for the UK: Lessons from Alaska <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Angela Cummine charts the growth and impact of Alaska's Permanent Fund and dividend – a unique combination of publicly owned wealth fund and basic citizen's income.</p> </div> </div> </div> <p>The idea of a ‘citizen’s income’ has made a real splash on the UK political agenda. The new year started with the Green party announcing a universal, non-means tested weekly payment of £72 to every British adult as its <a href="" target="_blank">flagship economic policy</a>, only to drop it this week from the party election manifesto after the programme’s costing failed to withstand rigorous scrutiny. Despite this step back, the citizen’s income idea may still feature in the election debate, given calls late last year by key <a href="" target="_blank">Liberal Democrats</a> for a universal basic income to become official party policy. And while the Greens have distanced themselves from the policy for the duration of the election, Green MP Caroline Lucas has identified the scheme as a long-term aspiration of the increasingly popular party.</p> <p>And even if it does not feature in the British election debate, the idea of replacing means-tested cash benefits with an unconditional, universal weekly payment to every adult citizen as a right of citizenship will soon be tested at the <a href="" target="_blank">Swiss ballot box</a>, with a referendum on basic income in Switzerland due sometime this year.</p> <p>The growing British interest in a citizen’s income scheme coincides with an announcement last month that two major UK public pension funds – the Greater Manchester Pension Fund (GMPF) and London Pensions Fund Authority (LPFA) – will form a joint infrastructure investment venture worth $500 million. In doing so, they are heeding <a href="" target="_blank">Boris Johnson’s calls</a> for a ‘citizen’s wealth fund’: last October, London’s mayor proposed pooling some of the UK’s 39,000 public pension funds into a single investment fund large enough to reduce the country’s dependence on foreign investment and close its infrastructure financing deficit. Of course, this modest joint fund proposal, at just half a billion pounds, hardly competes with the holdings of the world’s largest public pension funds, such as the Netherlands’ ABP ($375 billion), Canada’s Public Pension Plan Investment Board (CPPIB) and Australia’s Future Fund ($92 billion). Nevertheless, the announcement represents a step towards the creation of a British nation-building fund.</p> <p>Thus far, these separate proposals for a UK citizen’s income and citizens’ wealth fund have not been linked in the public debate. However, a working model for how these policies might be connected together and how they can support one another does exist. Alaska is the only state in the world to pay its individual citizens an annual, equal income, known as the permanent fund dividend (PFD), and this ‘basic income’ is financed by the investment returns of its sovereign wealth fund, the Alaska Permanent Fund (APF). While it remains an isolated example, the Alaskan model offers insights for Britain as it considers the appropriateness of a citizen’s income and wealth fund.</p> <h3>Creating the Alaska Permanent Fund and dividend</h3> <p>Unlike Johnson’s proposal to create a community wealth fund from public pension assets, Alaska built up the APF, worth around $51 billion, with resource windfalls. Since 1977, the state has quarantined 25 per cent of its natural resource revenues in the APF, owned and managed by the government of Alaska on behalf of the state’s citizens. The motivation for the fund was twofold: to convert the state’s finite resources into permanent financial assets and to protect these temporary revenues from political misuse. In the decade prior to the APF’s creation, the initial $900 million windfall from oil exploration licences – equivalent to more than five times the entire Alaskan budget at the time – had flowed into <em>and out of</em> state coffers. Wishing to more successfully preserve future revenues, Alaska amended its constitution to require a portion of the oil revenues be set aside in a savings fund for future generations.</p> <p>It was another four years until the Alaskan legislature decided how to manage the APF’s earnings. The case for distributing a portion of the fund’s returns directly to citizens had several bases of support. Some favoured direct distribution of a portion of Alaska’s new oil revenues as a check on government growth and ‘state greed’. Others saw it as protection against savings raids on the APF, on the basis that it would give citizens greater interest in the underlying source of their payment. Some supported the proposal on equity and fairness grounds, since elites were already perceived to benefit disproportionately from the state’s resources, through special-interest appropriations of oil wealth, and because it would bring a huge benefit to low-income Alaskans and those living at a subsistence level. Others preferred cash dividends on efficiency grounds, believing that individuals would be better able to make good use of oil revenues than government.</p> <p>For the main instigator of the dividend concept, then-governor Jay Hammond, these arguments boosted the case for dividends, but they were not the driving force. According to former advisors to the governor Cliff Coh and Gregg Erickson:</p> <p>‘For Hammond [and staff] … the shared core idea was neither charity, nor leveling, nor an attempt to build an income floor. [The] shared commitment was to the notion of collective ownership and the fundamental fairness of sharing the returns in equal proportion to their equal ownership.’</p> <p>While there were also strategic motivations for the dividend – it was a defensive posture to help keep the APF alive – Hammond’s fundamental belief was that a dividend would give each citizen an individual stake in Alaska’s collectively owned state wealth.</p> <h3>How Alaska’s dividend works</h3> <p>The successful passage of the PFD legislation has meant that, since 1982, every Alaskan citizen has received an equal annual dividend from the APF’s income. The PFD is universal, with no age-limit, means-testing or restrictions on how it is used. The only significant eligibility requirement is that the recipient must have been resident in Alaska for a full calendar year before they are entitled to receive the dividend. It is paid by direct deposit into individual residents’ bank accounts on the same day each year.</p> <p>The payment fluctuates in size depending on the APF’s investment returns in a given period. From a low point of $300–$400 when it first commenced, the dividend <a href="" target="_blank">peaked</a> at just over $2,000 in 2008. Since the principal of the APF is legislatively protected as ‘non-spendable’, the dividends must be funded entirely from returns. While these returns vary, the dividend is calculated based on a five-year average in order to smooth out the short-term effects of market fluctuations. Finally, the dividend is paid irrespective of whether the state of Alaska is in surplus or deficit.</p> <h3>Insights for the UK</h3> <p>In form and effect, the Alaskan PFD closely resembles a basic income. Its supporters claim that it has helped to make Alaska the most equal state in the US, provides a safety net for all citizens, helps to reduce poverty and ease unemployment traps, and promotes worker freedom. On one measure, Alaska has the most equally distributed income among all US states, as well as the fewest households with incomes under $10,000. Although these outcomes cannot be entirely attributed to the dividend, studies have shown that Alaska’s equality of income distribution and poverty alleviation improved dramatically since the dividend’s introduction.<a href="">[1]</a></p> <p>While the UK has arguably missed its chance to establish a resource-based citizen’s fund – as might have been built up from North Sea oil and gas revenues – there is still much the UK can learn from Alaska’s hybrid fund-and-dividend approach. The Alaskan experience suggests that considering the two policies together promotes a more viable version of both initiatives. Survey research of Alaskans has revealed that the dividend helps to protect the underlying wealth fund, insofar as Alaskans reject the idea of cashing it out and dividing it up. Instead, they prefer to maintain a community savings fund for future generations, which can also provide current citizens with an annual dividend.</p> <p>If the UK wants to establish a <em>citizen’s,</em> as opposed to a <em>sovereign</em> wealth fund, then the lesson is that citizens are more likely to monitor and care about the performance of that fund if they are individual, direct beneficiaries of its performance. Equally, a basic income attached to individuals as a right of citizenship is more likely to be realised and entrenched if it is bundled up with a permanent funding source, and so is quarantined from the vicissitudes of annual budget rounds and spending decisions.</p> <p>&nbsp;</p><p><em><strong>Crossposted from IPPR's <a href="">Juncture blog</a>.</strong></em></p> <hr size="2" /> <p><strong>Note</strong></p> <p>1. Goldsmith S (2012) ‘The Economic and Social Impacts of the Permanent Fund Dividend on Alaska’ in Widerquist K and Howard MW (eds) <em>Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model</em> (Palgrave Macmillan) </p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-read-on"> <div class="field-label"> 'Read On' Sidebox:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p><a href=""><img src="// Charter Convention (1).jpg" alt="" width="140" /></a> </p><p><a href="">The Great Charter Convention</a> – an open, public debate on where arbitrary power lies in the UK today and how we should contest and contain it.</p> </div> </div> </div> </fieldset> uk uk A new charter of the forest Building it: campaigns and movements Great Charter Convention Modernise: de-privatise Angela Cummine Wed, 11 Feb 2015 00:11:11 +0000 Angela Cummine 90291 at Pos-neoliberalismo: lecciones de Sudamérica <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Después de un período de rápida liberalización, Sudamérica puso en marcha un programa de re-nacionalizaciones antes de haberse salido totalmente de la fase neoliberal - en una iniciativa que podría ser calificada como ‘pos-neoliberalismo’. <em>Publicado previamente&nbsp; en OurKingdom. <a href="" target="_blank"><strong>English</strong></a></em></p> </div> </div> </div> <p>La última década puede definirse en buena parte de América del Sur como “posneoliberal”. Esto significa dos cosas: que el período neoliberal dejó sus marcas, muchas de carácter estructural, y que al mismo tiempo varios de sus postulados se dejaron de lado. Hay una (inevitable) continuidad histórica con notables novedades. Los cambios se manifiestan en el contenido de las políticas públicas pero también en su concepción, desde la adopción, en los `90, de un recetario nacido en el Consenso de Washington y promocionado por los organismos internacionales de crédito hasta una serie de programas neodesarrollistas que en los últimos años no contó con un esquema predefinido, se hizo “sobre la marcha” e hizo propias reivindicaciones populares.</p> <p>El neoliberalismo dejó marcas indelebles: sociedades desintegradas, tejidos industriales deteriorados, sectores populares más postergados y sistemas políticos en crisis. También decretó una serie de dificultades para que los Estados dirijan los procesos de desarrollo, como legislación favorable a las corporaciones, la pérdida de herramientas de política fiscal, monetaria, comercial y de capacidades regulatorias, la liquidación de órganos de intervención en el mercado y la privatización de empresas públicas.</p> <p>La “ola de privatizaciones” tuvo lugar entre 1990 y 1995. En ese período, según las cifras de la Cepal, el stock de inversión extranjera directa en América latina y el Caribe pasó de 126 a 278 mil millones de dólares (un crecimiento del 120 por ciento). &nbsp;Se calcula que unas 1500 empresas públicas en toda la región fueron vendidas al sector privado, cerradas o declaradas en bancarrota[i]. Afectó a firmas de servicios públicos, industria, transporte, logística y medios de comunicación, entre otros. Las privatizaciones formaron parte del plan de alineamiento político de la región con Estados Unidos. Una de sus motivaciones fue la integración de los países al &nbsp;Plan Brady, y por esa vía, a los mercados internacionales de crédito, después de las crisis de la deuda de los `80.</p> <p>Desde la época del desarrollismo, en los `50 y `60, la empresa pública tuvo fuerte presencia en la explotación de los recursos naturales no renovables, en los servicios públicos y en el sector manufacturero. Estaba en el centro de las capacidades del Estado, por eso las privatizaciones definieron al neoliberalismo, junto a los contratos de concesión favorables al capital o la cooptación de las empresas públicas por parte de directivos vinculados a las multinacionales. Fueron modos de “cortarle las uñas” a los Estados.</p> <p>El agotamiento del modelo de acumulación neoliberal se expresó en las crisis económicas, sociales y políticas de fines de siglo y derivó en el cambio de signo político en muchos países de la región. Ese giro se verificó en materia de relacionamiento exterior, con una mirada más integracionista hacia la región y de menor aceptación de las directrices norteamericanas. Los gobiernos también lanzaron programas de asistencia social y de defensa del empleo.</p> <p>El recambio político motivó una mayor intervención del Estado en la economía. Además de la utilización de las herramientas fiscales, monetarias y comerciales, se verificaron avances a través de empresas privadas con participación estatal, se nacionalizaron empresas antes privatizadas y también firmas privadas. Creció en algunos casos la presencia estatal en el directorio de empresas, hubo expropiaciones y cambios en las condiciones contractuales de explotación de recursos naturales a favor del Estado. Los ejemplos de Brasil, Argentina, Venezuela, Bolivia y Ecuador, que se detallan a continuación, muestran las distintas estrategias de avance del Estado sobre las privatizadas y sobre los espacios privilegiados de rentabilidad que habían sido entregados al capital.</p> <p><strong>Brasil</strong></p> <p>En Brasil el proceso privatizador se desarrolló de la mano del ambicioso plan de Fernando Henrique Cardoso, quien fue ministro de Relaciones Exteriores (1992-1993), de Hacienda (1993-1994) y Presidente del Brasil (1995-2002). “El planteo de los sectores liberales en Brasil era que había que desregular. Por eso aplicaron una fuerte apertura externa financiera y comercial. La intención explícita era `dar vuelta la página de la era desarrollista`, durante la cual se habían creado las grandes empresas estatales, como Petrobras, el Banco Nacional do Desenvolvimento Econômico e Social (BNDES) y Vale do Rio Doce -- del sector de hidrocarburos, banca de desarrollo y minería, respectivamente--”, explicó Javier Ghibaudi, investigador de la Universidad Federal Fluminense y de la Universidad Federal de Rio de Janeiro, a <em>Open Democracy</em>. Los casos más emblemáticos del proceso privatizador son Vale do Rio Doce, el sistema eléctrico, la telefonía, empresas del sector siderúrgico, el sistema ferroviario, metalúrgico y petroquímico y bancos provinciales. Petrobras mantuvo el control estatal y los grandes bancos nacionales, como el BNDS, La Caixa Económica, y el Banco do Brasil, no modificaron su estructura societaria.</p> <p>Las privatizaciones fueron financiadas por el capital extranjero y por recursos nacionales privados. Pero sobre todo participaron fondos públicos a través del BNDS y los fondos de pensión. Eso le permitió al Estado brasileño contar con un grado relativamente alto de participación societaria en numerosas empresas industriales, que incluso se incrementó en los últimos años a partir de la compra directa de acciones. El caso más claro de la nueva relación que en los últimos años se construyó entre el Estado y los privados es la constructora Odebretch.</p> <p>En el sector eléctrico, después del famoso apagón de 2001, el Gobierno central también amplió su influencia, a través de más controles regulatorios. En el caso del petróleo, hubo un cambio en el régimen de regulación de las explotaciones para los pozos nuevos, con más exigencia de contenido industrial local.</p> <p>“Brasil no volvió atrás con las leyes privatizadoras de los `90. Tampoco creó nuevas empresas públicas. En cambio, el Estado financió a los privados y así se formó una suerte de asociación, que es económica y también política”, sintetiza Ghibaudi.</p> <p><strong>Argentina</strong></p> <p>El 17 de agosto de 1989, con motivo de la sanción de la ley 23.696, conocida como Ley de Reforma del Estado, Roberto Dromi, secretario de Obras Públicas de la Argentina bajo la presidencia de Carlos Menem (1989-1999), pronunció un discurso histórico: “El gobierno de la Nación Argentina cumplimenta esta noche siete privatizaciones en sectores estratégicos. Encaramos la privatización de la televisión, de los teléfonos, del sistema del peaje, de la concesión vial y ferroviaria, las radios y por supuesto de la empresa estatal de la aeronavegación. Hemos ideado un decálogo de la reforma del Estado. El mandamiento uno dice así: `nada de lo que deba ser estatal permanecerá en manos del Estado`”. Fue un furcio revelador, porque durante la década, Menem privatizó, además de lo dicho, las principales industrias del sector siderúrgico, petroquímico, naval y petrolero, electricidad y gas, puertos, centrales hidroeléctricas, la banca hipotecaria y el sistema previsional. No por nada el país fue considerado durante muchos años “el mejor alumno” del FMI.</p> <p>En Argentina el estallido del neoliberalismo configuró la peor crisis económica, social y política de su historia. Durante los gobiernos de Néstor y Cristina Kirchner (2003-2015) se realizaron varias “desprivatizaciones”, como último remedio ante situaciones de vaciamiento de las empresas y falta de cumplimiento de los contratos, aunque también hubo decisiones concebidas con un carácter estratégico. De todos modos, en muchos sectores económicos las privatizaciones quedaron intactas.</p> <p>El primer caso de “desprivatización” fue el Correo Argentino, en 2003, ante la quiebra de la empresa, mientras que en 2004 el Estado recuperó el espectro radioeléctrico, manejado por la francesa Thales Spectrum que incumplió inversiones por 300 millones de dólares. En 2006 se nacionalizó el servicio de agua y cloacas, que controlaba hasta 2006 la francesa Suez y la española Aguas de Barcelona, luego de que distribuyeran agua contaminada en una zona importante de la provincia de Buenos Aires. En 2008 se nacionalizó la línea aérea de bandera, Aerolíneas Argentinas, ante el grotesco vaciamiento que produjo la española Marsans.</p> <p>Luego se dieron los dos casos más importantes de reversión de privatizaciones. A fines de 2008 se estatizó el sistema previsional, que pasó de un esquema de capitalización individual manejado por los bancos a uno de solidaridad intergeneracional. Esa medida le permitió al Estado obtener recursos líquidos y también participación accionaria en las empresas más importantes del país. La estatización más ruidosa fue en 2012, cuando el Gobierno expropió la petrolera YPF a la empresa española Repsol, después de una caída estrepitosa de la producción y de las reservas de hidrocarburos. El último caso fue el los trenes: después del fallecimiento de 51 personas en un accidente que sólo se explica por la falta de mantenimiento parte del concesionario privado y por la ausencia de controles estatales, el Gobierno prácticamente estatizó el sistema ferroviario.</p> <p>El de YPF fue el único caso de compensación monetaria, por 5 mil millones de dólares en un acuerdo conjunto. El resto de las medidas se tomaron como anulación de los contratos de concesión o como estatización ante la quiebra del privado.</p> <p><strong>Venezuela</strong></p> <p>“El venezolano es un caso excepcional, porque el proceso de privatización se vio casi totalmente frenado por el levantamiento popular conocido como el “Caracazo”, en 1989, contra el gobierno de Carlos Andrés Pérez --1989/1993--. Hasta 1999, cuando finaliza el mandato de Rafael Caldera, se habían privatizado algunos hoteles, la empresa Venalum, de aluminio y otras firmas, aunque no se pudo completar el proyecto privatizador de los sectores liberales. En particular, PDVSA, la empresa nacional de petróleo, mantuvo su status estatal, aunque en ella convivían directores estatales y otros designados por las multinacionales del sector”, señaló a <em>Open Democracy</em> Modesto Guerrero, reconocido periodista venezolano.</p> <p>El gobierno de Hugo Chávez (1999-2013) avanzó desde comienzos del nuevo siglo con un ambicioso plan de estatizaciones, no de empresas privatizadas sino de empresas privadas. Fueron más de mil firmas, entre ellas las más grandes del país, como la acería Sidor, las empresas de generación eléctrica Seneca y Electricidad de Caracas, por la cual el Gobierno pagó a la firma norteamericana AES Corp 740 millones de dólares por el 82 por ciento de la compañía; la Compañía Anónima Nacional de Teléfonos de Venezuela (CANTV), que exigió el pago a la estadounidense Verizon Communicatios de 572 millones por el 28,5 por ciento del paquete accionario, y el Banco de Venezuela, filial del español Santander, cerrado bajo acuerdo por 1050 millones de dólares, además de otro gran número de operaciones en el sector bancario. Chávez también estatizó las cementeras Cemex (mexicana), Lafarge (francesa) y Holcim (suiza), la firma más importante de fertilizantes y cientos de pequeñas empresas, además de “desprivatizar” Venalum.</p> <p>Con respecto al sector petrolero, la política oficial consistió en la nacionalización de los nuevos pozos en la franja del Orinoco, además de incrementar la presencia estatal en PDVSA. Se multiplicaron las inversiones chinas y rusas en explotación conjunta con PDVSA. Bajo el mandato de Nicolás Maduro, en un contexto político delicado, el Gobierno decidió revertir su política de nacionalizaciones, especialmente en el relación a pequeñas compañías, que fueron restituidas al sector privado.</p> <p><strong>Bolivia</strong></p> <p>El actual presidente, Evo Morales, asumió en 2006 con la promesa de llevar a cabo la demanda popular de la nacionalización de los hidrocarburos, que obligó a las petroleras a renegociar contratos, que pasaron a beneficiar en un 82 por ciento al Estado y el resto al capital privado, cuando antes la proporción era inversa. El Estado boliviano también adquirió acciones de las petroleras Chaco (controlada por British Petroleum), Andina (filial de Repsol) y Transredes (de Ahsmore y Shell). La nacionalizacion de los hidrocarburos fue el eje de la política económica boliviana y permitió que la firma estatal YPFB quintuplicara su patrimonio en un puñado de años.</p> <p>Morales revirtió la privatización en el sector de las telecomunicaciones, al nacionalizar ENTEL en 2007, después de un año de negociaciones con EuroTelecom International (ETI), la subsidiaria de Telecom Italia que desde 1996 tenía el 50 por ciento de acciones y la administración de ENTEL. A su vez, nacionalizó cuatro empresas eléctricas de capitales extranjeros y una metalúrgica.</p> <p><strong>Ecuador</strong></p> <p>“En Ecuador, el proceso privatizador fue débil porque ya estaba asegurado, a través de modalidades contractuales o de concesión, la penetración del capital privado en distintos sectores económicos. Se mantenía entonces la propiedad estatal en términos formales, pero en los hechos una enorme porción de las rentas generadas eran apropiadas por el capital extranjero. Por eso mismo no se puede hablar de reversión de privatizaciones en estos años en el Ecuador”, explicó a <em>Open Democracy</em> Diego Borja, ex ministro de Economía (2005-2006). Sin embargo, ell Gobierno modificó en 2006 los contratos de forma que el Estado incrementó su participación en la renta petrolera.</p> <p><strong>La mano visible…</strong></p> <p>Brasil, Argentina, Venezuela, Bolivia y Ecuador fueron los países de América del sur que de forma más marcada experimentaron cambios políticos en la última década. En todos los casos se percibe una mayor presencia del Estado en la economía, aunque ese avance tomó distintas formas, en función del pasado reciente de privatizaciones, el sentido “rupturista” de los gobiernos y las condicionalidades desde el exterior. La voluntad de otorgar más relevancia a la actividad del Estado, además, se desplegó en un contexto económico peculiar. Los países de la región crecieron de forma sostenida, accedieron a las divisas provenientes de los buenos precios de los commodities, mejoraron notablemente su capacidad fiscal y se desendeudaron.</p> <p>La intención política y la capacidad económica permitieron a los gobiernos devolver relevancia a los Estados, a través de expropiaciones al sector privado que fueron indemnizadas, otras que no lo fueron, compras de acciones al sector privado, préstamos que se capitalizaron y modificaciones en los contratos de concesión. De todos modos, perduran muchos de los cambios estructurales que provocó el neoliberalismo, de los cuales las privatizaciones no revertidas son sólo un ejemplo. Todo ello conforma un esquema político, económico y social que está en desarrollo y se llama posneoliberalismo.</p> <hr size="2" /> <p>[i] &nbsp;Estache, Antonio y Trujillo, Lourdes. “La privatización en América latina en la década de los años 90: aciertos y errores”. Revista Asturiana de Economía, 2004.</p> DemocraciaAbierta DemocraciaAbierta uk Modernise: de-privatise Javier Lewkowicz Mon, 09 Feb 2015 18:23:06 +0000 Javier Lewkowicz 90364 at Post-neoliberalism: lessons from South America <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>After a period of rapid liberalisation South America undertook a programme of renationalisations, while still bearing the marks of the neoliberal phase - what might be termed 'post-neoliberalism'. <a href="" target="_blank"><strong><em>Español</em></strong></a>. </p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="282" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Flickr/CM Ortega. Some rights reserved.</span></span></span></p><p>For much of South America, the last decade can be defined as “post-neoliberal.” This means two things: the neoliberal period left its imprint—much of it structural in nature—and, at the same time, many of its core principles were cast aside. Despite some inevitable historical continuity, there has been noteworthy divergence, as evidenced by changes not just in the content of public policy but also in its formulation. These began in the wake of the Washington Consensus, which produced economic prescriptions eagerly promoted by international lending agencies, and were maintained through a series of neo-developmental programs that, in recent years, were not the product of a set plan but rather undertaken on the fly, generating their own attendant popular demands.</p> <p>Neoliberalism left indelible marks: disintegrating societies, deteriorating industrial frameworks, neglected public sectors, and political systems in crisis. It also impeded the State’s ability to manage development by enabling legislation that benefitted corporate interests, undermining fiscal, monetary and commercial mechanisms as well as regulatory capacities, eliminating entities able to intervene in markets, and privatising public companies. </p> <p>The privatisation wave swept through the region between 1990 and 1995. In that brief period, according to figures from ECLAC, direct foreign investment in Latin America and the Caribbean surged from $126bn to $278bn USD (an increase of 120 percent). An estimated 1,500 public companies were either sold to the private sector, closed, or declared bankrupt.<a href="#_ftn1">[1]</a> This affected utility companies as well as other key sectors such as industry, transportation, logistics, and communications. Privatisation was part of a regional plan to seek political alignment with the United States, the motivation for which was a reaction to the debt crisis of the '80s and a concomitant impulse to integrate the countries of the region into the Brady Plan and, by extension, into international credit markets.</p> <p>During the era of developmentalism that characterized the '50s and '60s, public companies played a pivotal role in the exploitation of non-renewable resources, utilities, and manufacturing. They were at the heart of state power, which is why a privatisation backlash would come to define the subsequent neoliberal period - along with licensing contracts that favoured big business and the coopting of public companies by an executive with close ties to multinationals. It was a way of declawing the state. </p> <p>The neoliberal model of capital accumulation succumbed under its own weight at the end of the 20th century, giving way to widespread economic, social and political crises and leading to a change in the political orientation of many countries in the region. The shift was confirmed in foreign relations, in particular by a more integrationist posture within the region and less willingness to tow the North American line. For the first time, governments initiated important social assistance and employment protection programs.</p> <p>Political change led to greater state intervention in the economy. In addition to making use of fiscal, monetary, and trade mechanisms, progress was made through governmental participation in private companies, with both formerly privatised enterprises and privately owned firms being nationalised. In some cases government presence increased on company boards, businesses were expropriated, and contracts governing the exploitation of natural resources were modified to benefit national interests. The cases of Brazil, Argentina, Venezuela, Bolivia, and Ecuador, which are detailed below, illustrate how different strategies were used to encroach on the private sector and areas of economic profitability that had been its preserve. </p> <p><strong>Brazil</strong><strong>&nbsp;</strong></p> <p>In Brazil, the privatisation process was spearheaded by the ambitious statesman Fernando Henrique Cardoso, who occupied in turn the position of Minister of Foreign Affairs (1992-1993), Finance Minister (1993-1994), and President (1995-2002). “The position taken by the liberal factions in Brazil was that deregulation was essential. So they opened up their financial and commercial markets to the outside. It was a clear attempt at ‘turning the page on the developmental era’ during which massive state enterprises such as Petrobras, Banco Nacional do Desenvolvimento Economico e Social (BNDES), and Vale do Rio Doce had been created - which controlled the oil and gas, development banking, and mining sectors respectively,” explains Javier Ghibaudi, a researcher at the Fluminense Federal University and the Federal University of Rio de Janeiro. The most emblematic examples of the privatization process are Vale do Rio Doc (mining, metals and logistics), the electricity, telephone, steel, rail, metals and petrochemical industries as well as the provincial banking sector. Petrobras continued to be state controlled while the larger national banks such as BNDS, the Caixa Economica and Banco do Brasil maintained their corporate structure.</p> <p>The privatisations were financed by foreign capital and private domestic sources. But the lion’s share came from the public coffers through BNDS and pension funds. That afforded the Brazilian government a relatively large shareholder stake in numerous industrial companies, an initiative that increased in recent years through direct share purchasing. The clearest evidence of the new relationship between the state and the private sector is the construction company Odebretch.</p> <p>After the famous blackout of 2001, the federal government also extended its influence in the electricity sector through increased regulatory control. In the case of oil, changes were made to the regulatory framework for exploiting new wells, requiring greater participation by local industries. </p> <p>“Brazil did not go back on its privatisation laws of the 90s; nor did it establish new public enterprises. Instead, the government funded private industry and in so doing formed a kind of association, one that is economic as well as political,” Ghibaudi concludes. </p> <p><strong>Argentina</strong><strong>&nbsp;</strong></p> <p>On August 17, 1989, on the occasion of the passage of Argentina’s law 23.696, the<em> Act Respecting State Reform</em>, Roberto Dromi, then Secretary of Public Works under President Carlos Menem (1989-1999), delivered an historic speech, “Tonight the Government of Argentina has completed seven privatisations in strategic sectors. We look forward to the privatisation of television, telephones, the toll system, road and railway licensing, radio and, of course, the state-owned airline. We have devised a decalogue for reform, the first commandment of which reads: ‘Nothing that should be state-owned shall remain in the hands of the State’.” It was a revealing slip of the tongue because in addition to the above, during the decade of his mandate, President Menem privatised other key industries such as steel, petrochemicals, shipbuilding and oil, electricity and gas, ports, power plants, mortgage lending, and social security. It is no coincidence that for many years Argentina was considered the IMF’s top student.</p> <p>The neoliberal surge brought about the worst economic, social, and political crisis in Argentina’s history. During the successive governments of Nestor and Cristina Kirchner (2003-2015), many renationalisations were undertaken as a last resort in the face of asset stripping and non-compliance, although some of these decisions were also strategically motivated. Nevertheless, in many economic sectors, privatisation remained intact.</p> <p>The first case of renationalisation involved the bankrupted postal service in 2003. The next year, the government recovered Argentina’s radio spectrum, which had been managed by the French company Thales Spectrum, who failed to honour a $300m investment. In 2006, water distribution and sewage were taken out of the private hands of France’s Suez S.A. and Spain’s Aguas de Barcelona, following a water contamination incident in a major industrial area of the province of Buenos Aires. In 2008, the airline Aerolineas Argentinas was nationalised after flagrant asset stripping by Spanish Grupo Marsans.</p> <p>But the two most significant cases of renationalisation were yet to come. In late 2008, the social security system went from an individually funded scheme managed by the banks to one of intergenerational liability. This measure gave the government access to liquid assets and a shareholder stake in one of the country’s most important enterprises. The biggest controversy occurred in 2012, when Kirchner’s government expropriated the oil company YPF, which had been controlled by Spain’s Repsol, after a precipitous drop in hydrocarbon production and reserves. Most recently, the country’s trains came under scrutiny when 51 people were killed in an accident that could only be explained by shoddy maintenance on the part of rail owners and the absence of adequate government supervision; the railway has now been almost fully nationalised. </p> <p>The only financial compensation paid out in this period was in the nationalization of YPF, which involved some five billion dollars and a joint agreement. All the other measures were undertaken by terminating licensing contracts or nationalising private companies that faced bankruptcy. </p> <p><strong>Venezuela</strong><strong>&nbsp;</strong></p> <p>As the renowned Venezuelan journalist Modesto Guerrero explains, “Venezuela is an exceptional case because the privatisation process was almost completely halted by the 1989 popular uprising, known as the <em>Caracazo</em>, against the government of Carlos Andrés Pérez (1989-1993). Up until 1999 and the end of Rafael Caldera’s mandate, a handful of hotels, the aluminum company Venalum, and a few other firms had been privatized but the measures stopped short of the liberal faction’s goals. In particular, the national oil company PDVSA kept its state-owned status, although its board enjoyed membership by both government appointed directors and those designated by the multinationals of the energy sector.” </p> <p>From the first days of the new century, the government of Hugo Chávez (1999-2013) put forward an ambitious nationalisation plan - one that did not target previously privatised companies but wholly private firms. More than a thousand signatures attest to the changing of hands. These include Venezuela’s largest enterprises: the Sidor steel mill; the power companies Seneca and Electricidad de Caracas, for which the government paid the U.S. firm AES Corp $740 million for an 82 percent stake in the company; Compania Anonima Nacional Telefonos de Venezuela (CANTV), which required a $572 million purchase from Verizon Communications of a 28.5 percent stake; and the Bank of Venezuela, an erstwhile subsidiary of Spanish Santander, which involved a $1.05bn deal; and many other major transactions in the banking sector. Chavez also nationalised the cement companies Cemex (Mexico), Lafarge (France), and Holcim (Switzerland) as well as the largest fertilizer producer and hundreds of small businesses, and it renationalized Venalum.</p> <p>In regard to the oil sector, the official policy was to nationalize new wells in the Orinoco belt and expand state presence in PDVSA. Chinese and Russian investment also increased in the form of joint ventures with PDVSA. Operating in a more precarious political context, the government of Nicolas Maduro has decided to reverse its policy of nationalization, particularly in relation to smaller companies, which have been returned to the private sector.</p> <p><strong>Bolivia</strong><strong>&nbsp;</strong></p> <p>Current president Evo Morales took office in 2006 promising to accede to popular demand and nationalize the oil and gas industry. This forced petroleum companies to renegotiate contracts. As a result, the state inverted the traditional benefits ratio, tapping 82 percent of the profits, with only the balance going to the private sector. The Bolivian government also acquired shares in Chaco (formerly controlled by British Petroleum), Andina (a subsidiary of Repsol) and Transredes (Ahsmore and Shell). Oil and gas nationalization was the focal point of Bolivia’s economic policy, and it enabled state-owned YPFB to quintuple its assets in a handful of years.</p> <p>With the nationalization of ENTEL in 2007, Morales reversed the privatization of the telecommunications sector. It took a year of negotiating with Euro Telecom International (ETI), a subsidiary of Telecom Italia, which had enjoyed a 50 percent equity and management stake in ENTEL since 1996. Morales in turn nationalized four foreign-owned power companies and a metalworking business. </p> <p><strong>Ecuador</strong><strong>&nbsp;</strong></p> <p>"In Ecuador, the privatisation process was weak because private capital penetration in various economic sectors was already implicitly secured through contractual arrangements or licensing. The formal appearance of state ownership was thereby maintained, but in reality foreign investors appropriated a huge portion of the income generated. That is why it cannot be said that renationalisation occurred in recent years in Ecuador,” explains Diego Borja, former Finance Minister (2005-2006). Nevertheless, the government modified its contracts in 2006 so as to increase its share of oil revenues.</p> <p><strong>The visible hand</strong></p> <p>Brazil, Argentina, Venezuela, Bolivia, and Ecuador are the South American countries that experienced the most marked political changes in the last decade. In each case, state presence in the economy increased, although it took different forms, depending on the country’s recent history of privatisation, the government’s readiness to break with tradition, and the conditions imposed from outside. Moreover, the commitment to grant more power to the state was bolstered by a particular economic context. The countries of the region grew steadily, benefitted from strong commodity prices, significantly improved fiscal policy, and reduced their debt. </p> <p>Political will and economic viability enabled governments to boost the power of the state, through expropriations—some of which were compensate and others not—and share buyouts in the private sector, loan capitalization, and new licensing contract terms. In any event, many of the structural changes brought about by neoliberalism endured, of which the decision not to reverse certain privatisations is just one example. Together these elements make up a political, economic, and social framework that is still evolving and can be called post-neoliberalism.<strong>&nbsp;</strong></p><p>&nbsp;</p><p><strong><em><span>This article is part of our </span><a href=""><span>Modernise: de-privatise series</span></a><span>, looking at different forms of public ownership and the methods by which people have democratised the assets.</span></em></strong></p> <hr size="1" /> <p><a href="#_ftnref1">[1]</a> Estache, Antonio y Trujillo, Lourdes. “La privatización en América latina en la década de los años 90: aciertos y errores”. <em>Revista Asturiana de Economía</em>, No. 31, 2004. </p> uk uk Modernise: de-privatise Javier Lewkowicz Mon, 09 Feb 2015 00:11:11 +0000 Javier Lewkowicz 90188 at Red state, red power: Nebraska’s publicly-owned electricity system <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Nebraska's energy is all publicly owned, yet it blows away the myth that public ownership is inherently inefficient, bureaucratic or unresponsive.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="296" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Flickr/Blue Square Thing. Some rights reserved.</span></span></span></p><p>Around the world, people often assume that in the United States, home to a no-holds-barred version of “free market” capitalism, private ownership operates more or less across the board. There is, however, a rich and robust history and experience of public ownership throughout the country - often found in the least expected of places. For instance, there is <a href="">one state</a> where every single resident and business receives electricity from a public or community-owned institution rather than a for-profit corporation. It is not a famously liberal state like Vermont or Massachusetts. Rather, it is conservative <a href="">Nebraska</a>, with its two Republican Senators and two (out of three) Republican members of Congress, that has embraced the complete socialization of energy distribution. The ‘red states’—named after the color now given to states that vote Republican in elections—are often ‘red’ in more ways than one.</p> <p>In Nebraska, 121 publicly-owned utilities, 10 cooperatives, and 30 public power districts <a href="">provide</a> electricity to a <a href="">population</a> of around 1.8 million people. Public and cooperative ownership keeps costs low for the state’s consumers. Nebraskans pay one of the <a href="">lowest rates</a> for electricity in the nation and revenues are reinvested in infrastructure to ensure reliable and cheap service for years to come. “There are no stockholders, and thus no profit motive,” the Nebraska Power Association proudly <a href="">proclaims</a>. “Our electric prices do not include a profit. That means Nebraska’s utilities can focus exclusively on keeping electric rates low and customer service high. Our customers, not big investors in New York and Chicago, own Nebraska’s utilities.” Payments (in lieu of taxes) from the state’s publicly-owned utilities <a href="">exceed</a> $30 million a year and support a variety of social services throughout the state—including the public education system.</p> <p>Nebraska has a <a href="">long history</a> of publicly-owned power systems dating back to the beginnings of electrification in the late 1800s. Initially, these co-existed with small private utilities. However, in the post-World War One era, large corporate electric holding companies backed by Wall Street banks entered the market and began taking over smaller private and municipal systems. Using their financial and political power, these corporations dramatically consolidated the power industry in Nebraska and attempted to stop new cooperatives and publicly-owned utilities from forming. During this time more than one-third of the state’s municipal utilities were sold to private corporations. </p> <p>Tired of abusive corporate practices, in 1930 residents and advocates of publicly-owned utilities took a revenue bond financing proposal straight to the voters, bypassing the corporate influenced legislature which had previously failed to pass similar legislation. It was approved overwhelmingly - signaling both popular support for publicly-owned utilities in the state and also the beginnings of their resurgence. Led by powerful Nebraska Senator George W. Norris—the driving force behind the publicly-owned <a href="">Tennessee Valley Authority</a>—a series of state and federal laws were passed including: the state’s Enabling Act (1933) which allowed 15 percent of eligible voters in an area to petition for a decision on a publicly-owned utility; the Public Utility Holding Company Act (1935) which forced the breakup and restructuring of corporate electricity monopolies; and the Rural Electrification Act (1936) which provided financing for rural electricity projects. By 1949, Nebraska had solidified its status as the first and only all-public power state.</p> <p>Local control and the possibility for democratic participation are defining features of Nebraska’s publicly-owned electricity system. At the ground level, public utilities and cooperatives are run by publicly elected power district boards, cooperative boards, or elected city councils (often through appointed boards). These bodies establish budgets, establish service standards and policies, and set prices. Regularly scheduled meetings of power boards and councils are open to public involvement and comment. Should they so wish, <a href="">every Nebraskan</a> has the opportunity to become involved in the decision making of their local electricity provider. One such example relates to the increasing use and proliferation of renewable energy facilities. While the state remains heavily reliant on coal and nuclear sources to provide low-cost energy to consumers, interest in renewable energy—primarily wind—has taken off in recent years. In 2003, electricity consumers, many of whom drove more than 100 miles for the event, <a href=";print">participated</a> in an eight-hour deliberative polling survey for the Nebraska Public Power District (NPDD) - a public <a href="">corporation</a> owned by the state of Nebraska that supplies energy to 600,000 people via local publicly-owned utilities and cooperatives. The topic at hand was the potential addition of more than 200 MW of wind energy by 2010. 96 percent of the participants <a href="">supported</a> the wind project, with 50 percent agreeing it was the right size and 36 percent wanting it expanded (compared to just 3 percent who wanted it reduced).</p> <p>In addition to its other wind power facilities, in 2005 NPDD began operating the Ainsworth Wind Energy Facility, the nation’s <a href="">second largest</a> publicly-owned wind farm <a href="">consisting</a> of 36 turbines generating up to 59.5 MW of energy. In 2011, the state’s <a href="">energy plan</a> acknowledged both that power generation from wind had doubled every two years since 2006 and that developing just 1 percent of the potential energy from wind in Nebraska would satisfy the state’s entire peak demand. </p> <p>Moreover, public ownership of electricity generation and distribution in Nebraska is complemented by another seemingly socialist idea - planning. The Nebraska Power Review Board is a state agency that oversees the publicly-owned electricity system. In addition to its regulatory functions—such as monitoring rate increases and arbitrating conflicts—the five person <a href="">Review Board</a> (appointed by the Governor and confirmed by the legislature with party, occupational, and term limit restrictions) “oversees the preparation and filing of a coordinated long-range power supply plan,” as well as the location and construction of new electricity generation facilities. </p> <p>As demonstrated by Nebraska’s nearly 100 years of experience with a completely public and community-owned electricity system, American experimentation offers an interesting alternative to how public ownership has often been implemented in other parts of the world. Describing the post-World War Two British public-ownership program, University of Glasgow professor Andrew Cumbers <a href=";dq=reclaiming+public+ownership&amp;hl=en&amp;sa=X&amp;ei=iq--VJ-vKYOfgwSyvYD4Cw&amp;ved=0CB0Q6AEwAA">writes</a>: “The nationalization of the electricity, gas and other utilities resulted in the centralization of many activities that had formerly been locally or municipally owned and subject to a reasonable degree of local democratic control…Not only did this eviscerate important traditions of municipal socialism and more democratic forms of public ownership, but it also led to an increasing number of costly and unaccountable decisions (notably the decision to invest in nuclear power) by nationalized entities.” </p> <p>Such experiences often reinforce the concern that public ownership of larger scale systems can lead to inefficiency, unaccountability, and bureaucracy. But Nebraska demonstrates that this does not necessarily have to be the case. The principles of subsidiarity and local control can, in fact, be preserved through a networked mix of publicly-owned institutions at various scales without sacrificing efficiency or service quality. Of course, public ownership alone is not a fix-all solution. It does, however, provide an opportunity for a community, a city, or even a whole region or nation to become actively involved in economic decision making on important matters affecting their lives, their environment, and their future.&nbsp; </p> <p>&nbsp;</p><p><strong>This article is crossposted with thanks to <a href="">Community Wealth Blog</a>, as part of our <a href=""><em>Modernise: de-privatise</em></a> series.</strong></p> uk uk Modernise: de-privatise Thomas M. Hanna Wed, 28 Jan 2015 00:11:11 +0000 Thomas M. Hanna 89819 at Three signs that privatised rail is unsustainable <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Railway privatisation has failed. It's time to put the public in charge.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="// shot 2015-01-14 at 14.21.55.png" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="// shot 2015-01-14 at 14.21.55.png" alt="" title="" width="460" height="339" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'> Nico Hogg, some rights reserved:</span></span></span></p><p>I was recently a guest on a BBC 5 Live debate where my opponent (from the Institute for Economic Affairs) was practically making the case against rail privatisation for me. She acknowledged that fares are too high and carriages are overcrowded. Her analysis was that a purer form of privatisation would solve these problems by giving train companies more freedom. As a frustrated passenger myself, I find it hard to believe that more privatisation is the answer. That if only train companies had less regulation to deal with, they'd be reducing my fares and providing more carriages. The reality is that we've given privatisation a fair shot and it's about time we started doing things differently. Here are my top three reasons why privatised rail can't be sustained long term. </p><p>1) Fare rises are unsustainable</p> <p>At the start of the year, angry passengers were protesting at railway stations around the country about high fares and calling for public ownership. Since privatisation, the average price of a train journey has <span><a href="">increased by 22% in real terms</a></span>. We've known for a while that public ownership of rail would save money - £1.2 billion according to the <span><a href="">'Rebuilding Rail'</a></span> report, which mainly looked at the costs of fragmentation. This equates to a fare cut of 18% across the board. Our own recent research with Corporate Watch looked at the cost of energy and water bills along with rail fares, and found that <span><a href="">households would save around £250 a year</a></span> if energy, water and rail were in public ownership. (This research didn't consider the issue of fragmentation but just looked at the savings that could be made by taking out shareholder profits and allowing for a lower cost of borrowing for government.) At £13 a year, rail is by far the smallest part of this 'cost of privatised living' (everyone uses energy and water, not everyone takes the train). But for those people who do commute or take the train regularly, their savings on train tickets would be much higher than this average.</p> <p>2) Network Rail's debt is unsustainable</p> <p>In September of last year, the Office for National Statistics reclassified Network Rail as a central government body. As CRESC (University of Manchester) outlines in its report 'The Conceit of Enterprise', Network Rail operates as a kind of 'philanthropic landlord' to the rail industry, while its own debt rises. Train companies benefit from indirect subsidies provided through low track access charges and high government investment. Despite this, <span><a href="">the average age of trains is higher than it was in 1996</a></span> and there has only been a 3% increase in new carriages since 1994/5. Now that Network Rail's £34 billion debt mountain is officially on the government's balance sheet, it seems likely that there will be more debate about how we should manage our railway network.</p> <p>3) The ideology of privatisation is unsustainable</p> <p>It is getting harder to argue that public ownership doesn't work when the evidence shows so strongly that it does. The East Coast line has demonstrated that our railways can be run successfully and profitably in public ownership, with profits - £1 billion in this case since 2009 – being returned to the Treasury. It was recently revealed that <span><a href="">foreign taxpayer-owned companies received £102 million in dividends from UK train fares in the past two years</a></span>. Instead of using rail profits to improve services and reduce fares, we are choosing, in effect, to subsidise passengers in other countries, because of an ideological commitment to franchising. Right now the government is not questioning this approach: East Coast is being reprivatised; the state-owned Abellio has been given the ScotRail franchise and will use profits to improve services for Dutch passengers. However, this situation gives the lie to the idea that only private companies can run a railway. Privatisation is still winning the battles but perhaps it is starting to lose the war.</p> <p>The public is rightly suspicious of privatised rail – <span><a href="">only one in three of us</a></span> trusts the rail industry to act in our best interests, and 66% of us want to see rail in public hands. Politicians are starting to shift too - Labour, the Liberal Democrats and the SNP want to make it possible for the public sector to bid to run railways, while Plaid Cymru and the Greens want public ownership across the board. (Check out our scorecard <span><a href="">'Privatisation: People vs Politicians'</a></span> for more on this.) </p> <p>The idea that our railway would work better if it operated more like a 'pure' free market is attractive. But in practice, the market in rail was only ever the invention of ideologues. Passengers don't choose their trains the way they choose between chocolate bars. They're travelling from A to B, along one railway line, and they pay the price they're told to pay. It's increasingly clear that the price we're all paying, as passengers and as a society, is much too high to be sustainable.</p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/rachel-graham/water-in-uk-public-versus-private">Water in the UK - public versus private</a> </div> <div class="field-item even"> <a href="/ourkingdom/sam-lundharket/possession-of-power-deprivatising-energy">The possession of power: deprivatising energy</a> </div> <div class="field-item odd"> <a href="/ourkingdom/liz-murray/it%E2%80%99s-more-than-just-nhs-that%E2%80%99s-at-risk-in-scotland-from-ttip">It’s more than just the NHS that’s at risk in Scotland from TTIP</a> </div> </div> </div> </fieldset> <div class="field field-country"> <div class="field-label"> Country or region:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> UK </div> </div> </div> <div class="field field-topics"> <div class="field-label">Topics:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> Economics </div> </div> </div> uk uk UK Economics Privatisation Modernise: de-privatise Cat Hobbs Wed, 14 Jan 2015 00:11:11 +0000 Cat Hobbs 89553 at Water in the UK - public versus private <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Like the East Coast mainline, the differing setups within the UK offer a useful insight into claims by Britain's governing parties that privatised water is in any way superior to publicly owned. But it does offer some enormous profits.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="307" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style=""/></a> <span class='image_meta'><span class='image_title'>Flickr/Patrick Brosset. Some rights reserved.</span></span></span></p><p>Of all the privatisations of the Thatcher government, perhaps the most controversial was the privatisation of water. Most countries in the developed world run their water on a <a href="">municipal</a> basis. In some countries, citizens don’t receive water bills but simply pay for it as part of their rates. In the UK, however, we now have a patchwork of different ways of delivering our water. </p> <p>In <a href="">Scotland</a> and <a href="">Northern Ireland</a>, water is delivered by the public sector. Northern Ireland Water is a government owned corporation, accountable to the Northern Ireland Utility Regulator. Scotland has a truly public water supply. Scottish Water is a statutory organization, accountable to Scottish Parliament. In Wales a <a href="">non-profit</a> organization, set up after the failure of a private concern, supplies the water. In England <a href="">ten</a> wholly private companies provide water and waste management in ten regions. Once again, this puts England at the forefront of the privatisation drive within the UK.</p> <p>Water is the very stuff of life, so it is understandable that its privatisation during the Thatcher years was controversial. So why do it? The big argument for privatisation used to be that it was cheaper. However as this turned out not to be the case—or somewhat disingenuous, depending on how you want to look at it—the new argument is that it’s more ‘effective’. We are told that, whilst private utilities may be more expensive, they are also more efficient. It turns out this might be a bit questionable.</p> <p>In 2014, the Public Services Research Unit conducted a review looking at the difference in efficiency between the public and private <a href="">sectors</a>. They concluded: “The results are remarkably consistent across all sectors and all forms of privatisation: there is no empirical evidence that the private sector is intrinsically more efficient.” This finding is echoed by a whole host of studies into privatisation in both developing and developed nations, which show that the idea of greater efficiency in the private sector is a <a href="">myth</a>. This applies to water, but also equally to other utilities. A review of the experience in privatizing electricity in Norway, Canada (Alberta) and the USA (California), as well as the UK, concluded that markets did not deliver lower prices and higher efficiency because small groups of producers abuse market power. (<a href="">Woo et al, 2003</a>).</p> <p>The UK’s water supply would seem particularly informative to study, due to the diversity of supply methods within one nation. At the same time this very complexity—and the information available—means the industry is very opaque and difficult to scrutinize. In a report for the New Policy Institute, the authors refer to the way the industry, particularly within England, is organised as <a href="">'very odd'</a>.</p> <p>Despite the complexities of the English water industry and its ownership model, certain trends are evident. Firstly, as recent media headlines suggest, household bills in England are increasing. Secondly, there is the clearly changing ownership profile of the privatised water companies, and the increasing presence of private equity in the mix. Thirdly, high profits and dividends for shareholders have also generated headlines. Fourthly, an increasing amount of debt is being carried by the English water companies. And finally, a run of problems and issues have faced the English water companies, including leaks and unsafe water, along with waste water incidents. Taken together these issues seem to challenge the claim by Thatcher’s government that a privatised water industry would be more efficient and less costly to run.</p> <p>In England annual water bills had risen from £120 per year in 89, to £204 by 2006. If you take into account inflation, you’ve still got a rise of 39% over and above inflation.</p> <p>And bills continue to rise, despite stagnating wages and a sluggish economy. </p> <p>To counter the anger at climbing bills, privatisation supporters argue that the English water companies have invested more than state run entities would have. A study by Greenwich University shows that this isn’t true. Their <a href="">research</a> concluded that at least half the investment made by the water companies since privatisation was due to EU directives and regulations. That is, the companies made the investment because they <em>had to</em>. They didn’t do so happily either. In fact, the UK government tried to <a href="">exempt</a> the private water companies from having to make the improvements but the European Commission denied the bid.</p> <p>During the early noughties Scottish Water and Northern Ireland water also had higher bills. But during this time Scottish Water invested £1.8 billion into the system, the biggest investment into the water infrastructure in Scotland ever made. Once this period of investment into a decaying water network was finished, Scottish Water began to reduce bills. Whilst Northern Ireland doesn’t currently charge domestic customers for water, it has had higher <a href="">notional</a> bills than some of the English regions. However it has, in the last few years, had the least increase to bills of all the water suppliers.</p> <p>These days the difference in bills between the English water companies and Scottish Water are stark. Last year Scottish Water customers paid less than customers of <em>all</em> the private English and Welsh water <a href="">companies</a>. Prices across the ten English water companies vary greatly. Offwat’s <a href="">estimated average</a> bills for 2013/2014 are as follows: </p> <p>South West&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £499</p> <p>Wessex&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £478</p> <p>Southern&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £449</p> <p>Anglian&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £434</p> <p>Dwr Cymru&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £434</p> <p>United Utilities&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £406</p> <p>Yorkshire&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £368</p> <p>Northumbrian&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £359</p> <p>Thames&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £354</p> <p>Severn Trent&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; £335</p> <p>In contrast the cost for Scottish Water customers was £334. In England, the least expensive is Severn Trent, and the most costly for households is South West water, whose average bill for 2013/2014 was an <a href="">astronomical</a> £499. So high are South West’s bills that the government pays for a £50 reduction for each household! This raises the question, if the private industry needs to rely on government help for its customers – shouldn’t the government simply take over and run the concern directly? </p> <p>This isn’t the only instance of the industry asking the government to help. Thames Water has long argued that they need to build a new sewer in London to update the Victorian system – a so called ‘super sewer’. The only problem is that, as Thames Water is owned by a private equity consortia and has a high ratio of debt, it can’t finance this itself. The ownership group of Thames Water includes Macquarie Infrastructure Fund (Australia). The China Investment Corporation, and Abu Dhabi Investment Authority. The result of the situation is that the British state has to come to the rescue once again as Thames Water has asked the <a href="">government</a> to guarantee the risk. This is because Thames water has run up debt since privatisation and now owes around £8 <a href="">billion</a>. All this despite being able to pay out approximately £1.4bn in dividends between 2006 and <a href="">2012.</a> This example brings us to two of the most pressing issues facing the English water companies, the increasing amount of private equity ownership, and increasing debt profiles.</p> <p>The ownership profile matters for a variety of reasons. Stock exchange listed parent companies would be subject to UK tax. Private equity companies are not open to the same scrutiny, or the same tax regime if based outside the UK. Furthermore, they do not have to comply with any of the disciplines of the UK equity market.</p> <p>The water companies that are private equity owned seem to be the ones with higher debt ratios. In fact, the privatised industry as a whole now has high debt levels. You can measure a company’s debt levels by looking at what is called the gearing ratio. This is a way of looking at how highly leveraged a company is. It is measured in percentages, and it is traditionally argued that a business that has a gearing ratio of higher than 50% is highly geared, or, highly leveraged, which could be unsustainable. The average level for the water companies has risen dramatically since privatisation and stood at <a href="">70%</a> by 2010. </p> <p>Whilst higher ratios aren’t always a cause for alarm—financing through debt can be cheap—the figures for some of the water companies are worryingly high. It also matters what the money is being used for. If the money is being borrowed purely for capital investment it is different than borrowing to keep paying high dividends, which some believe utilities in general are doing. It is argued by some analysts that organisations which have to borrow to pay dividends are basically self-<a href="">cannibalising</a>. </p> <p>Thames water in particular has been accused of using borrowed money to fund too high dividends for over a <a href="">decade.</a> </p> <p>This need for high dividends can cause companies to experience trouble with their credit ratings. Indeed, Sir Ian Byatt, formerly of Offwat, himself makes the link between high dividends, high debt, and trouble getting finance. He <a href="">states</a>: <em>“In practice, many companies, especially the private equity infrastructure funds, have paid out excessive dividends to their owners. In the case of Thames Water, this has damaged its credit rating, leading to requests to Government for guarantees.”</em></p> <p>Some analysts believe the most highly leveraged water companies could be in danger of going bust if asked to pay back a significant proportion of that debt. In this sense, English households are now, often unknowingly, part of the somewhat risky financialisation of water.</p> <p>Another reason for the high debt structure of these companies may be more dubious than simply wanting to finance investment cheaply. There are increasing allegations that the water companies are using debt to lower their tax obligations. Tory MP, Charlie Elphicke, claims that the water companies have used debt interest to avoid tax adding up to over a <a href="">billion pounds</a> lost to the Exchequer in just three years. He terms the avoidance “staggering”. He singled out Yorkshire Water as a particularly bad example.</p> <p>Simon Hughes MP gave figures showing just how much tax Yorkshire Water has managed to avoid by using debt to offset payments. He wrote to the Public Accounts Committee back in <a href="">2012 stating</a>: “<em>Yorkshire Water…has seen its tax liability decline from £70m in 2009 to a tax credit of £18.9m this year after it took out £1bn from a group of finance companies it owns in the Cayman Islands.</em>"</p> <p>The ownership profile of Water Yorkshire includes Deutsche Asset &amp; Wealth Management, GIC an investment fund backed by the Singaporean government, along with Citi Infrastructure <a href="">Investors (US based).</a> So yet again we have a complex group of international finance organisations, owning a UK utility that is highly leveraged and pays little UK tax.</p> <p>In sharp contrast to the complex over indebted structure of much of the English water companies. Welsh water is a non-profit organisation, <a href="">under which</a> “assets and capital investment are financed by bonds and retained financial surpluses. Financing efficiency savings to date have largely been used to build up reserves to insulate Welsh Water and its customers from any unexpected costs and also to improve credit quality so that Welsh Water’s cost of finance can be kept as low as possible in the years ahead.”</p> <p>Scottish Water is a publicly owned utility, directly answerable to the Scottish Parliament. It can borrow more cheaply than the English water companies, as government debt is considered safer than private debt. It has invested record amounts of money in recent years into the infrastructure, and once the investment is finished it quickly reduced bills to levels lower than all the English companies.</p> <p>Whilst analysing UK water provision is an extremely complex task, it is clear that the privatised English water companies are operating in a highly financialised environment in many instances. They stand accused of running up high debts to maintain dividends, and in some cases, such as Thames Water, this has arguably helped damaged their credit rating. They appear to be run in the interests of shareholders and not customers. Not only are English customers paying the highest bills, they also are most at risk from utility companies whose business practices may mean that when it comes to future investment the state has to step in. Indeed, it is this highly leveraged structure, and the increasing amounts of foreign ownership that are most troublesome when examining the water providers.</p> <p>Water should not be a vehicle for huge, international consortia to get rich. We have two alternative examples of healthier ways to run water companies within the UK. The non-profit organisation set up in Wales, or better yet, a return to full public ownership. The case of Scottish Water shows that this would be the best outcome for English customers.</p> <p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Rachel Graham Fri, 19 Dec 2014 00:11:11 +0000 Rachel Graham 89023 at The possession of power: deprivatising energy <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Energy privatisation has failed - all over the world, there are examples of how to take it back into democratic control.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="510" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Hamburg, where the energy is owned by the people/wikimedia</span></span></span></p><p>What must it be like to manage an oil company? To become the chief executive of an energy corporation and to earn millions a year doing so? Iain Conn, ex-managing director at BP, knows. He is about to take up the position of CEO at Centrica (which owns one of the ‘Big Six’ energy suppliers, British Gas) in January. The aptly named Conn will be paid in the region of £2m with added extras expected to raise this to around £3.7 million. One thing’s for sure; he won’t have trouble paying his fuel bill this winter. </p><p>The rest of us, however, might struggle. With fuel prices that have risen eight times faster than average incomes, more than one in ten households in England are now living in fuel poverty. Last month the Office for National Statistics released the number of people who died of cold last winter as 18,200. The World Health Organisation attributes 30 to 50 per cent of these deaths to cold homes. The energy companies would have us believe that there’s nothing they can do about prices but the reality is that they’re pocketing huge profits while failing to pass on lower wholesale prices. Collectively, the Big Six made £2.8 billion in 2013, with profits from domestic customers a staggering five times higher than in 2009.</p> <p>Companies, such as Centrica, are also reinforcing our addiction to dirty energy, which we still rely on for the vast majority our electricity generation<a class="sdfootnoteanc" href="#sdfootnote1sym">1</a>. There is something clearly wrong with our current energy system. A utility which used to be publicly owned in this country is making millions keeping people in fuel poverty and fuelling our addiction to carbon intensive fuels. </p> <p> All over the world the story is similar. From the tar sands in Canada and Madagascar, to coal mines in Colombia and Mongolia, fossil fuel extraction is scarring the landscape, displacing communities and contributing to catastrophic climate change. Yet this is doing nothing to get energy to the people who need it. One in five people globally live without electricity because they are unable to access it and many more go without because they can’t afford it. In Africa only 10 per cent of those living in rural areas have access to electricity. Although it is the model that is pushed throughout the world by institutions like the World Bank, privatised energy is not helping extend grids to people who lack access to energy or making energy affordable to the poor. The problem is corporate control – energy resources being used to make huge profits while steamrolling over people’s needs. </p> <p> If we want more communities to be able to access and afford energy within the confines of a carbon constrained world, our current corporate-controlled privatised energy system is failing us. It’s painfully obvious that we need to look at the alternatives. The good news is that there are plenty!</p> <p> <span>Nationalised</span></p> <p> Before Thatcher, the UK had a state run energy system and there are plenty of examples of countries around the world which still have them, such as Urugauy. In other places, privatisation has been such a disaster that energy systems have been taken back into public ownership. The advantages of publicly owned energy systems are that they tend to have more public accountability and aren’t obliged to siphon off juicy profits for their shareholders. </p> <p> <span>Municipalised</span></p> <p> In Germany there has been a huge move towards local authority run energy schemes as part of the country’s Energiewende, or energy transition. In Germany this shift, known as municipalisation, has often come as a result of local referenda. In Hamburg, local people voted in September 2013 for their council to buy back the energy grid from multinational corporations E.ON and Vattenfall after campaigners successfully argued that the companies were not acting in the public interest and were delaying the transition to renewable energy. The city of Boulder in America has also had success in municipalising its energy. </p> <p> <span>Co-operative</span></p> <p> In parts of the world there is a long history of energy systems being run using co-operative models of control and ownership. For instance in Nepal and the Philippines micro-hydro co-operatives supply rural communities with reliable access to energy. Here communities have collective control over a renewable energy source which could also make use of wind or biomass. A co-operative model more easily enables a project to be run by a community for the community. </p> <p> Small scale co-operatives can provide an invaluable solution when prospects for grid connection are remote or would cause damage. In developed countries, small-scale cooperatives can also be a democratic way of communities gaining control over energy generation, even when they are connected to regional or national grids. In Spain, Som Energia (‘We are Energy’ in Catalan) co-operative, was set up in 2011 in response to the lack of green energy options and the high bills of the large energy companies, of which the largest two account for 80 per cent of the Spanish energy market. Four years after being established, it has set up eight solar roof installations and a biogas plant and is in the process of building Spain’s first community wind turbine. It has 16,000 members who purchase electricity from the co-operative.</p> <p> <span>Scaled up</span></p> <p> There are questions about the speed at which small scale projects can give communities the energy they need. Larger scale on-grid solutions have the potential to connect more households.</p> <p> Large scale co-operatives have been very effective in America where they date back to the New Deal and where 13 per cent of the population use them – the co-ops are united by the National Rural Electric Cooperative Association (NRECA). In Bolivia, the Cooperativa Rural de Electrificacion (CRE)<strong> </strong>is the biggest in the world with 276,000 users. Set up in the 1970s it was a small group of community leaders frustrated by the lack of municipal, state and private company willingness to provide services that got it off the ground. Costa Rica also has large and long-established energy co-operatives that are run by the communities they serve and which function alongside the state energy company.</p> <p> Gaining democratic control of energy resources is a fundamental part of ensuring our energy system provides for those that need it most and moves away from its destructive addiction to fossil fuels. While there is no one-size fits all answer to these issues, approaches that give genuine control and ownership to those they serve have a more likely chance of survival and of remaining truly democratic. The solutions for reclaiming energy are here; let’s take power out of private hands.</p> <p class="sdfootnote"><a class="sdfootnotesym" href="#sdfootnote1anc">1</a> Centrica owns a 25% stake in cuadrilla – the first and one of the largest companies’ fracking in the UK. </p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/stephan-lefebvre-jeanette-bonifaz/lessons-from-bolivia-renationalising-hydrocarbon-indust">Lessons from Bolivia: re-nationalising the hydrocarbon industry</a> </div> <div class="field-item even"> <a href="/ourkingdom/platform/democratic-energy-beyond-neoliberalism">Democratic energy beyond neoliberalism</a> </div> </div> </div> </fieldset> uk Can Europe make it? uk Modernise: de-privatise Sam Lund-Harket Mon, 15 Dec 2014 09:33:41 +0000 Sam Lund-Harket 88732 at It’s more than just the NHS that’s at risk in Scotland from TTIP <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>The EU/US Trade Deal poses a threat to Scottish Water's plans to deprivatise failing PFI facilities.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>A protest outside the Scottish Parliament against the smell at SeaField</span></span></span></p><p>Last week, a <a href="">Europe-wide petition against TTIP</a>, the controversial and aggressively neo-liberal free trade deal between the US and EU, reached 1 million signatures. More than 180,000 of those were from the UK. Another <a href="#petition">petition here in Scotland</a>, calling on the First Minister Nicola Sturgeon to oppose TTIP, gained almost 25,000 signatures. </p><p>Opposition to TTIP is growing at an astonishing speed as the public discover how it threatens democracy, social justice, public services and national sovereignty.</p> <p>TTIP is facing particularly widespread criticism for the threat that it poses to the NHS – particularly by ‘locking-in’ privatization. But it’s also a threat to other public services in the UK, and we believe that here in Scotland it could have an impact on Scottish Water if it ever wanted to renationalise its <a href="">troublesome PFI</a> projects. </p> <p>Around half of all waste water and about 80% of waste water sludge in Scotland is treated in works operated by PFI companies, under contracts signed with Scottish Water in the late 1990s. Some of these projects have been heavily criticised for mechanical failures, leakages and bad smells and Scottish Water has had to spend millions of pounds over the years to try and reduce these problems. </p> <p>The treatment plant at Seafield in Edinburgh, for example, has caused many problems for local residents for a number of years from <a href="">bad smells</a>. This plant is operated by multi-national waste company Veolia under a 30 year PFI contract signed with Scottish Water in 1999. </p> <p>Scottish Water has suggested in its <a href="">business plans</a> in the past that it would try and bring the PFI projects back into public ownership. </p> <p>However, this could be stymied by one of the key features of TTIP: the investor-state dispute mechanism (ISDS) which allows multi-national companies to use international arbitration courts, outside of national legal systems, to sue countries if national policies threaten profits (or, crucially in this case, future profits). It’s this mechanism that we believe could be used to stop Scottish Water bringing its PFIs back into public ownership, through the companies involved suing the government for compensation for lost profits if contracts are not renewed. The cost of this compensation could be enough to put Scottish Water and the Scottish government off renationalising those PFIs.</p> <p>There are many, many examples from other treaties of companies using this mechanism to sue (or even just threaten to sue – which can sometimes be enough) governments over lost profits. Just this week, Friends of the Earth Europe (FoEE) <a href="">released new research</a> showing the extent to which the inclusion of these special rights for investors in previous trade treaties has allowed corporations to sue European governments in secret courts (and how much taxpayers are footing the bill for this). </p> <p>Their research identified 127 known ISDS cases that have been brought against 20 EU member states since 1994. Despite information on these secretive court cases being hard to find, the facts that FoEE was able to undercover illustrate the enormous sums of money involved in these cases. The largest known amount to be awarded by a tribunal against a state was 553 million euros (in the case of Ceskoslovenska Obchodni Banka vs Slovak Republic) and the largest known settlement was 2 billion euros, paid by Poland to Eureko, a Dutch insurance company.</p> <p>Veolia, the operator of Seafield treatment works that I mentioned above, also has form when it comes to using ISDS to claim compensation for lost profits. Since 2012, Veolia (which is headquartered in France but has many offices around the world) has been <a href="">suing Egypt</a> based on the bilateral investment agreement between France and Egypt for an alleged breach of a contract for waste disposal in the city of Alexandria. The city had refused to make changes to the contract which Veolia wanted in order to meet higher costs – in part due to the introduction of a minimum wage. Also, according to Veolia, the local police had failed to prevent the massive theft of dustbins by the local population. According to media reports, Veolia wants 82 million euros in compensation.</p> <p>Last month, the Scottish Parliament European and External Affairs committee of the Scottish Parliament started an inquiry into TTIP. We gave <a href="">written and oral evidence</a> to the committee, highlighting our concerns about a range of problems with the trade deal, including the ISDS mechanism and the threat that it poses to public services and laws to protect workers’ rights, the environment and public health. </p> <p>The Scottish government wants the NHS in Scotland exempted from TTIP. We don’t believe that this goes far enough – and we think that the people who have signed the petitions would agree. If the Scottish government is to protect Scotland’s much loved public services and safeguard laws designed to protect workers, public health and Scotland’s natural heritage then it must go further and oppose the trade deal entirely in its current form (as indeed the SNP MEP Alyn Smith has said that he does) as well as demonstrating a robust counterweight to Westminster’s enthusiasm for it. Only that will really address the concerns of the one million citizens across Europe opposed to TTIP.</p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/can-europe-make-it/euro-elections-you-tell-us/marzena-sadowska/ttip-and-first-rule-of-fight-club">TTIP and the first rule of Fight Club</a> </div> <div class="field-item even"> <a href="/can-europe-make-it/walden-bello-thomas-fazi/ttip-and-tpp-harnessing-anger-of-people">TTIP and TPP: harnessing the anger of the people </a> </div> </div> </div> </fieldset> uk uk Modernise: de-privatise Liz Murray TTIP Thu, 11 Dec 2014 00:11:11 +0000 Liz Murray 88608 at Privatisation: the gap between politicians and the rest of us <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>New analysis from We Own It shows just how big the gap has become between what the British public want for their public services and what Westminster wants.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="223" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>CLICK TO ENLARGE</span></span></span></p><p>From Royal Mail to the NHS, privatisation of our public services is continuing apace. An outside observer might look upon these cynical sell offs and conclude that such a policy commands popular support. However, <a href="">our new analysis</a> has shown just how out of step Westminster politicians are with public opinion when it comes to who should be running our public services. This privatisation scorecard compares public opinion with party policy on a number of key indicators, including a commitment to a publicly-run and owned NHS, public ownership of our railways, and proper accountability for private companies that win public service contracts. The major parties are consistently found wanting. A huge gap has opened up between what the electorate wants—public services run for people, not profit—and what politicians are willing to offer. Privatisation has become the lazy default rather than a conscious choice, and represents the opposite of evidence-based policy making.</p> <p>Since the 1980s we’ve seen more and more of the public sphere put up for sale, with money diverted from much-needed investment straight into the pockets of shareholders and executives. The public is increasingly questioning the logic behind a series of governments’ addictions to the mythical infallibility of market competition - and with good reason. </p> <p>For example, <a href="">66% of the electorate</a> support public ownership of our railways. This failed privatisation experiment has seen the cost of running the railways more than double, with average fares rising by <a href="">22% above inflation</a>. Bringing the railways into public ownership could save <a href="">£1.2 billion year</a>, enough to fund an 18% cut in fares. In flagrant defiance of the public’s wishes, the government is forging ahead with the controversial re-privatisation of the East Coast mainline. A public ownership success story, East Coast has returned over a billion pounds to the public purse, and requires <a href="">less public subsidy</a> than any of the 15 privately run rail franchises. Despite this, the service has <a href="">just been awarded</a> to a joint bid from the tired old guard of the rail industry - Stagecoach and Virgin. Only the Green Party and Plaid Cymru are advocating public ownership of our railways as the default. </p> <p>On energy and water, the polling shows the majority of the public want these vital national resources in public ownership. Just <a href="">32% of us trust the energy industry</a> - not surprising given endless price rises and <a href="">allegations of profiteering</a>. Across the western world there is a growing ‘remunicipalisation’ movement - taking back energy and water services into local, public ownership. In Germany alone over <a href="">100 energy concessions have been brought back into public ownership since 2007</a>, and in France major cities like <a href="">Paris and Bordeaux </a>have returned water into public hands, funding new investment and cuts to customers’ bills. Britain risks being left behind, tied to a worn-out belief that private is always best. Public ownership of water is <a href="">already working in Scotland</a>, showing just what can be achieved with the right political will. The British public is ahead of the political curve when it comes to these vital services and is rightly calling for them to be in public hands. Only the Greens and Plaid Cymru seem to be heeding these calls, with the other parties placing their faith in a broken system of corporate control.</p> <p>The public also supports the right to be involved in the decisions that affect their public services. <a href="">79% want proper public consultation</a> before a service is privatised, but none of the largest parties are willing to accept the public’s right to have a say. The only measure politicians seem to be starting to agree on (thanks to our campaigning work, and with the exception of the Conservatives) is our proposal of a right to recall private companies doing a bad job, supported by 88% of the public.</p> <p>There is some light at the end of the tunnel: both Labour and Liberal Democrats support private companies running public services being subject to Freedom Of Information requests, and the Greens match or are ahead of public opinion on nearly all of the key indicators. But politicians on all sides need to do more to ensure they represent the views of the British people.</p> <p>With the forthcoming general election expected to be the most difficult to call in recent memory, politicians vying for our support would do well to respond to these findings. <a href="">Previous polling</a> has shown that voters are more likely to vote for a party advocating public ownership instead of outsourcing and privatisation, by a ratio of 4:1. A radical alternative to market dogma could restore confidence in our political system, and stay the terminal decline in election turnouts. A quick trip north of the border shows how civic life can be reinvigorated by the chance to vote for a positive alternative.</p> <p>Public ownership is often dismissed as a throwback to the 1970s, but that very idea is getting old - this is about moving forwards into a better future. In reality it represents a popular, pragmatic way in which we can improve the public services we use every day. That’s why we’re calling on all of our supporters to write to the major parties asking for a manifesto commitment to a <a href="">Public Service Users Bill</a>. The Bill would promote transparency and accountability, make sure a realistic in-house bid is entered for any public service contract, and ensure that services are run in the interests of people, not profit. It would also promote bids from social value organisations, such as cooperatives and community groups. It seems there are MPs that are proud to listen to the views of their constituents - already 76 have backed <a href="">Early Day Motion 438</a> in favour of such a Bill, including MPs from Labour, the Lib Dems, Plaid Cymru, SNP and the Green Party. It’s time the rest of Westminster started to reflect the views of the electorate. </p> uk uk Modernise: de-privatise Calum McGregor Tue, 02 Dec 2014 07:54:59 +0000 Calum McGregor 88368 at Lessons from Bolivia: re-nationalising the hydrocarbon industry <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>In Bolivia, renationalisation of the hydrocarbon industry has been a huge economic success.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>CMI Cochabamba</span></span></span></p><p>President Evo Morales came to power in Bolivia in 2006 amid widespread discontent. The country had been experiencing a long-term economic growth failure, with income per capita in 2005 lower than it was <a href="">27 years prior</a>, and privatization efforts had been widely unpopular, including with the indigenous majority. Conflicts over natural resources, most notably the water and gas wars of 2000 and 2003, respectively, led to the resignations of Presidents Gonzalo Sánchez de Lozada in 2003 and Carlos Mesa in 2005. The Morales administration marked a dramatic turn-around for the country. The economy began to grow, experiencing its fastest growth in decades. Bolivia increased its sovereignty over economic policy; social spending increased by 45 percent from 2005-2012 and poverty was reduced by 25 percent from 2005-2011. In order to achieve these results, President Morales nationalized the hydrocarbons sector by decree early during his first year in office, allowing his government to engage in effective redistribution and macroeconomic policies that benefited the poorest segments of society. </p> <p>For decades, natural resources extraction in Bolivia has alternated between public and private control. The oil and gas industries in Bolivia were privatized in 1996 through Hydrocarbons Law No. 1689 in a process heavily supported by the <a href="">International Monetary Fund (IMF) and the World Bank</a> as part of a neoliberal reform plan to increase foreign investment in those industries. YPFB (Bolivia’s state hydrocarbons company) was divided into three companies and 50 percent of the shares were auctioned to the private sector, a process that turned control of YPFB’s major assets <a href="">over to private companies</a>. The winners of the auction, including Enron, Shell and Repsol YPF, were not asked to pay for their shares; instead they simply committed themselves to investing an amount at least equal to the sale “price” over a period of seven years, the epitome of neoliberal governments giving away state assets.<a class="sdfootnoteanc" href="#sdfootnote1sym">1</a> Additional efforts to attract foreign capital included lowering royalties and taxation rates on the gas industry from <a href="">50 percent to 18 percent</a>. International companies were allowed to take possession of any hydrocarbons they extracted, except for a small amount slated for domestic consumption in Bolivia. </p> <p>Foreign investment and production increased, and new natural gas deposits were found, but the public sector’s chronic fiscal deficit worsened. Rather than attempt to raise taxes on the immensely profitable hydrocarbons industry, now dominated by foreign corporations, the government announced it would create an income tax (the so-called “impuestazo” of 2003) despite prevailing low wages, high unemployment, and high levels of poverty. At around the same time, the government announced plans aimed at raising revenues by expanding gas exports with a pipeline through Chile, which would enable sales to the U.S. and Mexico. </p> <p lang="en-US">&nbsp;<span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>CMI Cochabamba</span></span></span></p> <p>As the public’s backlash against these policies increased, and the country was immobilized by protests. Following the killing of over 60 protesters <a href="’s-black-october-ten-years-later">by state security forces</a>, President Sánchez de Lozada resigned and fled the country, and Carlos Mesa took office in 2003, calling for a referendum on the energy sector to take place in 2004. 92 percent of voters supported nationalizing Bolivia’s gas and 87 percent supported repealing the 1996 privatization law.<a class="sdfootnoteanc" href="#sdfootnote2sym">2</a> </p> <p>In response, President Mesa reluctantly passed Hydrocarbon Law 3058, which increased taxes and royalties paid on gas extraction from 18 percent to 50 percent. Not only was this seen as too conciliatory to foreign companies, a lack of political will led to the law not being fully implemented. Protests grew throughout the country, and Mesa resigned in 2005. </p> <p>In May of 2006, five months into his presidency, Evo Morales nationalized the hydrocarbons sector, re-founding the state company YPFB through a repurchase of majority shares in the privatized enterprises and claiming public ownership over the country’s gas and oil resources.<a class="sdfootnoteanc" href="#sdfootnote3sym">3</a> Foreign companies now turned over extracted resources to the state, which fully controlled sales, transportation and distribution as well as key decisions regarding the refining of raw materials. The nationalization decree also forced foreign oil companies to renegotiate contracts <a href="">with the new administration</a>. This has resulted in increased revenues to the central government that in 2011 were worth 16 percent of total hydrocarbon revenues (in addition to the 50 percent achieved <a href="">under Hydrocarbon Law 3058</a>). The added income has additional significance because the 2005 Hydrocarbon Law, largely preserved by Morales, created a system in which much of the public sector revenues bypass the central government and are distributed unequally and regressively among <a href="">Bolivia’s nine departments</a>.&nbsp; </p><p>Gas nationalization had a number of interrelated benefits for Bolivia. By claiming a larger role in the industry, the state was able to increase its ability to capture rents associated with hydrocarbon extraction. For each year between 1970 and 2005 the balance of Bolivia’s non-financial public sector was in deficit, but in 2006 the government achieved a surplus of 4.5 percent of GDP and it has remained in surplus <a href="">every year since</a>, a change that can be attributed to higher revenues. Since 2005, revenues to the government from the hydrocarbon sector <a href="">have increased almost seven fold</a> (in nominal U.S. dollars). Of course, the government budget has also been helped by higher tax collection, which is linked to the faster GDP growth.</p> <p>Nationalization of the gas industry allowed the state a bigger role in determining the industry’s broader impact in Bolivia. The government renegotiated supply contracts with Brazil and Argentina, significantly raising the export price of gas and thus bringing them closer to a fair market value. With nationalization, local content commitments were suddenly a part of negotiations for gas industry contractors, consultation periods with local communities could be better enforced, and technological transfer agreements could be arranged to increase the benefits accrued to Bolivians. For example, in 2013, Morales <a href="’s-gas-bolivia-not-brazil">inaugurated the country’s first natural gas liquids separation plant</a>, as part of a program to increase the value-added of the gas industry in Bolivia, and thus the rents accrued from exploiting the country’s natural gas. </p> <p>Higher revenues allowed the government to increase spending on social programs. Over 11 percent of the government’s revenues from the hydrocarbon sector <a href="">are earmarked for</a> universities, indigenous groups and the Renta Dignidad grant, a monthly payment to low-income residents over the age of 60 which has provided support for more than one million people. Overall, public spending on health, education, pensions and poverty alleviation programs rose 45 percent in real terms <a href=";ver=contenido&amp;id=2885&amp;id_item=646&amp;seccion=269&amp;categoria=1523">from 2005-2012</a>. Although this increase did not keep pace with the fast growing economy, it helped lower poverty from 60.6 percent of the population to <a href="">43.4 percent over the same period</a> (2005-2012), thus lifting about one million people out of poverty (from an initial population of 9.4 million). </p> <p>In addition to spending on social programs and infrastructure, some of the resource earnings were directed to Bolivia’s Central Bank where they helped grow the country’s stock of international reserves. International reserves, mostly U.S. dollars, act as a buffer against external shocks, preventing balance of payments crises by ensuring an adequate supply of U.S. dollars for importers to exchange for local currency. In 2005, Bolivia’s international reserves could cover 6.9 months of imports, while in 2013 the country’s international reserves could cover <a href="">15.9 months</a>. </p> <p>Bolivia’s more than adequate level of international reserves is one of the main factors that has allowed the country to avoid resorting to loans from the IMF. For the 20 years preceding the Morales administration, Bolivia was operating continuously under successive <a href="">agreements with the IMF</a> (with the exception of one 8-month period). Agreements with the IMF were a de facto condition for funding from other sources, especially the World Bank, Inter-American Development Bank and high-income governments. Neoliberal policies were imposed on Bolivia by this creditors’ cartel, who among themselves “collaborated extensively on fiscal and financial sector reforms as well as other structural reforms [for Bolivia],” though the World Bank “<a href="">took the lead</a> in advising the authorities on capitalization (privatization),” including the gas privatization of 1996. Nationalization of Bolivia’s hydrocarbons sector in 2006 went against the recommendations of these international development institutions and the Washington Consensus. In 2006 the World Bank even wrote that with nationalization, revenues to the government “<a href="">could diminish</a> due to a fall in [natural gas] production.” The actual result was very different, as predicted by many who supported the re-nationalization decision. </p> <p>Bolivia’s success in recent years signals a second independence for the country, now able to pursue economic and social policies without the influence of the United States, which wields considerable power within international financial institutions like the IMF and World Bank. In Bolivia, impressive poverty alleviation and faster economic growth were achieved through an economic program that prioritized increased sovereignty over natural resources.</p> <p> <a class="sdfootnotesym" href="#sdfootnote1anc">1</a> Kaup, Brent Z. “A Neoliberal Nationalization.” <em>Latin American Perspectives</em> 37.172 (2010): 123-138.</p> <p> <a class="sdfootnotesym" href="#sdfootnote2anc">2</a> Velasquez-Donaldson, Christian. “Analysis of the Hydrocarbon Sector in Bolivia: How are Gas and Oil Revenues Distributed?” World Resources Institute (2007), 7.&nbsp; </p><p> <a class="sdfootnotesym" href="#sdfootnote3anc">3</a> Ibid, 51</p> <p class="sdfootnote">&nbsp;<em><strong>This article is a part of the OurKingdom series <a href="">Modernise: de-privatise</a>, examining what the UK can learn from other countries around the world who have been successful in democratising their economies.<br /></strong></em></p> uk uk Modernise: de-privatise Jeanette Bonifaz Stephan Lefebvre Mon, 24 Nov 2014 00:11:11 +0000 Stephan Lefebvre and Jeanette Bonifaz 87989 at Democratic energy beyond neoliberalism <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Democratising energy would not only save thousands of lives a year but would be a big step forward in saving the planet.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="613" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Wind turbines on Eigg/</span></span></span></p><p>The NHS was built by on the model of the Tredegar Medical Aid Society – a mutual health provision organisation in South Wales set up by miners and their families, that ran for over forty years. By scaling up a local community-controlled structure, the NHS founders fundamentally transformed the economy and politics of healthcare nationwide. We need a comparable transformation of energy provision. Could Eigg in Scotland—an island owned collectively by its inhabitants and supplied by renewable electricity—be the Tredegar Medical Aid Society of energy?</p> <p>Recently the Fuel Poverty Action group launched their 'Energy Bill of Rights' at the House of Commons. They're demanding energy that is fair, affordable and sustainable, following a recent report from the Department for Energy and Climate Change suggesting that the inability to pay energy bills led to 10,000 deaths in Britain in 2013. The report also found that 10.4 per cent of the population are living in fuel poverty.&nbsp; Fuel Poverty Action were not alone in taking notice of popular anger over these statistics. Earlier this year, Labour announced plans to freeze gas and electricity bills until 2017, making energy reform a key plank of their 2015 election manifesto.</p> <p>But are Labour's proposals adequate to the scale of the challenge? The UK urgently needs to explore energy alternatives that do more than tinker at the edges of the problem. We need to break with the foundational assumptions of current neoliberal energy policy. Rather than begging for small palliative scraps, the left must make the argument for a new energy and economic settlement. This is necessary for survival, and for justice. In Nigeria, 72% of people use wood for cooking as they have no gas, while their country exports 950 billion cubic feet of gas every year. Much of it is shipped to Britain. When Platform brought Niger Delta activist Celestine Akpo Bari to London he was astounded to discover that Britain suffers the worst levels of fuel poverty in Western Europe, with one person dying of cold every six seconds last winter. So who benefits? The answer lies in record energy company profits.</p> <p>Labour's policy proposals are based on an understanding of individual consumption that does not describe the manifold relationships we have to energy.&nbsp; We take buses, we work in heated offices, we buy frozen ice cream. Our public wealth is used to subsidise oil companies, our cultural institutions to launder their image, and our government sends troops to support resource grabs. We have political and economic relationships to North Sea oil, wind turbines in the Thames estuary and carbon dioxide molecules in the atmosphere. But in all these cases, people, and especially the working class, are profoundly disempowered.</p> <p>Our relationship to energy needs to change. We need to shift power so that these relationships can be intentional and active, so that we are producers, distributors, owners, sharers, and collective users of energy. We need to democratise energy. This means commoning resources, dispersing economic power and ending dependence on multinationals that exploit public resources for private profit. This means dismantling BP, Shell, and the Big Six energy companies.</p> <p>The process of putting energy in common ownership is already a reality elsewhere in Europe, and underlies Denmark's remarkable success in ending dependence on imported fuel, replaced in large part with local renewables. Denmark's wind power revolution has been described by UN researcher Andrew Cumbers as 'a grassroots, community-based initiative, underpinned by decentralised, cooperative and municipal ownership alongside small-scale private ownership'.</p> <p>This developed partly out of an intense political struggle in late 1970s over energy policy that saw a coalition of leftists, greens and conservative rural interests unite in distrust of centralised (oil and nuclear-based) proposals. Instead, they promoted an alternative vision of a more localised and decentred non-nuclear future based on renewables and more radical democratic practices. They saw remarkable success. Within 20 years, the country went from dependence on oil imports for 90% of its energy demand to self-sufficiency in energy.&nbsp; And crucially, 80% of wind turbines were owned by co-operatives or families. This contrasts with Britain, where community ownership of renewables is miniscule.</p> <p>According to the conservative International Energy Authority, “no more than one-third of <em>proven reserves</em> of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 °C goal”. 2 °C remains the official international target, despite increasing recognition that it is too dangerous. This means coming to terms with leaving fossil fuels in the ground.</p> <p>We need to significantly reduce Britain’s 1,700 TWh demand for energy, while also rapidly replacing fossil fuels with renewables. Britain can generate vast amounts of electricity from offshore wind, wave and tidal energy. In the deep waters off Cornwall and Scotland, floating turbines can be anchored to the ocean floor by cables. In 2010, the Offshore Valuation Group estimated that Britain could generate more than 1,500 TWh per year from floating wind turbines alone, close to the UK’s <em>total</em> energy demand (this includes transport).</p> <p>Just two companies—BP and Shell—make up almost 20% of the value of the FTSE 100. These same two companies form an average 30% of most pensions; their shares are seen as a hyper-secure long term investment, similar to a government backed bond. </p> <p>However, their actual share value is predicated on their proven reserves. As new oil fields are discovered, the value goes up. Yet two thirds of proven fossil fuels must be left in the ground. That means that our struggle to shut down most extraction is also a struggle to wipe out most of BP and Shell’s share value. Planetary survival is pitted against pensioners’ future income. </p> <p>Unless we change the basis of those pensions. By wresting back control over our financial resources, we can also pay for the transition without falling hostage to exploitation by international finance. As it stands, neoliberal power builds dependency and limits collective action through institutionalised gatekeeping, restricting who can access investment, and in what form. This bottleneck kills many dreams. Community-owned renewable energy projects across the country are on hold, unable to access the funds to build.</p> <p>In July 2009 manufacturer Vestas decided to close down its wind turbine factory on the Isle of Wight. The workers occupied their workplace demanding a halt to the company’s plans, calling on government to intervene. The occupation, supported from afar by dozens of trade unions and green groups, and on the spot by climate activists from across Britain, lasted eighteen days.</p> <p>Alliances like this between labour unions and environmental movements can play a key role in transforming the energy settlement. A fundamental change in energy infrastructures that is needed to address climate change could create 1.33 million full time equivalent jobs in the UK in wind, marine, solar power, geothermal, synthetic gas and support services, according to Zero Carbon Britain. Some downstream fossil fuel infrastructure including the Grangemouth refinery could be retooled to run off synthetic gas, providing those workers with a long term role in our energy future.</p> <p>We need energy authorities and bodies with strong elected worker representation on their boards as in Norway and Denmark. Effectively combating the climate crisis relies on workplace democracy, with workers and trade unions centrally involved in planning and structuring the alternative.</p> <p>But “alternative” must mean more than a small-scale off-grid utopia. Nor is it an alternative but separate system, in parallel with neoliberalism. Otherwise elite groups, including new elites, will seek to recuperate, to take over, to concentrate power and subject collective projects to their private interests. This happened in Norway, where deliberative processes were subverted and technocrats enforced their will against democracy. </p> <p>To prevent this, movements need to dismantle existing power structures at the same time as building our energy future. We should aim to take space and make demands that force the hand of neoliberalism and authoritarianism. Strangling corporate power by denying it what it needs – possibilities for ever greater accumulation. Building the future while we confront the present.</p> <p>This is a call for energy democracy. Not energy security or energy separation. These are too rooted in the neoliberal common sense, and empower militaries and heavy-handed governments over a passive population. A survivable and just energy future means breaking the grip of elite interests on our energy systems, ending dependency, increasing autonomy, building diverse power structures that can hold one another to account and leaving fossil fuels in the ground. Energy democracy would end fuel poverty and create conditions for economic democracy, ending the concentration of power in the hands of unaccountable elites. We aren’t limited to a single unitary model - a resilient energy future will be composed of diverse energy commons, solidarities and practices. We believe energy democracy can be realised by scaling up from decentralised, community controlled renewable energy projects, and using the state’s institutions to pool and redistribute resources.</p> <p>Referring to the pioneering Tredegar Medical Aid Society, NHS founder Aneurin Bevan described the creation of the NHS as “We are going to Tredegarise you.” Seventy years later, could Britain’s energy be Eigg-ised?</p><p>&nbsp;</p><h3><a href="" target="_blank">Soundings Manifesto Seminar</a> <br /> Energy beyond neoliberalism</h3> <p><strong>Tuesday 18 November, 6.30-8.30pm</strong><br /> Marx Memorial Library, 37a Clerkenwell Green, EC1R 0DU</p> <p>Join us on Tuesday 18 November to discuss the latest installment in the After Neoliberalism? <span class="il">Kilburn</span> Manifesto series: "<strong>Energy beyond neoliberalism</strong>". This chapter investigates the potential of looking beyond dominant neoliberal models of energy production and distribution, with a particular focus on the role of "the commons". It will be available to read online in advance of the seminar.</p> <p>Speakers include <strong>Farzana Khan</strong> and <strong>Mika Minio-Paluello</strong> (Platform), with a response from <strong>Guy Shrubsole</strong> (Friends of the Earth). The seminar will be chaired by <strong>Jo Littler</strong> (City University).</p> <p>The event is free to <a href="" target="_blank">Soundings</a> subscribers.<br /> Subscribe <a href="" target="_blank">here</a>.<br /> Subscribers can sign up for the event <a href="" target="_blank">here</a>.</p> <p>To non-subscribers, the event is £5 (£3 concessions). Buy tickets <a href="" target="_blank">here</a>.</p> <h3><a href="" target="_blank">After Neoliberalism? The <span class="il">Kilburn</span> Manifesto Conference</a> </h3> <p><strong>Saturday 21 February 2015, 9.30am-4pm</strong><br /> Human Rights Action Centre, 25 New Inn Yard, EC2A 3EA</p> <p>A one day <a href="" target="_blank">After Neoliberalism? The <span class="il">Kilburn</span> Manifesto</a> conference from <a href="" target="_blank">Soundings Journal</a>.</p> <p>Confirmed speakers include <strong>Doreen Massey</strong>, <strong>Michael Rustin</strong>, <strong>Beatrix Campbell</strong>, <strong>Jeremy Gilbert</strong> &amp; <strong>Pragna Patel</strong>.</p> <p><a href="" target="_blank">Tickets available online</a>.</p> uk uk Kilburn Manifesto Modernise: de-privatise Platform Sat, 15 Nov 2014 00:11:11 +0000 Platform 87761 at Teaching neoliberalism: time to replace Ofsted <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Calls to reform Ofsted don't go far enough - it's become a tool for the neoliberal take-over of our education, and needs to be replaced.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="345" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'></span></span></p><p>At its Spring 2014 Conference the Green Party of England and Wales adopted a policy to replace Ofsted, the school inspections body for England, with an independent National Council for Education Excellence, working collaboratively with local authorities and schools and informed by educational research. </p> <p>Since the policy was adopted Ofsted has come under increased criticism with the Local Government Association calling for a review of an organisation that has become ‘media driven’, revelations that an academy chain was tipped off about the dates of its inspections, alleged conflicts of interest when inspectors are also employed by academy chains that would benefit from the forced academisation of schools deemed to be failing, and confusion over what Ofsted requires of schools. </p> <p>All this has resulted in calls for reform of Ofsted but Green Party policy goes further, locating the role of Ofsted within the neo-liberal project for the marketisation of education, commonly known as the Global Educational Reform Movement (GERM). </p> <p>Ofsted has become a political tool of the GERM project not merely because of senior staff links with academy chains, the recently appointed chair is a trustee of the AET academies chain, but through its judgements on schools being used by the DfE to force academisation of local authority schools, often against vehement parent opposition. </p> <p>The GERM not only seeks to privatise education and make what was public sector provision a source of profit for private companies such as Murdoch and Pearsons, but to narrow the purposes of education to one that links it directly to the country’s competitive position in the global market. </p> <p>The GERM thus encourages competition between schools with success or failure in that competition being measured by standardised tests the results of which are then used as marketing tools. </p> <p>In England the competition has been intensified by a Government programme of building new academies that are independent of local democratic control and run by private (currently not for profit) academy chains, voluntary conversion of existing local authority schools to academy status, forced academy conversion of failing local authority schools, and the ‘free school’ programme of centrally funded schools which operate independently of their local local authority. </p> <p>The Government intervenes further in the market by requiring any new schools to be academies or free schools. </p> <p>Teaching is reduced to ‘teaching to the test’ and pressure is passed down the line from local authority/academy chain to headteachers, teachers, parents and ultimately the pupil. </p> <p>Ofsted makes a preliminary judgement of a school based on the data produced by this process and the grade given by their inspection becomes another marketing tool with schools hanging banners on their gates boasting of their Ofsted ‘Outstanding’ ranking. </p> <p>Ofsted judgements are used by the Department for Education to force ‘failing schools’ to become academies thus involving Ofsted in the process of the privatisation of the education system. </p> <p>From this year teachers’ pay will be linked to their performance as measured by their pupils’ test performance alongside other data, thus acting as an instrument disciplining teachers into serving the interests of the GERM. </p> <p>The GERM is sold to parents, as consumers in a market, through concepts such as choice and accountability. School league tables and Ofsted reports become the method parents use to exercise choice in that market. </p> <p>The consequence has been an increase in the workload of teachers as schools become subservient to WOW (What Ofsted Wants), the de-skilling of teachers as they ‘deliver’ lessons to fulfil narrow targets, and a perpetual fear of what the next Ofsted inspection may bring in terms of the future of a school as well as individual careers. </p> <p>The result has been increased staff turnover and a crisis in the recruitment of headteachers. </p> <p>The issues were well illustrated at a personal level by Green MP Caroline Lucas in a recent adjournment debate on education, when she read into the House of Commons record testimonies of teachers about the impact of the reforms. </p> <p>Although Ofsted is a vital part of this process the Green Party recognises that the GERM needs to be tackled in its entirety as an ideological project. The introduction to its Education Policy states that: </p> <p>Education should provide everyone with the knowledge and full range of skills they require to participate fully in society and lead a fulfilled life. We reject market driven models of education that see its role only in terms of international economic competitiveness and preparation for work. </p> <p>This premise leads to the Greens, in addition to the abolition and replacement of Ofsted, to call for: </p> <p>* The abolition of Standardised Assessment Tests (SATs) and league tables </p> <p>* A curriculum based on broad ‘Learning Entitlements’ within which teachers and learners can develop their own curriculum based on their interest and enthusiasms </p> <p>* Parent Forums and Pupil Councils in every school </p> <p>* The restoration of the role of local authorities in education provision and reintegration of free schools and academies into the LA system </p> <p>* Restoration of local authorities’ powers to plan and build new schools where needed </p> <p>* Require every class to be taught by a qualified teacher </p> <p>* Tackle the process by which teachers have become de-skilled and their professional autonomy eroded </p> <p>* Abolition of Performance Related Pay </p> <p>Although the Conservatives, Labour and the Liberal Democrats in the run up to the UK General Election in 2015 will make a few policy tweaks they remain neo-liberal parties thoroughly enmeshed in the assumptions of the GERM. </p> <p>There is however a popular movement developing in England against the GERM exemplified by the NUT’s Manifesto: Stand Up for Education and their work in setting up stalls in town centres to spread the message, resistance by parent groups to academisation with the recent notable success at Hove Park in Brighton, the grass roots twitter revolt by teachers orchestrated by the wonderful @TeacherROAR, and parent groups such as Parents 4 Education (@par4ed) joining with teachers in calling for a broader curriculum and more creative methods to engage children in real learning rather than mere training for the tests. </p> <p>The GERM is also, fittingly, being fought on an international basis, and Twitter in particular has enabled its opponents to share experience and solidarity. The website sets out its purpose clearly: </p> <p>Education in almost every country in the world is subject to the grip of neo-liberal education 'reform' which is slowly starving out public schooling, promoting privatisation, destroying teacher professionalism and aims only to produce a minimally educated workforce, which can read instructions and advertisements but is discouraged from thinking critically about the world. </p> <p>Teachersolidarity is an independent website which records the resistance to such reform of teachers, their unions, communities and researchers, who are fighting to defend public and democratic education. It aims to bring such people together, through sharing experiences, learning from one another and giving and receiving solidarity. </p> <p>In May 2014 the NUT brought international speakers together in a conference aimed at Building Resistance and Solidarity to the GERM and <a href="">this report on the conference its report</a> is well worth reading </p> <p>Just as the sacking of Michael Gove did not mean the end of the GERM in England so the abolition of Ofsted will not mark its demise, but both are part of the broader struggle to reclaim our education system. </p><p><em><strong><span>Liked this piece? Please </span><a href=""><span>chip in £2</span></a><span> here so OurKingdom can keep producing independent journalism.</span></strong></em></p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/shinealight/clare-sambrook/goves-own-operation-trojan-horse-privatisation-of-our-schools">Gove&#039;s own Operation Trojan Horse: the privatisation of our schools</a> </div> <div class="field-item even"> <a href="/shinealight/clare-sambrook/its-all-right-for-michael-gove">It&#039;s all right for Michael Gove</a> </div> </div> </div> </fieldset> uk uk Modernise: de-privatise Martin Francis Tue, 11 Nov 2014 00:00:01 +0000 Martin Francis 87617 at Alternative liberal solutions to economic inequality <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>The rich tradition of alternative liberalism has much to offer by way of solutions to inexorably widening inequality—as social movements are beginning to realise.</p> </div> </div> </div> <p class="Body"><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//,_c1870_0.jpg" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//,_c1870_0.jpg" alt="" title="" width="460" height="578" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>John Stuart Mill/Wikimedia</span></span></span></p><p class="Body">The social problem of the future we considered to be, how to unite the greatest individual liberty of action, with a common ownership in the raw material of the globe, and an equal participation of all in the benefits of combined labour.&nbsp; </p> <p class="Body">- J.S. Mill, <em>Autobiography</em>, 1873, speaking of himself and the philosopher Harriet Taylor.</p> <p class="Body">Thomas Piketty’s <a href="">Capital in the Twenty First Century</a><em> </em>argues that, absent corrective action, we can look forward to a rise in capital’s share of national income and a corresponding depression of the share of labour. This might not be so significant were capital evenly distributed so that all could share in its higher returns. But Piketty shows that the distribution of capital is extremely unequal and likely to grow more so. At the same time, he argues, the share of wealth that is inherited looks set&nbsp; to increase. Together these trends threaten to produce a society in which a relatively small section of the population comes to claim a larger share of national income through its (increasingly) concentrated ownership of (increasingly) inherited wealth.</p> <p class="Body">How might we prevent this from happening? In a <a href="">recent interview</a> with Piketty, Martin O’Neill draws out the connection between Piketty’s concerns and those of the economist <a href="">James Meade</a>. Writing in the 1960s, Meade envisaged a future in which technological change would reduce the demand for labour and thereby increase the return to capital.<a href="#_ftn1">[1]</a> Given the highly unequal ownership of wealth, Meade expected this to lead to increased inequality of income. His proposed solution was to explore ways of equalising claims to the return on capital. This could involve measures to widen the private ownership of property (‘property-owning democracy’) and/or to socialise capital and share out the return on this. </p> <p class="Body">Meade’s work fits into a wider tradition of what one might call <em>alternative liberalism</em>. While this tradition endorses both markets and significant private ownership of wealth, its proponents also see a key role for collective action, including action by the state, in determining, for egalitarian purposes, the content of the right to capital and its distribution. I call this tradition <em>liberal</em> because some of its leading theorists, such as J.S. Mill and James Meade, identified as liberals and because the Liberal party in the UK historically drew on and contributed to it.<a href="#_ftn2">[2]</a> But it is an <em>alternative </em>liberalism to neoliberalism in that it takes a different view of the content of the right to capital and regards rules regulating the distribution of wealth as properly subject to collective determination and an egalitarian conception of the common good. </p> <p class="Body">Without claiming that alternative liberalism offers all the answers to the problems Piketty identifies, I do think it is a useful tradition to engage with. My aim here is to clarify some of its main ideas and discuss its political relevance. </p> <p class="Body"><strong>Rights <em>of</em> capital: income and control</strong></p> <p class="Body">Say you have a right to some capital, in particular to some capital invested in a firm. What should the content of this right be? What sort of rights to income from, and control over, the firm should the right entail?&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="Body">In the historic Liberal party in the UK the answers to these questions centred around notions of profit-sharing and co-determination. </p> <p class="Body">Let’s take profit-sharing first. This term can mean a number of different things, but in the mainstream Liberal party tradition it had a specific meaning. The firm is seen as a partnership of labour and capital. Workers are entitled to a (trade-union negotiated) wage. Capitalists are entitled to a ‘capital wage’, a norm for the rate of return on investment. Any income the firm receives over costs, including the wages of labour and capital, is pure profit. Who has a right to this pure profit? One view, going back to Co-operator <a href="">Robert Owen</a>, is that labour and capital both have a legitimate claim to a share of this. This is seen as both just in itself and (in some accounts) good for workplace relations and productivity. Some Liberals argued that profit-sharing in this sense should be compulsory (though the details of this were very controversial). Capital should not be allowed, on this Liberal view, to monopolise pure profit to the exclusion of workers. Capital’s right to income does not stretch that far.</p> <p class="Body">At the same time, Liberals argued that capital’s authority in the firm ought to be limited by workers’ rights to consultation and participation in structures of co-determination. The right of capital to control the firm is not absolute. The right to invest in a firm is conditional, on this view, on accepting workers’ rights to share in authority at various levels of decision-making. Participation rights here can include representation on works’ councils and on firms’ governing bodies. The rationale for this was again in part about alleged work relations and productivity, but also about inherent justice. In the words of one Liberal party report from the 1960s:</p> <p class="Body">Just as there is a difference between a citizen and a mere subject, so there is a difference between an employee who is simply hired by his company and one who shares, officially and formally, in the ultimate power to determine the company’s aims and call its directors to account.<a href="#_ftn3">[3]</a></p> <p class="Body">Indeed, for some more radical liberals/Liberals the idea of co-determination sometimes gave way to the idea that firms ought to be labour-managed. Firms should be run by their workers. To attract capital, worker-managed firms would of course have to offer a return on investment. But investors would not have a right to directly control the firms themselves. A further step along this road, of course, is to envisage workers owning the firm they manage, either in whole or in part.</p> <p class="Body">We see a vision of this kind in J.S. Mill’s <em>Principles of Political Economy</em> (1848) which argues that ‘the relation of masters and workpeople will be gradually superseded by partnership, in one of two forms:...association of the labourers with the capitalist; in others, and perhaps finally in all, association of labourers among themselves’.<a href="#_ftn4">[4]</a> And well over a century later, we see Paddy Ashdown, leader of the newly formed Liberal Democrats, returning to the idea of the labour-managed firm: ‘[i]n some cases, the present situation will be reversed…with workers employing capital and even hiring their own management’.<a href="#_ftn5">[5]</a></p> <p class="Body"><strong>Rights <em>to</em></strong><strong> capital: direct and indirect</strong></p> <p class="Body">Undoubtedly many will find these modifications of the right to capital—the limitation of capital’s income and control rights—too modest. Perhaps in and of themselves they are. But they are just part of the package potentially offered by alternative liberalism. Also important is the way this tradition thinks about the right <em>to</em> capital and the role of collective action in shaping the underlying distribution of wealth.</p> <p class="Body">For much of the twentieth century, the Liberal Party campaigned on the slogan, <em>Ownership for All</em>. The ideal was a society in which all citizens would hold some wealth. In its most radical form, the moral claim is that we have a right to capital as citizens. </p> <p class="Body">At the policy level, Liberals tended for the most part to support rather modest measures to encourage wider ownership, e.g., tax relief for personal saving accounts. Liberals also supported taxation of inherited wealth. Meade considered&nbsp; how one might structure such a tax to motivate a wider dispersion of inheritances. One might think of these policy ideas as instruments that seek to institute a right to capital indirectly, by means of supposedly helpful incentives and/or targeted assistance.</p> <p class="Body">Another possibility is to link profit-sharing (as described above) to the aim of spreading wealth. One idea that played a part in Liberal debates in the 1960s—though it was never formally adopted as party policy—was to use labour’s profit share to invest in firms’ assets so that, over time, workers would build up their own share in firms’ wealth. (This reflected a wider interest in such ideas at the time in Western Europe, an interest which arguably found its most radical expression in the famous ‘Meidner plan’ developed by the economist <a href="">Rudolf Meidner</a> at the request of the Swedish trade union movement.)</p> <p class="Body">The most direct way to institute a right to capital, however, is simply to make it a basic right of citizenship. In his <em>Agrarian Justice</em>, published in 1797, Tom Paine argued that every citizen reaching adulthood should receive a capital grant from the state, paid for by a tax on inherited wealth.<a href="#_ftn6">[6]</a> The proposal resurfaced at intervals during the 19th century. Dane Clouston brought it into Liberal party debate in the 1970s (and he <a href="">continues</a> to advocate it) and it has recently made a comeback not least due to the efforts of Bruce Ackerman and Anne Alstott in their 1999 book, <a href="">The Stakeholder Society</a>. The idea of a universal capital grant was taken up in the UK in a modest way by the previous Labour government in the form of the <a href="">Child Trust Fund</a>,<a href="#_ftn7">[7]</a> one of the first policies to be abolished by the Coalition government. </p> <p class="Body">Another model of a citizens’ right to capital is what we might term the Citizens’ Trust. Meade was somewhat sceptical about the state owning and running particular firms or industries. However, he thought the state should build up its own set of stocks and shares in what Gerald Holtham terms a <a href="">‘community fund’</a> . In Meade’s vision of what he called ‘Agathotopia’ (the good place, though not the perfect place of utopia), he imagines the community owning something like 50% of the nation’s productive assets in this way. The return on this national asset or community fund can then be paid out to the citizenry as a social dividend. A real-world example of what Meade has in mind is the <a href="">Alaska Permanent Fund</a>. This invests revenue derived from the sale of mineral rights and pays out a modest annual return to every Alaskan citizen. </p> <p class="Body"><strong>Extending the Citizens</strong><strong>’ </strong><strong>Trust idea: basic income </strong></p> <p class="Body">In Meade’s model of the Citizens’ Trust collective asset ownership is seen as a way of securing a <a href="">basic income</a>: an income paid to every citizen as of right with no means test or work-related condition. However, we don’t necessarily have to think of basic income as something delivered solely through a Citizens’ Trust. Another, complementary, possibility is to consider how the tax-transfer system can be structured to provide a basic income. </p> <p class="Body">There is, again, considerable support for this in the tradition I am calling alternative liberalism. <a href="">One proposal</a>, currently floated by the Citizens’ Income Trust in the UK, is to fold most existing cash benefits and tax reliefs into a basic income scheme. Another long-standing idea seeks to link specific natural resource taxes to the funding of a basic income. One <a href="">strand in the liberal philosophical tradition</a>, for example, argues that natural resources such as land are fundamentally the property of all. If individuals wish to use those resources for private purposes, they may do this. But they must pay the community for the privilege. Taxes, e.g., a <a href="">land value tax</a>, can be used to ‘charge’ natural resource users for their appropriation of part of the commons. The funds can then be recycled to citizens as a basic income, reflecting their right to an equal share of the underlying resources. </p> <p class="Body"><strong>Alternative liberalism in practice?</strong></p> <p class="Body">A society designed to satisfy the aspirations of alternative liberalism would look rather different to our own, though familiar in other ways. Some assets would remain privately-owned, though the distribution would perhaps be more equal due to the effects of inheritance tax and basic capital schemes. Many citizens would sell their labour-power to make a living, but the context would be reshaped somewhat by rights of participation in firm decision-making and, not least, by a basic income. Though technological developments might put downward pressure on labour’s share of national income, workers would be compensated for this by their greater access to the return on capital. There is reason to think that such a society would be more distributively and relationally egalitarian than our own. With such measures backed up by strong trade unions, quality public services and other social security payments (such as to cover the additional living costs of disability), a society of this kind would certainly look very different to the scenario otherwise predicted by Piketty.</p> <p class="Body">But can alternative liberalism connect with political practice? </p> <p class="Body">As the discussion above suggests, alternative liberalism did influence thinking in mainstream UK politics in the 20th century. Although the Liberal party was quite marginal for most of the century, the tradition also had some support within the Labour party and, in the 1980s, the Social Democratic Party. However, even then, its impact on actual policy was limited. And, in the last couple of decades, alternative liberalism has struggled to retain a hold within the mainstream ‘centre left’.</p> <p class="Body">Nevertheless, there remain echoes of it in <a href="">Liberal Democrat</a> and <a href=",2013-03-08">Labour</a> proposals for ‘mansion taxes’. Labour MP David Lammy proposes a shift to taxation of unearned wealth from taxation of income and that we adopt power-sharing and profit-sharing in companies in his 2011 book <a href="">Out of the Ashes</a>. Researchers at the centre-left think-tank IPPR have also recently explored forms of power-/profit-sharing (<a href="">Lawton and Lanning 2013</a>, <a href="">Lawrence and MacNeil 2014</a>), while Martin O’Neill has argued that Labour’s big idea of ‘<a href="">predistribution</a>’ should be developed in terms of Meade-style notions of ‘property-owning democracy’.</p> <p class="Body">We can also see an interest in some of the ideas associated with this tradition in green and emerging social movement thinking. Amelia Womack, deputy leader of the Green Party of England and Wales, has <a href="">argued</a> that all workers should have the right to convert their firm into a co-op, a proposal that is now that Party’s policy. The <a href="">New Economics Foundation’s work</a> on tackling economic inequality has recently included proposals for wider employee share ownership, community share ownership, profit-sharing, and a land value tax linked to a ‘citizen endowment’.<a href="#_ftn8">[8]</a> <a href=""></a>Guy Standing’s attempt to imagine a ‘<a href="">Precariat Charter</a>’ to address inequalities of power and material insecurity in the contemporary labour market includes proposals for basic income and, as also <a href="">suggested</a> by Angela Cummine, to develop and use Sovereign Wealth Funds in a manner akin to a Citizens’ Trust. Many of these proposals also feature in an attempt to explore a&nbsp; <a href="">‘republican’ political economy</a> in an <a href="">e-book</a> edited by myself and Niki Seth-Smith.&nbsp; There is much common ground, too, with the ideas for ‘community-wealth building’ being developed very concretely by the <a href="">Democracy Collaborative</a> in the US, though there is a stronger emphasis <a href="">in their work</a> on the need to root capital in specific places than one usually finds in the alternative liberal tradition<a href=""></a>. <a href="">The Little Book of Ideas</a><em> </em>produced by Occupy London’s Economics Working group has entries on basic income, employee share ownership and land value tax. Basic income in particular seems to be emerging as a core element of a post-<a href="">Occupy</a> perspective on what a new economy should involve. </p> <p class="Body">At times in the past, alternative liberalism has been an intellectual tradition largely confined to a technocratic elite at some distance from popular movements for social justice.&nbsp; But as new popular movements try to articulate a way forward from neoliberalism, the tradition of alternative liberalism has a lot to offer. Perhaps, as some of its ideas become grounded in such movements, they will find the political traction they lacked for much of the twentieth century.</p> <p class="Body"><em>My thanks to Martin O</em><em>’</em><em>Neill for comments on an earlier draft.</em></p> <p class="Body">&nbsp;</p> <p class="WPNormal"><strong>Stuart White </strong><em>is a political theorist at Oxford University. He is interested in the relationship between democratic citizenship and the economy. He is an editor of the </em><a href=""><em>Great Charter Convention</em></a><em> at openDemocracy.</em></p><p class="WPNormal">&nbsp;</p><p class="WPNormal"><em><strong>Crossposted with thanks to <a href="">New Left Project</a></strong><br /></em></p><p>&nbsp;</p> <hr size="1" /> <p class="Footnote"><a href="#_ftnref1">[1]</a> James Meade, <em>Efficiency, Equality, and the Ownership of Property</em> (London: Allen and Unwin, 1964).</p> <p class="Footnote"><a href="#_ftnref2">[2]</a> See Stuart White, ‘“Revolutionary Liberalism”? The Philosophy and Politics of Ownership in the Post-War Liberal Party’, <em>British Politics</em> 4 (2), 2009, pp. 164-187.</p> <p class="Footnote"><a href="#_ftnref3">[3]</a> Liberal Party, <em>Industrial Affairs </em>(London: Liberal Party, 1962), p. 23.</p> <p class="Footnote"><a href="#_ftnref4">[4]</a> John Stuart Mill, in Donald Winch, ed., <em>Principles of Political Economy</em>, Books IV and V (Harmondsworth: Penguin, 1970 [1848]), p. 129.</p> <p class="Footnote"><a href="#_ftnref5">[5]</a> Paddy Ashdown, <em>Citizen</em><em>’</em><em>s Britain: A Radical Agenda for the 1990s</em> (London: Fourth Estate, 1989), p. 113.</p> <p class="Footnote"><a href="#_ftnref6">[6]</a> Thomas Paine, ‘Agrarian Justice’, in Michael Foot and Isaac Kramnick, eds., <em>The Thomas Paine Reader</em> (Harmondsworth: Penguin, 1987 [1797]).</p> <p class="Footnote"><a href="#_ftnref7">[7]</a> Rajiv Prabhakar, <em>The Assets Agenda</em> (Basingstoke: Palgrave, 2008).</p> <p class="Footnote"><a href="#_ftnref8">[8]</a> </p> uk uk Modernise: de-privatise Stuart White Debating economic and social rights Wed, 05 Nov 2014 09:58:51 +0000 Stuart White 87248 at What Elinor Ostrom taught: democratic control is not only possible, it's normal <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>The only woman to win the Nobel Prize for Economics showed that democratic management of commons isn't just possible, but normal.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="684" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Elinor Ostrum/Wikimedia</span></span></span></p><p>The market fundamentalism of Hayek seems to dominate political discourse. Hayek, the liberal free market Austrian economists, argued that state planning would end in failure and only the market could promote economic efficiency. This agenda seems, since Thatcher and Reagan, to have swept the world but it is, of course false. Neo-liberals far from reducing state intervention use the state to support corporations. Privatization is about helping powerful firms and market competition is no longer an issue. A good example is the current transformation of the NHS into a cash cow for Virgin and US health corporations. Neo-liberals promote corporate welfare and monopoly. Elinor Ostrom is powerful ally for all those of us who want to challenge that neo-liberal dogma and create people centred cooperative economics.<br /><br />Elinor Ostrom, who sadly died in 2012, was the first and so far only women to win a Nobel Prize, strictly speaking the Swedish bank prize, for economics. She was awarded it for her work on commons, collective resources and collective communal property. If we want a practical alternative (s) to privatisation she helps in a number of ways.<br /><br />First, she is one of very few thinkers who gets us beyond market and state binaries. Her Nobel lecture was entitled 'Beyond markets and states', while she was neither a radical anti-statist nor an anti-capitalist, she believed that a whole host of ways of running an economy were possible and that all sorts of cooperative and diverse ways of owning property and dealing with economics had the potential to work. The idea that the market was a panacea, or, indeed, the state, was alien to her thinking. This approach is a good way of challenging the neo-liberal idea that only privatisation is permitted - popular democratic control of the economy and society is at the centre of Ostrom's work.<br /><br />Second, her research showed that far from being tragic, commons were possible. In her most important book <em>Governing the Commons</em>, she looked at real world examples of commons that had succeed and others that had failed. She discovered that some commons such as the grazing pastures at Torbel in Switzerland had worked very well for over a thousand years. She looked at how Spanish farmers have shared limited irrigation water – using the same formula for centuries, she examined how for generations, fishing communities in West Africa have divided up access to fish, to ensure that only a sustainable number are ever caught... Cooperative ownership is thus an alternative to private corporate control of resources. Her work on commons is a powerful challenge to neo-liberal assumptions that corporate ownership is the ideal because cooperation always tends to fail.<br /><br />Third, she helped to discover ground rules to make commons work. Often we think in slogans and make broad ideological statements. She in contrast looked in very great detail and what made cooperation more likely. Her eight design features for a well-functioning commons, cannot simply be applied to all forms of collective cooperative ownership but provide a very good start for helping us. For example, running a cooperative or commons, involves constructing rules as to who does what, her assumption that the more participation co-operators have in making the rules the more likely they are to stick to them, is just one useful insight.<br /><br />Fourth, she reminds us that institutions and culture are important. We live in the UK in society where hierarchy and market values are often strong, it is thus likely to involve some serious work to construct alternatives. We need to look at examples which have worked and others which have failed, working hard intellectually and practically to build alternatives. Alternatives to neo-liberalism are possible in a society but practice will be needed to get them right.<br /><br />Fifth, Ostrom was overwhelming pragmatic. She focussed on practical problems and how to solve them. Her interest in commons and indeed that of her husband Vincent, an interesting thinker in his own right, came from a particular dilemma. They were interested in the problems of conserving West Basin, a body of water near Los Angeles. If too many users including farmers took water from it, the water level would fall, salt water would be sucked in from the Pacific and West Basin would be ruined as a source of fresh water. You can't divide water courses up and sell them, so a solution that involved diverse user cooperating had to be achieved. It might be said that human beings face a variety of challenges in creating economies and institutions that work for mutual benefit, the Ostrom approach of seeing these challenges as forms of problem solving is I feel very helpful.<br /><br />Sixth, while Ostrom was never identified with the radical left or anti-capitalism, her ideas when examined are extraordinarily radical. For example, long before it was fashionable she was an intersectional thinker, she always worked for women and diverse but excluded social groups. The idea that economics was gender neutral did not fit with her work. Her own experience shaped this approach. </p> <p>Her mother was Protestant, her father Jewish. She was brought up as a Protestant, yet she remembers children shouting 'Jew' at her in the Sunday school playground,</p> <p>‘I got circled in the schoolroom, out on the playground.’</p> <p>'You Jew! You Jew!' she recalled, her voice rising, imitating the taunts.<br />‘Having that experience as a kid and being a woman, and having that challenge as it has been at different times to be a woman, I've got pretty good sympathy for people who are not necessarily at the centre of civic appreciation.*</p> <p>She faced an uphill battle as a woman wanting to study economics and this reinforced her love of diversity and democratic self-governance. Ecological considerations were built into her work, she developed the concept of social-ecological systems and argued that ecological sustainability was essential. She was also a keen advocate of the seven generation rule, derived from indigenous Americans, noting: </p> <p>‘indigenous people in this country had a way of thinking seven generations into the future. We need to do more thinking about seven generations into the future’ </p> <p>Ostrom, to summarize, showed that an alternative to purely private ownership were possible, she argued for diverse, democratic ownership and ecological sustainability, a long way from the narrow assumptions of mainstream economics. Above all, she used detailed research methods to investigate how we could do better. Her work is essential for helping us to move away from an economy that is based on top down instruction, inequality and corporate control. She was a pragmatic radical and we can all learn from her. </p><p>&nbsp;</p><p><em>*(Leonard 2009) Quoted in Wall 2014</em> </p> <p><a href=""><img src="//" alt="LocalismWatch icon" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Derek Wall Wed, 29 Oct 2014 23:11:11 +0000 Derek Wall 87232 at Labour and TTIP: things just got worse <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>The Labour Party has just changed its position on TTIP - for the worse.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="298" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'><span class='image_title'>Image: WDM</span></span></span></p><p>The latest briefing from the Parliamentary Labour Party on TTIP has just dropped into my inbox. It’s not an encouraging read, as the party seems to have weakened its position. </p> <p>Most worrying is that their previous opposition to ISDS (the ‘corporate court’ system) seems to have turned into a call for ‘transparency’. At a time when the EU’s own Commission is <a href="">publically divided on ISDS</a> and even the ultra-free-market Cato Institute have come out against, we could really make some headway. <a href="">The Economist</a> came out a couple of weeks ago saying: </p> <p>“<em>If you wanted to convince the public that international trade agreements are a way to let multinational companies get rich at the expense of ordinary people, this is what you would do: give foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever a government passes a law to, say, discourage smoking, protect the environment or prevent a nuclear catastrophe.”</em></p> <p>But Labour’s shadow team on trade has <em>softened</em> its position – calling for a sort of carve out giving governments a ‘right to regulate’. </p> <p>But this language is already included in trade agreements, and no ‘carve out’ <a href="">would make a blind bit of difference</a> to the ability of multinationals to take legal action against governments. There’s a simple point of principle– big business must not have a separate system of law which privileges only their interests. </p> <p>Second, on public services, Labour clearly calls for exemption of the NHS. This is good (and we hope that means they will <em>oppose </em>TTIP if the NHS isn’t excluded). But it isn’t just a matter of the NHS. Education is clearly at risk, higher education especially so but also, for example, government regulation of training and free schools. Then there’s transport, energy and communications – none of which constitute public services as things stand but none of which should be locked into a path of endless liberalisation.</p> <p>Third, on standards, its good to hear Labour will “only support an agreement that avoids a race to the bottom” but worryingly they think “the principle behind the treaty is to keep or raise standards” as that certainly <em>isn’t</em> what scores of big business lobbyists are pushing for. We should also worry about the phrase “benefits for consumers” as this often equates simply to ‘cheaper prices for goods’, regardless of impact on society, the environment, even choice. </p> <p>And finally Labour now appears to be backing the Commission’s position of ripping open US procurement. The Commission has always said it wants to give European business access to the massive spending of US states, where ‘Buy America’ provisions often apply. But procurement is a vital means of giving public support to local farmers and small local business. For instance, getting schools to buy local, environmentally sustainable food is a <em>good thing</em>. </p> <p>The last thing we want is for our ability to use local government spending to be stripped away so that they <em>have</em> to purchase the cheapest goods possible. This is a recipe for giving big business with poor labour standards, huge carbon footprints and unhealthy production practices the right to access massive amounts of public money. We shouldn’t be forcing open US procurement, but rather protecting our own. </p> <p>Labour continues to “support the principles behind these negotiations”. As we get closer to seeing manifesto commitments, it’s vital we change this position. </p> <p><a href="">Sign the Europe-wide petition to stop undemocratic trade deals like TTIP</a> </p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/can-europe-make-it/euro-elections-you-tell-us/marzena-sadowska/ttip-and-first-rule-of-fight-club">TTIP and the first rule of Fight Club</a> </div> <div class="field-item even"> <a href="/can-europe-make-it/walden-bello-thomas-fazi/ttip-and-tpp-harnessing-anger-of-people">TTIP and TPP: harnessing the anger of the people </a> </div> <div class="field-item odd"> <a href="/od-blog/mary-fitzgerald/most-important-thing-you%E2%80%98ve-never-heard-of">The most important thing you’ve never heard of</a> </div> <div class="field-item even"> <a href="/ournhs/caroline-molloy/nhs-boss-stevens-and-ttip-lobbyists">NHS boss Stevens and the TTIP &#039;trade&#039; lobbyists who threaten our NHS</a> </div> <div class="field-item odd"> <a href="/ournhs/jurgen-maier/battle-royal-in-brussels-backroom-%27trade%27-deals-under-fire">Battle Royal in Brussels - backroom &#039;trade&#039; deals under fire</a> </div> </div> </div> </fieldset> uk uk Modernise: de-privatise Nick Dearden TTIP Wed, 29 Oct 2014 12:39:49 +0000 Nick Dearden 87253 at “Unexpected partnerships” in protest at the National Gallery <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>As the state retreats from funding the arts, corporate power creeps in - only to find itself exposed by new alliances of citizens.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="// shot 2014-10-23 at 11.41.46.png" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="// shot 2014-10-23 at 11.41.46.png" alt="" title="" width="460" height="307" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'></span></span></p><p>The National Gallery recently opened the doors to its new headline exhibition, ‘Rembrandt – The Late Works’, but by deciding to take on a private security firm and accept sponsorship money from Shell, the gallery had unwittingly opened its doors to a week of protest. A new alliance of climate activists and union members was about to emerge, intent on defending the arts from unethical sponsors and highlighting the gallery’s plans to privatise up to two thirds of its workforce. </p><p>On Tuesday morning, respected arts journalists and critics had made their way to the gallery’s Sainsbury Wing for an exclusive press conference, launching the new exhibition. However, just as the press conference was drawing to a close, a group of ten “actor-vists” dressed in black and red began singing from the landing above. The group performed a <span><a href="">Faustus-themed musical sketch</a></span>, in which a gallery director is tempted by a “Shell-devil” offering oily money and sell-offs to private hands. In this version though, the gallery director sees the error of his ways and changed his plans at the last minute: ‘We’ll cut the cuts to national art; Culture, oil – set them apart!’ Journalists and gallery-goers gathered to watch the performance, which was met with applause, before the performers ceremonially kicked the Shell-devil out of the building.</p><p>&nbsp;</p><p><a href="">Oil sponsorship, Rembrandt &amp; the National Gallery</a> from <a href="">rikki</a> on <a href="">Vimeo</a>.</p><p> The groups behind the performance, <em>BP or not BP</em> and <em>Shell Out Sounds</em>, are part of Art Not Oil, a coalition of groups that creatively campaign against oil sponsorship of arts and culture. From oil spills and gas flaring in the Niger Delta to carbon-intensive tar sands projects in Canada, <span><a href="">Shell are an extremely unethical choice of sponsor</a></span>. Their continued lobbying against climate legislation that would protect future generations makes this explicitly clear. For its meagre contributions, Shell attempts to clean up its reputation by latching its name onto the arts and our cultural institutions. These creative protests are part of a wider campaign to stigmatise fossil fuels and challenge the ‘social license’ of oil companies, which allows them to keep pursuing ever more high-risk projects – like drilling for oil in the Arctic. </p> <p>Rhiannon Kelly, a performer with the group, said ‘Arts institutions like the National Gallery receive just a small percentage of their funding from corporate sponsors like Shell, but these corporations receive a large amount of branding and kudos in return. We know the National Gallery can make ethical funding decisions if it chooses to…Shell may need the arts to prop up its tarnished brand, but the arts do not need Shell.”</p> <p>On Wednesday morning, the gallery management might have hoped for some respite but were forced to close its main galleries, as members of the Public and Commercial Services Union took part in a nationwide strike over pay and privatisation. In London, many members gathered in solidarity with staff at the National Gallery, along with a representative from Art Not Oil, sending a clear message that privatisation plans were unwelcome. The decision by the gallery director to pursue privatisation is seen as particularly unpleasant, after he <span><a href="">accepted a 20% bonus</a></span> earlier this year of £28,000, on top of his salary of £140,000. </p> <p>There was no let-up in protest on Thursday either. Shell was planning to celebrate its sponsorship of the ‘<span><a href="">Rembrandt</a></span>’ exhibition with a private gala evening in the Sainsbury Wing. Highly ranked staff and specially invited guests, including the Energy and Climate Change minister, Greg Barker MP, were to be treated to drinks, canapés and an exclusive tour. However, just before the doors opened, fifty singing protesters processed across Trafalgar Square and created their own welcome party for Shell’s VIPs. A whole range of campaign groups had joined forces and confronted the queue with singing, chanting and reciting messages from affected communities using the “human microphone” method, made popular by the Occupy movement. The words of Celestine, from <em>Social Action in the Niger Delta</em>, were particularly poignant as they echoed off of the gallery walls and guests stood and listened:</p> <p>‘<em>The arts sponsorship that Shell is giving out is blood money, because people in Nigeria are suffering and even dying as a result of Shell’s operations. Land is taken, livelihoods are destroyed, and the environment is devastated.’</em></p> <p>The protesters remained vocal and creative throughout Shell’s ‘soiree of deception’, at one point dividing into 3-part harmony. For part of the evening, they also held a solemn vigil where those attending tied messages of solidarity to a Shell-branded exhibition banner outside the gallery and, one by one, shared their motivations for attending the protest. </p><p>There were also chants in solidarity with the National Gallery’s PCS members, such as ‘Art for people not for profit’ and ‘Reclaim Rembrandt’. That morning, it had also been <span><a href="">reported by the Daily Mail</a></span> that members of the private security firm drafted in to watch over the exhibition were already letting standards slip: ‘They have been spotted touching paintings and even caught on camera in the Rembrandt exhibition stroking works loaned to the gallery.’ The headache caused by privatisation plans wasn’t about to go away. </p><p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="// shot 2014-10-23 at 11.43.57.png" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="// shot 2014-10-23 at 11.43.57.png" alt="" title="" width="460" height="306" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style="" /></a> <span class='image_meta'></span></span></p><p>The National Gallery has previously drawn an ethical red line when it comes to its corporate sponsors. In 2012, following a <span><a href="">successful campaign</a></span> by the Campaign Against the Arms Trade, the arms manufacturer Finmeccanica pulled out of its corporate membership of the gallery a year before it was due to end. South of the Thames, the Southbank Centre ended its relationship with Shell last year following a campaign by several groups, including Shell Out Sounds. In both cases, the contributions made by the sponsors were small, while the legitimacy gained was big. </p> <p>As cuts to the arts take hold, deals with unethical sponsors and plans to privatise galleries and museums could become more commonplace and it is something actively encouraged by the Department for Culture, Media and Sport, with little regard for the repercussions. However, <span><a href="">arts spending in Berlin</a></span> far outstrips the entire Arts Council England budget and consequently, there is a thriving and diverse arts scene. The PCS Union have also <span><a href="">made the case</a></span> that the culture sector ‘not only generates more income than is invested but investing in it is also linked to local economic prosperity and human well-being.’</p> <p>Clara Paillard, President of the PCS Culture Sector, said: ‘Privatisation and sponsorship by oil companies are two sides of the same coin: it is about the ongoing sell-off of public services, including museums and galleries. It is about exploiting workers for corporate profit. PCS believes austerity is not the only show in town and that proper public investment in arts and culture is in fact beneficial to the economy.’</p> <p>Last week, the National Gallery paid the price for its privatisation plans and deals with an oil sponsor. Members of the PCS Union are likely to take further action if there is no shift in the management position and the creative climate campaigners could yet return in novel new ways. But what the gallery might have unwittingly awakened is a new solidarity between environmental activists and union members, an allegiance that could easily spread to other institutions and halt corporate influence over the arts in its tracks. </p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/heather-mcrobie/refuse-bp-sponsorship-arts-will-be-undermined-by-petro-dollars">Refuse BP sponsorship: the arts will be undermined by petro-dollars</a> </div> <div class="field-item even"> <a href="/ourkingdom/kevin-smith/divestment-and-ending-sponsorship-both-tools-of-oil-company-stigmatisation">Divestment and ending sponsorship - both tools of oil company stigmatisation</a> </div> </div> </div> </fieldset> uk uk Modernise: de-privatise Chris Garrard Tue, 28 Oct 2014 23:36:07 +0000 Chris Garrard 87090 at The day the bosses left and the workers took over <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>When the Argentinian economy collapsed, lots of workers didn't believe that the things they made were no longer needed. And so they broke into their factories, and started making them again - only to prove they could run them better than their former bosses.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="392" height="295" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style=""/></a> <span class='image_meta'><span class='image_title'>image:</span></span></span></p><p>What do you think happened when foreign investment fled from Argentina after the country’s IMF-poster-child economy collapsed in 2001, shutting down many of the country’s factories overnight? </p><p>For one, the Argentines ousted five presidents in the first months of 2002 to voice their displeasure. But rather than simply protest, a movement of suddenly unemployed workers emerged to reclaim abandoned workplaces and run them as democratic workers’ collectives.</p> <p>Recovered businesses, as they were innocuously termed, spread across Argentina as workers returned to their old factories, clipping the chains on the gates that stood between them and their jobs. Their slogan, ‘Occupy, Resist, Produce,’ highlighted the radical nature of the movement, which threw private property rights into question, as more and more workers began to assert that their right to work trumped the employer’s right to own an empty factory.</p> <p>Occupied factories took on different forms. Some remained relatively traditional, with clear job titles and hierarchical salary structures, while many others began to change the nature of their workplaces in a range of deeper ways. Assembly decision-making processes, equal salaries across the workforce, and collective administration of the business, in sales, pay role, budgeting, and production forecasts, were but a few of the shifts that began to take hold in many of the factories.</p> <p>Recovered businesses would support other recovered businesses, giving each other the first contracts they needed to get machines operational again, supplying the different parts that other factories needed to make whatever it was they made. Even in the face of a severe economic downturn, several of the two hundred-plus occupied workplaces began to turn profits surpassing those achieved by the previous owners, often doubling everyone’s pre-occupation wages in the process. As one worker highlighted in Naomi Klein and Avi Lewis’ 2004 documentary, <em>The Take</em>, ‘What we’ve learned is that in a business, participatory democracy is more efficient.’<sup><a class="sdendnoteanc" href="#sdendnote1sym"><sup>i</sup></a></sup></p> <p>For example, when the recently jobless Unión y Fuerza piping factory workers voted to occupy their old workplace, their union’s lawyer told electrician Roberto Salcedo there was no way they could get the bankrupt factory up-and-running again. ‘If the owner, with his entire team of professionals and all his experience, ended up bankrupt, how could fifty workers with no experience manage to make it work?’<sup><a class="sdendnoteanc" href="#sdendnote2sym"><sup>ii</sup></a></sup> But the men – not a university degree among them – formed an assembly where all decisions were made, registered as a workers’ cooperative, turned down loans from eager banks and investment from former clients, and did just what they were told they couldn’t.</p> <p>In a diving Argentine economy, these workers carried out a market evaluation, determined potential income and expenditure (minus the costs of all the long-gone managers), and decided together to opt for an equal waging system for all. Unión y Fuerza soon became the biggest domestic pipe supplier in Argentina.</p> <p>‘You have to break through many fears, like the idea you can’t take over a company like this one,’ says Salcedo. ‘Actually, you learn how. And then you have the satisfaction that you are doing it for yourself.’<sup><a class="sdendnoteanc" href="#sdendnote3sym"><sup>iii</sup></a></sup></p> <p>If our social change organisations are committed to practicing the democratic values we speak about, it is hard to imagine why senior management teams still exist at all. The notion that staff in any organisation are unable to come together to make responsible decisions is an elitist remnant of <a href="">Frederick Winslow Taylor</a>’s time that needs to be thrown away if we hope to align our means and ends for social change.</p> <p>But if the notion of scrapping Senior Management still seems excessive, why don’t we think for a minute about some other important events in our shared histories that have transpired without a single manager orchestrating peoples’ actions. While countless Argentine companies went bankrupt in Argentina, but became financially sound without managers, if we had tried to achieve the changes brought by social movements through our organisational management structures, we can almost guarantee we would – at best – have gotten in the way. All of which should lead us to ask whether, even with the best of intentions, management itself might be the problem?</p> <p><em>This is an extract from Liam's book “Anarchists in the board room”, <a href="">which you can buy here</a>.</em></p> <p class="sdendnote"><a class="sdendnotesym" href="#sdendnote1anc">i</a> Naomi Klein &amp; Avi Lewis, <em>The Take,</em> Hello Cool World, 2004.</p> <p class="sdendnote"><a class="sdendnotesym" href="#sdendnote2anc">ii</a> Lavaca collective, <em>Sin Patrón,</em> Haymarket Books, 2007, p. 188.</p> <p class="sdendnote"><a class="sdendnotesym" href="#sdendnote3anc">iii</a> Ibid. p. 193.</p> <p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Liam Barrington-Bush Mon, 27 Oct 2014 23:11:11 +0000 Liam Barrington-Bush 87051 at Workers should have a right to co-operate <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>If we're going to have an economy that puts people and planet before profit, we need it to be made up of organisations which do just that: we need to give workers a right to turn their firms into co-operatives.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="// WFU_Womenleadership-cropped602x240.jpg" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="// WFU_Womenleadership-cropped602x240.jpg" alt="" title="" width="460" height="183" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style=""/></a> <span class='image_meta'></span></span></p><p>“People and planet before profit”. It's a simple little idea, and it's one which has driven huge numbers to join the Green Party in recent months. But how, in practice, can it be delivered? Of course, there are whole manifestos of policies outlining the complex answer to that question. But here's the thing. None of the ideas in them are worth anything unless you fix the core of the system. </p> <p>At the moment, we have governments across the world which have been caught in the headlights of corporate power. When voters seriously consider radical alternatives, the markets bully them back into their place – as we've seen in both Greece and Scotland in recent months. Big businesses are legally required to maximise short term profit at any cost, and that's exactly what they do – driving down wages of the many whilst owners and bosses do better than ever, plundering the planet, and kicking any politicians who get in their way.</p> <p>If we're going to build a just and sustainable society, we can't just introduce a few regulations and hope that these will tie companies into putting people and planet before profit. As long as our society is so dominated by organisations designed only to increase profit, they will keep pulling at the leash until they once more find themselves free to plunder the earth – bullying governments into letting them do what they want again.</p> <p>This means that we need a radical shift in the sorts of organisations which dominate our economy, and that's more true in the UK than almost anywhere else because, in many Western countries, co-operatives already have a much larger market share than they do here.</p> <p>Co-operatives are vital to building an economy that puts people and planet before profit, because the people who make the decisions in them are, largely, the people effected by those decisions. It's not a surprise that workers' co-ops don't tend to have outrageous pay disparity between the top and the bottom, because the person at the bottom gets a say in the pay of the person at the top. But there are some benefits to the broader community of having many many more co-ops which are a little more surprising. </p> <p>American Academic David Erdal <a href="">looked at communities</a> with more co-ops and those with fewer. He found:</p> <p>“On fifteen of seventeen quality of life measures, the community with high employee ownership is a better place to live than the one with least employee ownership. Residents of the community with employee ownership are less likely to be victims of crime, more likely to have a feeling of confidence in public authorities, more likely to have a feeling of security, less likely to be involved with domestic violence, more likely to stay in school, more likely to have training after school, </p><p>more likely to enjoy better physical and emotional health, more likely to have a network of friends they can rely on in times of trouble, and even more likely to give blood.”</p> <p>Is this causal? I think so. It's no surprise that the more a community is geared up to co-operate rather than compete, the less stressed people will be, and the better off everyone will be.</p> <p>In fact, it's not even very controversial. Pretty much everyone, across the political spectrum, likes co-operatives. And there is a simple reason for that. As far as the current system is concerned, co-ops are benign. They pose no threat to it at all. The fact that they don't come with an intrinsic desire to expand is in itself one of the reasons they are vital to the future of our economy, but it also means that, as things stand, they have little chance of replacing their more aggressive competitors. </p><p>If we want more of our economy to be co-operatively managed, therefore, the government will have to take action. Of course, there are various ways that they could: public procurement rules could prioritise co-ops, the government could set up a bank providing favourable loans for co-operatives, and so on. But all of these have the same problem – they don't allow co-ops to replace corporations. </p> <p>Because of this, the Green Party of England and Wales proposes a new workers' right: the right to co-operate. If this law were passed, any group of workers could get together, buy their firm off their employers, and turn it into a co-op. </p> <p>Any company is the product of capital and labour. As things stand, the government declares it will protect the right of only one of these groups to continue owning a company in pretty much any circumstances - the people who provide the capital. Of course, for these people, their main interest is increasing the capital – ie, generating profit. If they want to asset strip it and sack all the workers who actually built the thing up? Fine. If they want to trash the planet? Fine. If they want to cut wages so they get a bigger share of the pie? Fine. </p> <p>The philosopher John Locke argued that property rights stem from labour – ie, the people who the government should recognise as the owners of something are the people who put the work into building it. People apply this logic most frequently to land – to homesteads – but in the modern economy, why not extend it to those whose ideas and interactions are what grows the value of a firm? </p> <p>I'm not suggesting we just go all the way, and declare that workers now own their companies, without any compensation for those who risked their savings to invest in it. I'm saying that employees should have the right, if they wish, to buy what they have built and re-built every day of their working lives. </p><p>Of course, in many cases, I suspect workers wouldn't bother. Running a company is a faff, and if you're happy with the way you are being treated, you'd likely leave things as they are. But the existence of the option would mean that when workers were being treated badly by a company, when they feel that a company is polluting their local area too much, when they, the people on the front line, felt they could do a better job, then they'd have the right to take over ownership – and the people they took it off would be richly compensated. </p> <p>To give one example of how this might work in practice, such a right would have meant that Jim Ratcliffe wouldn't have been able to <a href="">bully the workers at Grangemouth</a> this time last year – when he threatened to sack them all, they could simply have raised a loan (from a government bank established for the purpose, perhaps) and bought the company off him. </p> <p>If we're going to build an economy that puts people and planet before profit, we're going to need some serious restructuring – and, almost by definition, we're going to have to have many, many fewer firms whose sole motive is profit. It only seems fair that, as we go through this transition, we properly compensate the people who invested in the old system, whilst we replace it. That's what these proposals do. We need a much more democratic, co-operative economy – and that means that we need to give workers a right to co-operate. </p> <p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Amelia Womack Fri, 10 Oct 2014 09:13:54 +0000 Amelia Womack 86701 at Washing away capitalism: workers who’ve occupied their factory provide a space of hope <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>A soap factory in Greece, abandoned by its owners, has been reclaimed by its workers - and provides a vital example of how things can be done differently.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="460" height="259" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_xlarge" style=""/></a> <span class='image_meta'></span></span></p><p>As <a href="">the Ecotopia Bike Tour</a> wheeled into a sun scorched factory in Southern Thessaloniki; not only was the sun glaring but so too was the obvious need for spaces where alternatives could be realised. The spirit of our critical mass to the occupied building materials factory,, had been dimmed by the heavy police presence (1 police car in front of us, 2 behind and motorbike alongside us) which escorted us for the entire ride through the city. However, our destination, which has been run as a democratic workers’ co-operative producing environmentally friendly washing products for eighteen months proved to be just such a space of hope.</p> <p>Three years to the day, the owners of <a href=""></a> had abandoned the factory and its 70 employees to the vicious tidal waves of austerity, unemployment and poverty which have struck Greece in the aftermath of the global financial crash. The social consequences of the crisis can be seen clearly by the fact that in 2011, the year the owners fled, suicides had increased in Greece by 40% from 2008. Our guide explained how the trade union had refused to abandon the factory and the workers who relied upon it for their livelihoods. Instead the union called a general assembly of its 45 members and declared that ‘If you [the employers] can’t, then we can.’ </p> <p>For three years the workers have guarded the factory, its machinery and unsold inventory twenty four hours a day, seven days a week – showing far greater responsibility towards their workplace then its legal owners. Collectively the workers decided to restart production, but rather than continue to produce their previous environmentally damaging chemical products they instead started to produce soap made from natural ingredients. Over time this soap has formed the base product of an expanding range of other environmentally friendly washing products. Such a radical project has not, though, been without its struggles; not least sectional conflict amongst the employees themselves. With the worker’s splitting on whether to start the production of soap. However, the solidarity provided by other Greek struggles, <a href="">such as SOS Halkidiki</a>, the wider Greek left and international supporters, including <a href="">the worker controlled FaSinPat factory</a> in Argentina, has provided the remaining workers with the strength to continue fighting. </p> <p>It's not only the product which has been transformed at, so has the very nature of production and exchange. Before the occupation, workers would only learn their specific job role: limiting their daily experiences to a few fragmented, repetitive and alienating tasks. Now all the tasks are performed by all workers and everyone does the same job in its totality. Without the domination of bosses, decisions are made collectively. Without owners to exploit them the workers have been able to implement equal pay. Exchange has also been radically altered alongside production; with the workers deciding that they did not want the new product of their labour to be sold in supermarkets but instead only through solidarity networks. </p> <p>Examples of alternatives such as are so important because they demonstrate that there are possibilities beyond the status quo; that a different future is possible and worth fighting for. However, without wider systemic transformation such alternatives can only ever exist as spaces of hope carved out between the contradictions of capitalism. These contradictions will inevitably shift and change over time, and as they shift the space open to alternatives is also transformed. is no different and is under a number of pressures; first and foremost is the need to boost wages which are currently only 10 Euros a day – barely enough to survive on. </p> <p>The major barrier to increasing pay is that, not owning the factory, the washing products can't be stored at the site, for fear that it might be confiscated. This severely limits the scale of production and makes distribution difficult. The workers have applied to the state to be granted ownership of some of the factory but meanwhile the owners are also trying to have the courts declare bankrupt so that their own debts will be written off. </p> <p>The response of state institutions, whether they allow the factory to be declared bankrupt and if not what constraints are placed on worker ownership and control will be crucial in determining's future. Another challenge facing is access to finance in order to invest in new machinery and raw materials. Experience in other countries shows that capitalist financiers such as banks are often weary of providing credit to co-operatives. However, if the credit were there, co-operatives could flourish: greater access to cheap credit was a major reason for the boom in Venezuelan co-ops, from 800 co-ops in 1998 to over 30,000 by 2007. While the creation of co-operative banks to provide credit to worker co-operatives was central to the success of the Mondragon workers co-operatives in the Basque reign of Spain which now employ over 80,000 workers and the La Lega worker cooperatives in Northern Italy which employ over 400,000 workers*. </p> <p>No matter the future of, its history will always live on, along with examples of worker co-ops in Argentina, Spain, Italy and Venezuela as a valuable proof that another world, free from alienation, domination and exploitation, is possible and worth fighting for. </p> <p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p><div class="field field-country"> <div class="field-label"> Country or region:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> Greece </div> </div> </div> uk Can Europe make it? uk Greece Modernise: de-privatise Alex Wood Fri, 03 Oct 2014 07:36:52 +0000 Alex Wood 86439 at Scotland's community land ownership story <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Community ownership of land in Scottish Highlands has been an astonishing success - and now others are starting to follow.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="400" height="300" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style=""/></a> <span class='image_meta'><span class='image_title'>Harris: wikimedia</span></span></span></p><p>It is still a little known and understood phenomenon, but communities in Scotland have been making determined progress in taking greater control of their own local futures through the ownership of their land and other key assets. </p><p>Today, close to 500,000 acres of Scotland is under the ownership and control of local communities. That may seem like a lot but, despite this welcome progress, it is modest by any standards and makes little impact on the total of Scotland still under traditional private ownership. Scotland has one of the most concentrated patterns of private land ownership anywhere – 432 people own half of Scotland’s private land. Scotland stands out within Europe as having the most anachronistic and concentrated land ownership patterns.</p> <p>In any economy, land - that finite resource - sits at the heart of its potential success. Who owns that land is central to how that land is used. In Scotland that places key decision making about social and economic development in the hands of very few people indeed and there is growing recognition that this needs to change, giving more people and whole communities a direct stake in the land. </p> <p><a href="">A recent report of the Land Reform Review Group</a> has given new impetus for that change and has altered the terms of the debate about land in talking of it as “a finite and crucial resource that requires to be used and owned in the public interest for the common good.” They go on to make clear what the common good comprises, and that is all about sustainability, economic opportunity, and an enrichment of participatory democracy – the essence of greater community empowerment.</p> <p>Owning and managing that land is the stimulus for economic reform and local progress. After securing the land, some communities have moved to take control of their local energy needs; some are generating power for export, with the revenues, in part, being used to create local investment funds to help support future economic growth. Most community owners are providing land for new housing, renovating, or developing new housing themselves. Many are building work and community spaces, retailing, producing food, planting and managing forests and creating new forest tenancies, investing in the renovation of key local infrastructure, all as a basis for more locally determined economic progress. Given the ownership model, it is the wider community that shares the benefits, as profit is re-invested for future and sustainable economic opportunities. These community owners are typically now quite complex multi-functional businesses run by the enterprise of the community.</p> <p>We now know that community land owners are demonstrating more enterprise than the previous private owners they succeeded, they are securing investment into their communities, and they are driving toward the future they want. Within the framework of community owned land confidence can grow, encouraging many new businesses, where individuals contribute to the greater social and economic good through their own private investment. Together, the community and private development builds the potential for stronger, more resilient and sustainable communities. </p><p><a href="">A recent independent study</a> of 12 community owners has shown that in a few short years some 300 housing units have been provided, some 100+ new jobs have been created, business turnover is up, and new community organisations, often partners with the community owners in delivering projects, are growing in numbers strongly. Those communities are managing assets valued at over £50 million. </p><p>Community land owning is an essentially democratic process, supported by a framework of law in Scotland created in 2003. In essence the process can run like this: the community has a right to register an interest in land; if the land comes on the market the community then has a first right of refusal to buy the land at an independent open market valuation; the process can only be actioned by a properly constituted `community body’, and after a democratic vote of all the registered electors in the area concerned. </p><p>Communities are not on their own in their endeavours; there is support available from development agencies to help bring in the expertise sometimes necessary to help deliver specific projects, just as would be the case in private business. That support is available from economic development agencies and the Big Lottery in Scotland. This funding can access technical support for legal and financial help, feasibility study work, and the like. There is a cash-limited Scottish Land Fund of currently £3million a year across Scotland to assist communities with the actual purchase of the land. </p> <p>Increasingly communities are not resorting to the provisions of the law to make their purchase, but do so by negotiation with current owners. This is partly because the law in practise is highly complex and limits purchase to where there is a willing seller. This is the reason why the Scottish Government are currently legislating to simplify that law and extend the rights of communities to situations where there may not be a willing seller of the land but where the community feel they can make a public interest case that the land would be better in community hands for its sustainable development. This right is already enjoyed by Scotland’s crofting communities. The legal changes coming also afford communities new rights in relation to publicly owned land and its potential transfer into community ownership.</p> <p>Community ownership of land and the rights for communities to purchase that land has hitherto been a rural right to buy land, but that is now to extend to all of Scotland, urban and rural alike. The community land ownership movement has its modern origins in the Highlands and Islands, but its potential is seen to have relevance much more widely. The work and success of the Development Trusts in Scotland, generally more urban focussed and involving ownership of generally smaller but vital local assets of land and buildings, is testimony to the potential for more communities to join in taking control of key local assets.</p> <p>Community ownership of assets, from the large local land assets, to particular buildings or facilities, is now seen as one of the more successful forms of regeneration activity in Scotland, and one which is truly empowering. There is something very powerful about allowing local people to control key assets. Of itself, the process of owning, of taking and having responsibility, appears to allow the enterprise that was always there within the people, to be released. Innovation and investment follows, and success breeds more success and potential for more investment. </p><p>Some question the capacity of communities, but then 20 years ago they questioned the capacity of the very communities now delivering real progress at their own hand. Further progress needs basic faith and trust in people and their potential to better themselves and their families and community, given the right circumstances and support. In just such circumstances people will surprise themselves in what they can achieve, and astonish others. </p><p>Community land ownership is delivering hope for sustainable economic futures when little existed before. No one involved falls into the category of a starry-eyed dreamer of some entirely new economic order, but they are convinced the early signs of real community economic empowerment are encouraging enough to drive this all a good deal further. </p><p><em>More about Community Land Scotland at <a href=""></a>, or follow <a href="">@CommunityLandSc.</a></em></p><p><em><strong><span style="font-size: 15px; font-family: Arial; color: #000000; background-color: transparent; font-variant: normal; text-decoration: none; vertical-align: baseline;">Liked this piece? Please donate to OurKingdom </span><a style="text-decoration: none;" href=""><span style="font-size: 15px; font-family: Arial; color: #1155cc; background-color: transparent; font-variant: normal; vertical-align: baseline; text-decoration: underline;">here </span></a><span style="font-size: 15px; font-family: Arial; color: #000000; background-color: transparent; font-variant: normal; text-decoration: none; vertical-align: baseline;">to help keep us producing independent journalism. Thank you.</span></strong></em></p> <p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise David Cameron Thu, 28 Aug 2014 08:30:26 +0000 David Cameron 84490 at It's not just a balancing act: work must work for workers <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>The British economy is unbalanced regionally and by sector, but at core, it must fix a deeper problem: work doesn't work for workers.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="400" height="274" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style=""/></a> <span class='image_meta'><span class='image_title'>Many workers are in a precarious position...</span></span></span></p><p>Both the economy and living standards are clearly being held back by both sectoral and geographic imbalances in the economy. However, it would be wrong to envision an alternative to the current economic mess purely around these imbalances. Doing so constitutes an overly economistic outlook which ignores the real nature of the problem whilst obscuring the real alternatives. In this article I hope to demonstrate that the real problem is the nature of paid work, and a real alternative, therefore, involves not only quantitative increases in paid work but also qualitative shifts in the nature of that work. This is necessary so as to make work work for workers not capital. </p><p>Making work work for workers can be understood in two senses and both are important. For the second will be argued as providing a pathway towards the achievement of the first. Firstly, this phrase aims to highlight that work should be beneficial for workers, not only materially but also psychologically. However, it also conveys the idea that workers, not capital, should control the nature of their work. In order to demonstrate that worker control is necessary (from the perspective of increasing the material and psychological wellbeing of workers); it is first necessary to outline the major problems which exist with paid work as it is presently constituted. Only once we have grasped these major issues can we turn to the institutional fixes which could alleviate them. </p> <p><strong>Work isn't working for</strong> <strong>workers</strong></p> <p>The 2012 Skills and Employment Survey found that 25% of workers were experiencing job insecurity. This figure is shocking as it's nearly 5% higher than in 1986, even though unemployment was around 25% higher at that time. The same survey also found that 52% of workers suffer anxiety about loss of job status. Moreover, zero-hour contracts have captured the public imagination, with there now being more than 1.3 million of these contracts in existence. However, the focus on &lsquo;zero-hours&rsquo; actually hides the much wider problem of generalised schedule insecurity. Although no estimates of schedule insecurity exist, it is probably extremely high, across Europe 35% of workers indicate that they have changes in their work schedule. Moreover, empirical research has consistently found job related insecurity to be associated with anxiety, stress and depression. </p> <p>Growth in real wages, according to the ONS, has been declining since the 1970s from 2.9% in the 1970s and 1980s to 1.5% in the 1990s and 1.2% in the 2000s, and there has been, on average, negative growth since the beginning of the crisis. Ominously this evidence suggests that the 1.2% growth of the 2000s is unlikely to be returned to. Moreover the compositional decline of manufacturing does not account for this reduction. However, averages hide a key fact, that there has also been a growing polarisation of wages and arguably of job quality too. For a century growing unionisation and collective bargaining raised the quality and wages of many low skilled jobs. However, the industries in which unions were strongest have declined dramatically since the 1980s, being replaced by employment in non-unionised service sector jobs. This has led to a hollowing out of the middle of the occupational structure. There are many high skilled, good quality and well-paying jobs on one side of the divide but there are also many low skilled, low quality and poorly-paying jobs on the other. </p> <p>Many workers are over-worked and their scheduling is rigid, making it hard for them to balance work with their family and social life. Yet, simultaneously many other workers are plagued by insecure hours and insufficient work. Currently 1.4 million workers are involuntarily in part-time jobs, whilst 2.2 million workers are officially unemployed (not employed and looking for work), with many more having given up on finding reemployment and being classed as economically inactive or having been forced into precarious self-employment &ndash; problems exacerbated by the workfare policies of New Labour and the Tories. Unemployment has also been consistently found to be associated with anxiety, stress and depression. Even six years after the crisis there can be no doubt that there remains a chronic problem of underemployment in the UK. </p> <p><strong>Supporting unions and worker co-ops </strong> </p> <p>The contemporary UK labour market then can be summed up, as being marked by declining real wage growth, insecurity, polarisation of wages and job quality and chronic over-work for some workers and simultaneous devastating underemployment for others. A deficit of worker control connects all these issues together, as greater worker control tends to lead to: higher pay for less skilled jobs - thus making pay more equal, greater job security, transforms negative schedule insecurity into positive worker controlled flexibility - which can help the achievement of work/life balance and enables workers to improve the quality of their jobs. Less inequality and greater income security also boosts consumption creating demand and creating more employment and reducing underemployment. </p> <p>Worker control can be exercised via two main avenues, firstly through workplace collective associations, traditionally unions, but as Walmart and Fast Food Workers are proving in the United States, less hierarchical network forms of organisation may now be viable. Since the 1980s the number of UK union members has halved, whilst less than a third of workers are now covered by collective bargaining. Even where bargaining exists it is often limited to pay, rather than the wider conditions of work. Reversing this decline in organised labour is paramount to increasing worker control over work, doing so requires unions to adopt innovative network forms of organising. But cross national research also highlights the importance of state based institutional supports such as the legal requirement for businesses to have works councils and democratic worker representation on company boards, frameworks for national collective bargaining and a legal system which doesn&rsquo;t curb workers human right to engage in union activity &ndash; as so frequently it does in the UK. </p><p>A fuller and more direct route for achieving of worker control is provided by worker co-ops. However, this path has proven, in the past, more difficult and thus less well trodden by the left. Worker co-ops are a form of business which is democratically run and owned by their workers. The balance of the evidence suggests that worker co-ops are just as efficient, if not more so, than conventional firms. But due to the biases of conventional financiers, worker co-ops have regularly struggled to raise the necessary funds in order to constitute an effective alternative to conventional firms. </p><p>Again research shows that state based institutional supports are required for workers co-ops to be viable. Such supports include the setting up of co-op development banks, the creation &lsquo;cooperative bonds&rsquo; - so co-ops can access capital markets without workers losing control and tax supports. For example, the growth in Venezuela from 800 co-ops in 1998 to over 30,000 by 2007 is argued to be largely down to lower tax rates for co-ops and greater access to cheap credit. More radically, workers should have the legal right to buy out their firm and employers should be mandated to create &lsquo;employee funds&rsquo;, funded by a percentage of a firms profits, and controlled by the workforce in order to buy shares in that firm - similar to those which existed in Sweden in the 1980s. For more detail on possibilities provided by worker co-ops and how they can be realised see Tom Malleson&rsquo;s recent book &lsquo;After Occupy: Economic Democracy for the 21<sup>st</sup> Century.&rsquo; </p><p>An alternative to the current misery of the labour market cannot be built on nostalgia and romanticism for the industrial manufacturing of the past. Let us not forget that much manufacturing work was highly alienating and mind numbing. We need &lsquo;real utopian&rsquo; solutions which must analyse the world as it is today, and then seek to transform it. Attempting to rebalance post-industrial capitalism into a new equilibrium, so as to enable business as usual is no alternative. Overcoming declining real wage growth, insecurity, wage and occupational polarisation, over-work and underemployment means making work and the economy work for workers not capital and that means that work must be democratically controlled by workers. In the short term through workplace associations such as unions and in the long term through the transition to an economy based largely upon worker co-ops. </p><p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Alex Wood Tue, 26 Aug 2014 07:45:56 +0000 Alex Wood 84204 at Why we need to own the newspapers <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>A crowdfunded bid has been launched to buyout the <em>Times </em>and the <em>Sunday Times</em>. The founder explains why, and how you can get involved.</p> </div> </div> </div> <iframe width="460" height="280" src="//" frameborder="0" allowfullscreen></iframe><p>It&rsquo;s now over three years since the phone hacking scandal erupted, a newspaper has been shut down, people have gone to jail and a new regulator has been set up. However throughout this the problem at the heart of the matter has been ignored: five families control 80% of the national newspapers we read, this is not a free press and it undermines our democracy. For what is the value in our vote if a few people control the information we receive? If we only receive half the story or some stories are not reported at all?</p> <p>If a few individuals hold too much power then they and the organisations they control can begin to act with impunity. This in time leads to unethical and unaccountable behaviour; phone hacking being one of the results. For democracy and capitalism to function we need to challenge concentrations of power wherever they exist. If we don&rsquo;t then one day we may look back and wonder where our democracy went. </p> <p>Our press has been controlled by a few individuals right from when printing press prices fell in the nineteenth century opening up a market to combine advertising with news. At the same time our political system was similarly controlled by elites, in 1832 only 8% of adults could vote. Since then our political system has opened up so that all adults gained equal rights to vote in 1928 and subsequently the backgrounds of politicians have become increasingly diverse to more closely reflect the electorate. However through this period the press has remained dominated by a few individuals. The concentration of power in our press looks increasingly at odds with our democracy. </p> <p>But despite the mandate provided by recent scandals, our politicians remain too scared to act. But with crowdfunding and the rise of collective action on the internet - we can. The campaign Let&rsquo;s Own the News (<a href=""></a>) is a crowdfunded bid to acquire <em>The Times</em> and <em>The Sunday Times</em> from Rupert Murdoch. This would reduce media concentration without the need for regulations or politicians involvement. It would not solve the problem completely, but it would be an important first step, showing there is an alternative to a press dominated by press barons.</p> <p>We target raising &pound;100m, which would be &pound;120 per reader or &pound;2 per UK adult. We outline on the website why it is an attractive investment and why Rupert Murdoch would consider selling. If successful the editor would be answerable to a board of directors elected by those who choose to invest through the crowdfunding process. Ownership would be capped at 1% per person so that no one individual could exert control.</p> <p>Some people argue that the internet is already providing this diversity of opinion and news, breaking the monopoly on news that the press barons previously held. The internet and rise of citizen journalism does help in this regard, but it is not enough. Large news organisations, mainly TV channels and newspapers continue to dominate news online. Only these organisations have the scale to invest in a strong online platform, employ hundreds of professional journalists and effectively monetise content.</p> <p>As newspapers transition online they will need to change how they create and distribute content, more than likely moving to a more decentralised model of content creation and editorial. But they will remain an important part of our press and therefore the current concentration of ownership is an issue that needs to be addressed.</p> <p>In addition a newspaper with fragmented ownership is also more likely to make this transition to decentralised content creation as there would be no owner wanting the newspaper to express a certain view. Therefore a crowd acquisition could help a newspaper transition successfully online, in addition to providing the opportunity to make a brand around independence.</p> <p>So overall, we don&rsquo;t have a free press and our politicians are too scared to do anything about it. But now with crowdfunding we can act collectively, we can each make an investment and at the same time help defend our democracy. We are currently only asking for non-binding pledges, we&rsquo;ll then ask for binding pledges if we receive sufficient support and News Corp agree to negotiate. In under two weeks we have received pledges from nearly 1000 people totalling over &pound;300k. Please visit <a href=""></a> to pledge your support for a press free of press barons.</p><p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk democratic media Modernise: de-privatise Laurie Fitzjohn Thu, 21 Aug 2014 23:11:11 +0000 Laurie Fitzjohn 85329 at We must show how public ownership defends our liberty <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>There is little evidence that privatisation works or is popular, and yet it continues apace. To counter it, the left must explain how democratic ownership is vital in defence of liberty.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="400" height="300" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style=""/></a> <span class='image_meta'><span class='image_title'>Privatisation doesn't mean freedom</span></span></span></p><p>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. </p><p>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.</p> <p>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 <a href="">by think tank CLASS</a>, 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.</p> <p>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&rsquo;s two failed dogmas of unfettered free market capitalism and totalitarian forms of centralised state socialism. </p> <p>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 <a href="">the think tank CLASS</a><a class="sdendnoteanc" href="#sdendnote1sym"><sup>i</sup></a> 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.</p> <p>A key theme underpinning my argument in the paper and expounded at greater length in a recent book,<a class="sdendnoteanc" href="#sdendnote2sym"><sup>ii</sup></a> is the need to tackle head on Fredreich Hayek&rsquo;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 &ldquo;road to serfdom&rdquo; and have in different forms been effectively rolled out by opponents of state intervention ever since. Hayek&rsquo;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.</p> <p>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.</p> <p><a class="sdendnotesym" href="#sdendnote1anc">i</a><sup></sup> Cumbers, A. 2014 <em>Renewing Public Ownership: Constructing a Democratic Economy in the Twenty-First Century</em> (CLASS).</p> <p><a class="sdendnotesym" href="#sdendnote2anc">ii</a><sup></sup> Cumbers, A. 2012 <em>Reclaiming Public Ownership: Making Space for Economic Democracy</em> (Zed).</p> <p class="sdendnote">&nbsp;</p><p class="sdendnote"><em>This article is part of the <strong>Modernise: de-privatise</strong> <a href="">series</a>. </em></p><p class="sdendnote"><strong><em><span style="font-size: 15px; font-family: Arial; color: #000000; background-color: transparent; font-variant: normal; text-decoration: none; vertical-align: baseline;">Liked this piece? Please donate to OurKingdom </span><a style="text-decoration: none;" href=""><span style="font-size: 15px; font-family: Arial; color: #1155cc; background-color: transparent; font-variant: normal; vertical-align: baseline; text-decoration: underline;">here </span></a><span style="font-size: 15px; font-family: Arial; color: #000000; background-color: transparent; font-variant: normal; text-decoration: none; vertical-align: baseline;">to help keep us producing independent journalism. Thank you.</span></em></strong></p><p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Andrew Cumbers Wed, 20 Aug 2014 23:11:11 +0000 Andrew Cumbers 84487 at From tragedy to joy on the commons: culture change through democratic ownership <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Democratic ownership doesn't just make society fairer, it brings out the best in all of us.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="// theory.jpg" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="// theory.jpg" alt="" title="" width="281" height="179" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style=""/></a> <span class='image_meta'><span class='image_title'>People nehave differently when presented with the "prisoner's dylemma" depending on the context</span></span></span></p><p>&ldquo;<em>Human beings show a broad spectrum of qualities, but it is the worst of these that are usually emphasised, and the result, too often, is to dishearten us, diminish our spirit.&rdquo;</em> &ndash; Howard Zinn<a class="sdendnoteanc" href="#sdendnote1sym"><sup>i</sup></a> </p> <p>We produce things we don&rsquo;t need from materials we can&rsquo;t replenish that are destroying the natural resources that we do need. We are persuaded to buy these things by people we don&rsquo;t trust, with money we earn through overwork that we are underpaid for, and borrowed from banks that undermine public infrastructure by avoiding their tax bills, to make impressions that won&rsquo;t last on people we don&rsquo;t like.<a class="sdendnoteanc" href="#sdendnote2sym"><sup>ii</sup></a> The people we do like, and the things we enjoy doing, have likewise been co-opted by the market, portioned, packaged and priced: exercise (indoors) for &pound;30 a month; a harmonious family (via fried chicken in a bucket) for &pound;15; increasingly expensive technologies for facilitating any human interaction or outdoor experience.</p> <p>Which is strange, because we don&rsquo;t like destroying the planet, we wish society was less materialistic, and we know that money can&rsquo;t buy us love. </p> <p>This paradox can be at least partially explained by the psychology of identity. We often think of ourselves as fairly consistent beings. We describe ourselves in binaries &ndash; &ldquo;He&rsquo;s a generous person&rdquo;; &ldquo;I know I&rsquo;m selfish&rdquo;; &ldquo;We&rsquo;re not fussy&rdquo; &ndash; when actually we&rsquo;re pretty much everything, sometimes. What&rsquo;s going on around us, what&rsquo;s encouraged in the current moment, brings forth particular elements of our identity. As Louis C.K. <a href="">so excellently describes</a>, just as we are responsible and compassionate people outside of our cars; behind the wheel we are impatient, unsympathetic and enraged when mere minutes are added to our commute. We&rsquo;re parents, football fans, children, shoppers, employers, friends; we respond differently when we&rsquo;re reminded of these different aspects of our identity. For instance, experimental research shows that we become more materialistic when we think of ourselves as consumers than when we think of ourselves as citizens. Thinking about luxury consumer goods makes us more concerned with short-term self-interest, less willing to participate in civic action, and less environmentally-concerned. In other words &ndash; being a <em>consumer</em> makes us less of a <em>citizen. </em> </p> <p>This can be extended outwards to encompass much of our &lsquo;market&rsquo; identity. If we play a Prisoners&rsquo; Dilemma game called the &lsquo;Wall Street Game&rsquo; we are significantly more likely to act competitively and betray the other players than if we play an identical game called the &lsquo;Community Game&rsquo;.<a class="sdendnoteanc" href="#sdendnote3sym"><sup>iii</sup></a> Participating in a market scenario also increases the likelihood that we will <a href="">allow a mouse to die</a>.</p> <p>With hindsight, Thatcher wasn&rsquo;t overselling when she described her objective as wishing to change the &lsquo;heart and soul of the nation&rsquo; through economic policy.<a class="sdendnoteanc" href="#sdendnote4sym"><sup>iv</sup></a> Privatisation is not merely a technical question of ownership, but a psychological question of values and identity. The ideological campaign to demolish public infrastructure is reflected in the erosion of our civic nature. Its most insidious effect is to nurture the values of the free-market within our psyche, which we apply far beyond their original remit. We are now consumer parents, consumer football fans, consumer kids, consumer friends. </p><p>Cross-cultural research shows that citizens of countries with more deregulated markets tend to put a higher priority on Schwartz&rsquo;s <a href="">power values</a><strong> </strong>than citizens of more regulated economies.<a class="sdendnoteanc" href="#sdendnote5sym"><sup>v</sup></a> These values are associated with money-orientation, narcissism, Machiavellianism, prejudice towards other groups and lower levels of empathy at an individual level; at country-level we see higher advertising spends, higher ecological footprints, lower child wellbeing, lower levels of parental leave.<a class="sdendnoteanc" href="#sdendnote6sym"><sup>vi</sup></a> And these values are reflected in our structures and institutions. </p><p>It is our everyday experience of these institutions and structures that shapes us, bringing particular identities to the fore and strengthening our conviction in particular values. The daily experience of war rendered prior social structures untenable and, through the levelling of resources and work, promoted the values of equality and social justice that the welfare state emerged from. Our daily experience of consumer capitalism is promoting individualism and greed, focusing our attention on money, status and nationalism. </p><p>The organisations we interact with on a daily basis &ndash; particularly those we work for &ndash; therefore hold real power in shaping our culture. David Erdal, author of <em>Beyond the Corporation: Humanity Working, </em><a href="">describes</a> a key difference between employee-owned and shareholder-run companies: </p> <p>[In 2012] the John Lewis Partnership and Marks and Spencer were about the same size: sales of &pound;9.5bn and &pound;10bn respectively. John Lewis employs slightly more people &ndash; employee owned companies generally do &ndash; 84,000 vs. 81,000. From their profits, John Lewis distributed &pound;210m in cash, M&amp;S &pound;268m. The cash from John Lewis went to the partners (employees) as a percent of salary &ndash; the same percent of salary for everyone, regardless of position. In other words it went to ordinary families, and was spent in ordinary ways, making life a bit better for 84,000 families. The story in M&amp;S was very very different. A few of the top people got a lot. The rest of the employees got little or nothing. Almost all the cash was sent up to the &lsquo;financial institutions&rsquo; in the City of London.&nbsp;</p> <p>But extending the reach of democracy to the organisations we interact with and work for &ndash; through ownership structures and decision-making processes &ndash; has significant cultural impacts beyond the material benefits afforded to more people.</p> <p>Whether in private or public ownership, higher degrees of hierarchy and inequality tend to foster damaging attitudes and behaviours. For instance, hierarchy requires people to constantly appear competent, superior and independent &ndash; the qualities that get people promoted further up the ladder. But the need to appear such has a particularly damning effect. The more hierarchical an organisation, the less likely people are to seek help: an issue at the root of countless organisational failures. This is particularly true of both lower-status employees and of people in leadership positions.<a class="sdendnoteanc" href="#sdendnote7sym"><sup>vii</sup></a> </p><p>Power &ndash; both the <em>experience</em> of being in a top position and the <em>value</em> placed on wealth and status &ndash; has the corrupting effect suggested by the adage. People in positions of power tend to show much lower levels of empathy and are more likely to put short-term profit over longer-term societal impacts.<a class="sdendnoteanc" href="#sdendnote8sym"><sup>viii</sup></a> They&rsquo;re more likely to lie in negotiations and endorse unethical behaviour at work.<a class="sdendnoteanc" href="#sdendnote9sym"><sup>ix</sup></a> And people who value power are less likely to be concerned with the wellbeing of others or the environment, instead objectifying those of different social standing. Competitive, hierarchical organisations &ndash; highly associated with <em>valuing </em>power &ndash; also breed &lsquo;internal politics&rsquo;, conflict, resentment and discontent among staff.<a class="sdendnoteanc" href="#sdendnote10sym"><sup>x</sup></a> </p> <p>Returning to Louis C.K., drivers of higher status cars are <a href="#bookmark">more likely to drive aggressively</a>: less likely to stop at zebra crossings and more likely to cut up other drivers. People with more wealth or status in experiments (either in real life or manipulated for experimental purposes) are more likely to cheat and steal than their less powerful counterparts (including stealing sweets from children in an experiment!).<a class="sdendnoteanc" href="#sdendnote11sym"><sup>xi</sup></a></p> <p>In one experiment, people played a forest management game where they could choose how much of the forest to log and sell each &lsquo;year&rsquo; (resource management games are a popular way of testing how concerned people are with the welfare of a wider social group). The higher the power-type value priorities of a group, the less likely they were to have any forest left at all by the end of the 25 &lsquo;years&rsquo; (rounds of the game).<a class="sdendnoteanc" href="#sdendnote12sym"><sup>xii</sup></a> </p><p>This clearly isn&rsquo;t something that is left at the office door at the end of the day: it spills out into the rest of society. These are values and actions that are carried out of the office, into our cars, back home, to how we treat our children, our neighbours, and our environment. </p><p>In another version of this type of game, designed to see how people would respond to the needs of future generations, approximately a quarter of groups had something to pass on to the next generation (if this seems small, it&rsquo;s worth noting that the resource depletion is usually because of a selfish minority rather than a selfish majority). In the fourth generation, nothing was left. But, rather wonderfully, when a democratic process was introduced into the mix, every single resource pool was sustained until the fourth generation.<a class="sdendnoteanc" href="#sdendnote13sym"><sup>xiii</sup></a> </p> <p>Greater participation through democratic processes isn&rsquo;t just about silencing the selfish minority: the process is important in itself.<sup></sup><a class="sdendnoteanc" href="#sdendnote14sym"><sup>xiv</sup></a> In a four-way prisoners&rsquo; dilemma game working in the group interest increases from 12% to 78% when groups can talk versus when they are anonymous.<a class="sdendnoteanc" href="#sdendnote15sym"><sup>xv</sup></a> It&rsquo;s pretty clear that having a greater sense of connection to your colleagues through shared ownership; being involved in decision-making; and reducing pay inequalities can foster the values of equality, community and autonomy. </p> <p>These values aren&rsquo;t just associated with greater social concern and environmental action: research suggests that autonomy values in particular promote acceptance of uncertainty, openness to risk-taking and failure, creativity, and experimentation:<a class="sdendnoteanc" href="#sdendnote16sym"><sup>xvi</sup></a> exactly the attitudes that we&rsquo;re going to need to be resilient in the face of an uncertain climate and unpredictable economies.</p> <p>What these examples make clear is that details of the process and experience of democratic ownership is crucial in fostering these values, however. Public ownership has often become entrenched in hierarchy and bureaucracy; democratic or participatory processes without ownership are more vulnerable to changes in leadership or economic climate. But there is potential in the many spaces between these. </p> <p>Workplaces tend to mirror wider culture &ndash; higher levels of individualism or money-orientation in citizens is (unsurprisingly) taken into the workplace and reproduced there.<a class="sdendnoteanc" href="#sdendnote17sym"><sup>xvii</sup></a> But the relationship goes both ways. Cultural change can spread outwards from workplace practice. As Michael Sandel says;</p> <p>&ldquo;Altruism, generosity, solidarity, and civic spirit are not like commodities that are depleted with use. They are more like muscles that develop and grow stronger with exercise.&rdquo;<a class="sdendnoteanc" href="#sdendnote18sym"><sup>xviii</sup></a></p> <p>More public control of resources can foster such values. We can rebuild our civic identity and reclaim our psyche from the values of privatisation. The case for democratic ownership of resources and services lies not only in its material impacts. The real strength is in its potential to act as a catalyst for the transformation to a more compassionate and environmentally-conscious society. </p><p>&nbsp;</p><p><em>This article is part of the <strong>Modernise: de-privatise</strong> <a href="">series</a>. </em></p><p><em><br /></em></p><p><strong>Notes</strong></p> <p><a class="sdendnotesym" href="#sdendnote1anc">i</a><sup></sup> Zinn, H. (2010).&nbsp;<em>You can't be neutral on a moving train: A personal history of our times</em>. Beacon Press.</p> <p><a class="sdendnotesym" href="#sdendnote2anc">ii</a><sup></sup> This is both a paraphrasing and extension of two quotes: i) from the film <em>Fight Club</em> and ii) Tim Jackson in his 2010 TED talk, available at</p> <p><a class="sdendnotesym" href="#sdendnote3anc">iii</a><sup></sup> Liberman, V., Samuels, S. M., &amp; Ross, L. (2004). The name of the game: Predictive power of reputations versus situational labels in determining prisoner&rsquo;s dilemma game moves.&nbsp;<em>Personality and social psychology bulletin</em>,<em>30</em>(9), 1175-1185.</p> <p><a class="sdendnotesym" href="#sdendnote4anc">iv</a><sup></sup> Margaret Thatcher in the Times, 1981. Quoted in Crompton, T, 2010. Common cause: The case for working with our cultural values. Available at:</p> <p><a class="sdendnotesym" href="#sdendnote5anc">v</a><sup></sup> Schwartz, S. H. (2007). Cultural and individual value correlates of capitalism: A comparative analysis.&nbsp;<em>Psychological Inquiry</em>,&nbsp;<em>18</em>(1), 52-57.</p> <p><a class="sdendnotesym" href="#sdendnote6anc">vi</a><sup></sup> Kasser, T. (2011). Cultural values and the well-being of future generations: A cross-national study.&nbsp;<em>Journal of Cross-Cultural Psychology</em>,&nbsp;<em>42</em>(2), 206-215.</p> <p><a class="sdendnotesym" href="#sdendnote7anc">vii</a><sup></sup> Lee, F. (1997). When the going gets tough, do the tough ask for help? Help seeking and power motivation in organizations. <em>Organizational Behavior and Human Decision Processes</em>, 72(3), 336-363.</p> <p><a class="sdendnotesym" href="#sdendnote8anc">viii</a><sup></sup> Reiter-Palmon, R., M. D. Mumford and K. V. Threlfall: 1998, &lsquo;Solving Everyday Problems Creatively: The Role of Problem Construction and Personality Type&rsquo;, Creativity Research Journal 11, 187&ndash;197.</p> <p><a class="sdendnotesym" href="#sdendnote9anc">ix</a><sup></sup> Piff, P. K., Kraus, M. W., C&ocirc;t&eacute;, S., Cheng, B. H., &amp; Keltner, D. (2010). Having less, giving more: the influence of social class on prosocial behavior.&nbsp;<em>Journal of personality and social psychology</em>,&nbsp;<em>99</em>(5), 771; C&ocirc;t&eacute;, S., Piff, P. K., &amp; Willer, R. (2013). For whom do the ends justify the means? Social class and utilitarian moral judgment.&nbsp;<em>Journal of personality and social psychology</em>,&nbsp;<em>104</em>(3), 490.</p> <p><a class="sdendnotesym" href="#sdendnote10anc">x</a><sup></sup> Ferris, G.R., Zinko, R., Brouer, R.L., Buckley, M.R, &amp; Harvey, M.G. (2007). Strategic bullying as a supplementary, balanced perspective on destructive leadership. <em>The Leadership Quarterly,</em> 18, 195-206; Ros, M., Schwartz, S., &amp; Surkiss, S. (2007). Basic individual values, work values, and the meaning of work. <em>Applied psychology</em>, <em>48</em>(187), 49&ndash;71; Schwartz, S. H. (1999). A Theory of Cultural Values and Some Implications for Work. <em>Applied Psychology</em>, <em>48</em>(1), 23&ndash;47.</p> <p><a class="sdendnotesym" href="#sdendnote11anc">xi</a><sup></sup> Piff, P. K., Kraus, M. W., C&ocirc;t&eacute;, S., Cheng, B. H., &amp; Keltner, D. (2010). Having less, giving more: the influence of social class on prosocial behavior.&nbsp;<em>Journal of personality and social psychology</em>,&nbsp;<em>99</em>(5), 771</p> <p class="sdendnote"><a class="sdendnotesym" href="#sdendnote12anc">xii</a><sup></sup> Sheldon, K. M., &amp; McGregor, H. A. (2000). Extrinsic value orientation and &ldquo;The tragedy of the commons&rdquo;.&nbsp;<em>Journal of personality</em>,&nbsp;<em>68</em>(2), 383-411. </p> <p><a class="sdendnotesym" href="#sdendnote13anc">xiii</a><sup></sup> Hauser, O. P., Rand, D. G., Peysakhovich, A., &amp; Nowak, M. A. (2014). Cooperating with the future.&nbsp;<em>Nature</em>.</p> <p><a class="sdendnotesym" href="#sdendnote14anc">xiv</a><sup></sup> Frey, B. S., Kucher, M., &amp; Stutzer, A. (2001). Outcome, process and power in direct democracy&ndash;new econometric results.&nbsp;<em>Public Choice</em>,&nbsp;<em>107</em>(3-4), 271-293.</p> <p><a class="sdendnotesym" href="#sdendnote15anc">xv</a><sup></sup> Frey, B. S., &amp; Bohnet, I. (1995). Institutions affect fairness: Experimental investigations.&nbsp;<em>Journal of Institutional and Theoretical Economics (JITE)/Zeitschrift f&uuml;r die gesamte Staatswissenschaft</em>, 286-303.</p> <p><a class="sdendnotesym" href="#sdendnote16anc">xvi</a><sup></sup> Calogero, R. M., Bardi, A., &amp; Sutton, R. M. (2009). A need basis for values: Associations between the need for cognitive closure and value priorities.<em>Personality and Individual Differences</em>,&nbsp;<em>46</em>(2), 154-159; See also Barrington-Bush, L, 2013. Anarchists in the Boardroom. For more discussion of how autonomy interacts with acceptance of complexity.</p><p> <br /><a class="sdendnotesym" href="#sdendnote17anc">xvii</a><sup></sup> Sagiv, L., &amp; Schwartz, S. H. (2007). Cultural values in organisations: insights for Europe.&nbsp;<em>European Journal of International Management</em>,&nbsp;<em>1</em>(3), 176-190. </p><p><a class="sdendnotesym" href="#sdendnote18anc">xviii</a><sup></sup> Sandel, M. J. (2012).&nbsp;<em>What money can't buy: the moral limits of markets</em>. Macmillan.</p><p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise Elena Blackmore Tue, 19 Aug 2014 23:11:11 +0000 Elena Blackmore 84664 at Economic democracy in the 21st Century <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>Workers co-ops, public banks and participatory budgeting have all been shown to be successful and efficient. It's time to take democratic control of our economy.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="256" height="388" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style=""/></a> <span class='image_meta'><span class='image_title'>Occupy Wall Street poster, wikimedia</span></span></span></p><p>Three years ago a ragged band of activists gathered in New York City&rsquo;s Zuccotti Park to protest economic injustice and inequality. Three months later, the Occupy Wall Street movement had spread to 951 cities in 82 countries around the world, dramatically illustrating a widespread and deep concern with contemporary levels of inequality &ndash; the highest since the 1920s and the age of the Robber Barons. Of all the plans and projects that bubbled out of the Occupy movement, one of the most powerful was that of &ldquo;economic democracy&rdquo;. Economic democracy became a unifying theme of Occupy because it provided both a series of practical reforms as well as an overarching critique of what was wrong with contemporary capitalism, both a means and an end. Today, long past Occupy, the ideas of economic democracy remain as potent as ever.<br /><br />There is a paradox at the heart of contemporary capitalism. Societies in the West are fervent about their democratic credentials. Our politicians give speeches extolling the virtues of democracy, our self-conception of being citizens in a democratic state is deeply ingrained in our identity. And yet, despite this, a central part of society, the economy, has very little democracy in it at all. Workers do not elect the managers of their firms. Bankers do not allocate finance with any accountability to the communities in which they operate. Investment decisions are not made with any participation of the citizenry. It is like we have erected a wall down the middle of society, and said that in this half, the economy, there is no need for democracy, while at the same time insisting on calling society as a whole &ldquo;democratic.&rdquo;<br /><br />A fundamental democratic principle is that public power should be accountable to those who are affected by it (i.e., the public). This is a basic safeguard against tyranny and one of the most fundamental rationales for having democracy at all. Yet in a variety of ways, managers, employers, investors, and financiers clearly exercise power too. Their decisions have massive social and public consequences&mdash;from a manager&rsquo;s decision to lay off a thousand workers, to a corporate decision to invest in dangerous deep sea oil extraction, to bankers&rsquo; decisions to provide risky subprime mortgages and resell them as complex debt instruments &ndash; these decisions have undeniable public consequences. Yet in stark contrast to our political system we do not demand that these people be accountable to those affected in any standard democratic way.<br /><br />The core idea of economic democracy is that wherever there is power there should be accountability. In contemporary society, economic power is exercised in three main areas: workplaces (where bosses and managers exercise significant power over workers), financial organizations (where banks and money markets exercise significant power through their control over lending or refusing credit), and investment (where business owners exercise significant power over the nation&rsquo;s citizens through their ability to invest or divest causing the economy to grow or falter). </p><p>The power that is exercised over workplaces, finance, and investment is for all intents and purposes <em>political</em> power, since it involves public, sustained relationships of authority and subordination, resulting in fundamentally different levels of freedom for different people. Unaccountable, unequal political power in a democratic society is unjustifiable, and so new economic arrangements should be experimented with in order to allow these sources of power to be accountable to the citizenry on a formally equal basis. The essence of economic democracy is that we should strive to democratize these three areas. There are no shortage of ideas for moving in this direction, but here I&rsquo;ll focus on three fundamental ones: worker cooperatives, public banks, and participatory budgeting.&nbsp; </p><p><em><strong>Worker Cooperatives</strong></em></p> <p> Worker cooperatives are firms that are owned and controlled by the workers themselves. In small co-ops the worker-owners may make decisions collectively, whereas in large ones they elect a management structure.</p> <p>The co-op sector in the UK makes up less than 1% of firms. The most well-known worker cooperative in the UK is the John Lewis Partnership, which is technically an employee-owned firm, though it has been sharply criticized for having very little actual workplace democracy in it. Although the worker co-op sector is small in the UK, it&rsquo;s a bigger player elsewhere. In Emilia Romagna, a prosperous region in northern Italy, 13% of the regional economy is co-op based. Many of the cooperatives have been around for decades, and many others are industry leaders in construction, agriculture, food processing, wine making, transport, retail, and machine production. </p> <p>The Mondragon network in the Basque country of northern Spain is the most famous example of a worker co-op. In 1956, five young workers, with the help of a progressive Catholic priest, bought an abandoned stove factory and started producing as a cooperative business. Today, Mondragon is a giant multinational enterprise with a network of 110 co-ops employing 80,000 people, with assets of &euro;35 billion. Each of these 110 co-ops is an autonomous worker cooperative, meaning that the workers collectively own the firm and elect their Board of Governors on a one-person one-vote basis. In addition, delegates from each firm are elected to represent their co-op at Mondragon&rsquo;s Cooperative Congress, which is like a mini-parliament overseeing the system as a whole. </p> <p>There is a widespread suspicion about worker co-ops that they are inefficient (people in the UK are especially prone to think this since it&rsquo;s likely that their only experience with a co-op is with the occasional small alternative coffee shop or radical DIY bike store). But in fact this is a misperception. The evidence is clear: when co-ops and capitalist firms are scientifically compared (in a careful, controlled way), economists over the last thirty years have found co-ops to be just as efficient as comparable capitalist firms. Co-ops have been found to have just as high productivity all over the world, in the US, Uruguay, France, the UK, Italy, Spain, Denmark, and Sweden.</p> <p>If we give this a moment&rsquo;s thought it&rsquo;s not particularly surprising. Co-op workers are likely to have significantly more motivation to work hard because they are co-owners, so unlike in a capitalist firm where the harder I work the more the boss makes, in a co-op workers have enhanced motivation because they receive a portion of the profits. In addition, co-ops are likely to have smoother coordination in their operation because the workers are likely to feel more trust and less alienation, and so there tend to be less sick days, and, importantly, less need to hire many expensive managers to constantly monitor and supervise every little thing.</p> <p>One of the major advantages of worker co-ops is in terms of wage equality. This is a big issue, since we know that economic inequality is at a higher level today, particularly in the US, than in any other time since the 1920s. Indeed, contemporary American inequality is significantly worse than during the height of the Roman Empire and is even starker than in Russia on the eve of the Revolution. The average American CEO makes 300 times the average worker; the average CEO in continental Europe makes about 15-20 times the average worker; whereas for worker co-ops, the ratio hardly ever surpasses 3 to 1. </p> <p>The second major advantage of worker co-ops is that they are far better at dealing with downturns than conventional firms. Whereas managers in conventional, undemocratic firms typically react to recessions by firing workers en masse, a cooperative structure allows workers to make shared sacrifices by collectively agreeing to reduce their hours or pay in a fair and equal manner. Since workers are their own bosses, lay-offs only happen as a very last resort. &ldquo;Economic rationality with a human face,&rdquo; as one commentator puts it. This is why during the Basque recession from the mid-1970s to 1984, the region saw the loss of 100,000 jobs and a 20% unemployment rate, yet, remarkably, not a single Mondragon member lost her job (though some temporary non-member workers did). While Mondragon is unlikely to escape the current Spanish depression unscathed, the latest data suggests that, once again, it will be responsible for far fewer layoffs than its competitors.</p> <p><em><strong>Public Banks</strong></em></p> <p>Public ownership of banks has been a common feature of many economies for many years. In 1970, 59% of the equity of the 10 largest banks in an average country was owned by the government, and still in 1995, 42% was state-owned. The most important rationale for public banks over private ones is that they can serve a social purpose broader than narrow profit maximization. Since public banks are not dependent on making money, they can provide financing to poor people and poor communities, they can invest in green businesses, they can help finance any number of socially desirable (but unprofitable) activities, from public transit, to art and culture, to volunteering and social justice activities.</p> <p>For example, one of the most serious failures of the private banking sector is the number of poor communities left without adequate financing. In the United Kingdom, for example, 26% of people from the poorest quintile of society have been refused credit; many are thus forced to rely on the subprime credit market where annual percentage interest rates typically range from 100 to 400%.</p> <p>Finance is so crucial to the day-to-day functioning of our economy that it is really a <em>public utility</em>&mdash;like a post office, water system, or an electricity grid. Society is utterly dependent on it. If banks and stock markets stop providing finance, businesses go bankrupt, people lose their jobs, then their livelihoods.</p> <p>One important example of public banks is found in India. In 1969, then further in 1980, the Indian government nationalized the bulk of its banking system. The rationale for nationalization, codified in the 1968 Bank Nationalization Act, was that</p> <p>an institution such as the banking system which touches and should touch the lives of millions has to be inspired by a larger social purpose and has to subserve national priorities and objectives such as rapid growth in agriculture, small industry and exports, raising of employment levels, encouragement of new entrepreneurs and the development of the backward areas. For this purpose it is necessary for the Government to take direct responsibility for extension and diversification of the banking services and for the working of a substantial part of the banking system.</p> <p>The banks were required to open branches in rural areas and to provide a portion of their credit to poor and marginalized people. Now it is clear that there was corruption in the public banks as well as inefficiency (though it&rsquo;s not clear that public banks suffer from more corruption than private ones). However, it is also clear that the banks were largely successful in their social mission. Indeed, India witnessed the largest rural branch expansion program ever seen: between 1969 and 1990, bank branches were opened in roughly 30,000 rural locations which had no prior formal credit and savings institutions. This expansion of public banking can explain roughly half of the fall in rural poverty between 1961 and 2000. Furthermore, if we compare the period between 1977 and 1990, when the banks were public, to the subsequent period after the partial privatizations, we see that rural bank expansion and poverty reduction were significantly greater in the public banking era than in the private one (since the private banks have been much less interested in operating in less profitable rural areas). The Indian example makes it crystal clear that public banks can serve a social purpose far more effectively than their private counterparts.&nbsp; </p><p><em><strong>Participatory Budgeting</strong></em></p> <p>Most countries today have &ldquo;public&rdquo; investment that is largely dislocated from the actual public &ndash; a vote every four years for a state with millions of people in it is an extremely narrow avenue for citizens to express their investment preferences. The local level is the area where the least public investment is presently done, yet it is where the most democratic potential lies.</p> <p>Instead of public investment always happening at the highest levels of the state, furthest away from grassroots influence, imagine if the state were to devolve substantial funds to the cities or to neighbourhood assemblies to democratically allocate investment. That way local people could engage in a meaningful way, deliberate about their investment priorities and make decisions on an equal one-person one-vote basis. An important real-life model for this is participatory budgeting. The most famous example of which is from Porto Alegre, Brazil, where the state devolves tens of millions of dollars every year for the citizens themselves to decide to spend in a participatory fashion. The process started in 1989 and then spread to over one hundred municipalities across Brazil and has now spread to 1,200 cities across the world from Canada to India. Residents in Porto Alegre meet in neighbourhood assemblies to deliberate on spending priorities and elect delegates to implement these priorities. In many ways participatory budgeting has been a great success: there has been a flourishing of participation in local investment decisions with thousands of people participating every year, mostly through local neighbourhood meetings to set investment priorities. Especially important is the fact that the process is dominated by poor and working people &ndash; a previously marginalized segment of society. </p> <p>There is widespread agreement that PB has brought significant positive changes to Porto Alegre. From 1996 to 2003, nearly US$400 million of new investment projects were implemented through PB; the projects ranged in size from small drainage systems and street paving to complex housing projects. It is important to note that the type of investment that has occurred is markedly different under PB than earlier eras. In terms of basic sanitation, for instance, in 1989, only 49% of the population was covered. By the end of 1996, 98% had water and 85% had sewage. De Sousa Santos reports that while all previous administrations combined had built 1,100 km of sewers, under PB, 900 km were built. Other common investment projects include roads, houses, and schools. Between 1989 and 1996, the number of students in school doubled and the number of schools quadrupled. Even the democratically recalcitrant IMF admitted that &ldquo;the process of participatory budgeting has brought substantial changes in Porto Alegre&rdquo;.&nbsp; </p><p><em><strong>Economic Democracy &ndash; A Systemic Alternative</strong></em></p> <p>Economic democracy is not simply a series of piecemeal reforms; it is also a vision of a fundamentally different kind of society. Imagine a society with full and robust economic democracy based on the following four pillars: the majority of workplaces are <em>worker cooperatives</em>; workers and consumers interact in a highly <em>regulated and redistributive market</em>; finance is provided by <em>public banks</em>; and public investment occurs partially at high level for major projects, but significantly through lower levels via <em>participatory investment</em>. </p> <p>How would the nuts and bolts of such a system function? People would apply for jobs in the normal way. Co-ops would try to make money in the market, just as firms do today. The co-ops would be free to pay their workers equal wages or not (though previous experience with co-ops indicates that wage differentials will not usually exceed 3:1). Co-ops looking to expand would apply for loans from their local public bank. Businesses that are innovative and successful at responding to the demand of the population would grow and prosper. So successful firms would make more money than their competitors, thus providing incentives to work hard. High levels of taxation would prevent the rich from becoming super-rich, and would also pay for excellent public services, perhaps a Guaranteed Basic Income. Firms that are producing things that no one wants would go out of business; their workers would need to find new jobs (but note that unlike today, this would not at all be a tragedy since the public services or basic income provide very strong social support). Moreover, community members would be able to direct the economic development of their neighbourhoods through their participatory budgeting system as well as the public banks. Such a system would retains price signals for efficient allocation, a certain degree of material incentives for hard work, but no devastating consequences for business failure. There would still be business competition, which is useful for keeping firms accountable to what the population wants, but in this competition, no one wins majestically and no one loses tragically (no one ever becomes rich enough to acquire power over others or poor enough to go hungry, or lose their healthcare). The democratic market here resembles more a friendly sports race than a life-or-death battle. </p> <p>A true economic democracy would possess all the efficiencies of the market system without the profound injustices and disenfranchisement. There would be far more freedom &ndash; workers have enhanced say in their workplaces, citizens would have enhanced say about the economic development of their communities. There would be far more equality &ndash; due to the compressed pay scales of the co-ops and the higher taxes. Democracy too would have finally breached the barriers of the political system within which it has previously been confined, and would thereby come to animate all the main institutions of society. Such a society would be neither capitalist nor communist. It would be a radically democratic society. Clearly it would not be a perfect society, but just as clearly, it would be a profound advance from where we are now. </p> <p><em>(All facts and statistics are drawn from the author&rsquo;s book, After Occupy: Economic Democracy for the 21st Century, <a href="">available here</a>.) </em> </p> <p><strong><em>&nbsp;<span style="font-size: 15px; font-family: Arial; color: #000000; background-color: transparent; font-variant: normal; text-decoration: none; vertical-align: baseline;">Liked this piece? Please donate to OurKingdom </span><a style="text-decoration: none;" href=""><span style="font-size: 15px; font-family: Arial; color: #1155cc; background-color: transparent; font-variant: normal; vertical-align: baseline; text-decoration: underline;">here </span></a><span style="font-size: 15px; font-family: Arial; color: #000000; background-color: transparent; font-variant: normal; text-decoration: none; vertical-align: baseline;">to help keep us producing independent journalism. Thank you.</span></em></strong>&nbsp; </p><p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> <fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ourkingdom/ourkingdom/modernise-deprivatise-new-ourkingdom-series">Modernise: de-privatise - new OurKingdom series</a> </div> </div> </div> </fieldset> uk Can Europe make it? uk Public ownership Modernise: de-privatise Tom Malleson Fri, 15 Aug 2014 15:40:50 +0000 Tom Malleson 83951 at Modernise: de-privatise - new OurKingdom series <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p><img src="//" alt="" width="140" /></p><p>Today we launch our new series on democracy and the economy: modernise, de-privatise.</p><p>&nbsp;</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style=""/></a> <span class='image_meta'></span></span></p><p>If such a thing is possible, there are two consensuses on privatisation. The first is the overwhelming agreement amongst almost all of the political class that it is inevitable and a thoroughly good idea. The second is among the public, who, more than almost any other issue than perhaps approval for motherhood and enjoyment of apple pie, are near unanimous in despising it. The truth is we simply can't afford privatisation any more - the prices it produces are far too high. Look at your water bill, your gas bill, your rail ticket (if you can afford one). Last year, the City <span style="text-decoration: underline;"><a href="">shrieked in terror</a></span> that the majority of the public have turned their back on privatisation - we want our assets back.</p> <p>Not by coincidence, it seems that the public are more in touch with their lived reality than their rulers. There is now a significant body of evidence to suggest the privatisation project has failed to improve services. To paraphrase Mr Keynes, the nastiest motives of the nastiest men do not somehow work out to produce the best social results. If privatisation was ever really intended to improve the lives of ordinary people in Britain rather than just to enrich the already rich, it has failed on a grand scale.</p> <p>Much of what we write here on OurKingdom bears witness to that failure. OurNHS challenges it specifically in the context of healthcare. Clare Sambrook's project, &ldquo;Shine a Light&rdquo;, has exposed the behaviour of G4S and other for-profit companies. But showing that a system doesn't work is not sufficient. It is also vital to demonstrate that there is an alternative. </p> <p>In some cases, of course, the other option is obvious. To everyone but the most ardent libertarians and anarchists, there is some sort of role for the state. It is pretty clear, for example, that the government owned NHS operated very effectively. Read the evaluations of the NHS from overseas medical clinicians, international institutions and public health academics, rather than the smears of the right wing press and think tanks in Britain, and you'll understand why. </p> <p>In other cases, though, what we ought to replace private control with is less clear. We might easily be able to agree that we want more democratic ownership, but what that adds up to is not always simple. State control certainly isn't always the answer and, because of the risk of alienating bureaucracy, perhaps it shouldn't even be the default. </p> <p>Public ownership is as broad an umbrella as private ownership. Just as your local cafe can be the property of your next door neighbour or a multinational corporation, a private company or a firm listed on the stock exchange, so too democratical control comes in all sorts of shapes and sizes. Alongside numerous ways in which the national government can run a service are municipal ownership, mutuals, worker co-ops, member co-ops, not-for-profit community groups and all manner of combinations of all of these.</p> <p>As such, showing that privatisation has failed is necessary but not sufficient. <em>We also need to say what we would replace it with</em>, and the answer shouldnt always be the same. There are intrinsic differences, both moral and practical, between the organisation which brings you smoothies and that which brings you water. </p> <p>This all tells us two things. The first is that the future must be taken into democratic control. The second is that a one-size-fits-all cry for "renationalisation!" isn't enough; we can do better and we must do better. Democracy is complex and fluid and messy. It requires us to ask who is effected by every sort of decision and so who should get a say. It demands that we experiment with different structures to see what works. It means that we need to start to trust each other.</p> <p>When building the democratic structures of the future, though, Britain is at a perverse advantage. With one of the most privatised economies in the Western world, we have the successes and failures of our neighbours to learn from. We have ideas from across the planet and the history of humanity to draw upon. That is one of the things this series seeks to discuss. We want to look at how other countries have taken a whole range of different parts of their economy into different types of public or democratic ownership and discuss where this has worked&mdash;and where it hasn't&mdash;and which models are successful, which require some tweaking. If an economy can be rapidly privatised, it can be de-privatised; we want to understand how, and we want the public to understand how.</p> <p>We must also engage seriously with our own past. It is easy on the one hand to look to the post-war consensus of nationalisation as a golden age. On the other, it is too simple to dismiss it as a failure. A fair assessment must look at where nationalisation worked and why and where it failed, and also at why it was politically possible to dismantle so much of it. </p> <p>Finally, when looking to the future, we need to be willing to imagine things which have never been tried before. We need to give ideas a place to sprout before they blossom or are chopped down. Again, we hope to provide a forum to do just that &ndash; to encourage discussion of the practical questions of de-privatisation.</p> <p>Few matters could be more important than these. After all, before any other question can be asked, we need to determine who has the power to choose the answer. Before we can solve our economic problems, we need to know who owns the economy. Not long ago, a large chunk of the British economy belonged to its people. We now own next to nothing. Even the Royal Mail has now been sold, at a shamefully low price, and making a killing for the Chancellor's best man in the process - this is the reality of privatisation.</p> <p>It is time to design a new economic democracy for the future. It is time to inspect each part of our economy and to ask how it can be accountable and how those impacted by it can decide what happens with it. This is what we aim to do with this series. We will need your help. We will need you to submit articles and suggest ideas and to challenge ours. Because ultimately, that's what democracy is about. </p><p>&nbsp;</p><p><em>Adam Ramsay &amp; Oliver Huitson, co-editors, OurKingdom</em></p><p style="background-color: #ededed; padding: 15px 10px 15px 15px; border: 1px dotted #3e9440;"><a href=""><img src="//" alt="LocalismWatch icon" style="float:right; margin: -20px 0 10px" /></a>This article is part of the <em><strong>Modernise: de-privatise</strong></em> <a href="">series</a>.</p> uk uk Modernise: de-privatise OurKingdom Tue, 12 Aug 2014 23:00:02 +0000 OurKingdom 85158 at We all already own the NHS - the latest 'mutual' spin is about taking it out of our hands <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>So-called 'John Lewis style mutuals' have been tried in the NHS - and flopped badly. So they want to give this Trojan horse for privatisation and asset-stripping new legs - and teeth.</p> </div> </div> </div> <p class="MsoNormal"><span>Here we go again. Turning the NHS into a ‘staff-owned’ mutual or ‘social enterprise’ has been re-launched more times than Liam Fox’s career, generally to a resounding wave of indifference or hostility from NHS staff who are less interested in being ‘social entrepreneurs’ than in getting on with doctoring and nursing.</span></p><p class="MsoNormal">The latest rebranding is that ‘<a href="">Mid Staffs would never have happened at a mutual’</a>, as Norman Lamb declared when he announced a new review last October, chaired by the <a href="">ever-willing</a> Professor Chris Ham of the King's Fund.</p><p class="MsoNormal">The review’s outcomes will be <a href="">launched today </a>by Francis Maude, Norman Lamb, and Hazel Blears MPs, giving the appearance of a cosy political consensus. It's a trick that has been played for <a href="">over a decade</a>.</p><p class="MsoNormal">Today's report is vague on who actually would <em>own </em>the 'mutual' hospitals once they are stripped away from the NHS (with the promise of more detail in yet another report in the spring). Here lies a hint as to why the idea is such a darling to some in our elite - a point I return to at the end of this article.</p><div><span>Suspicions that mutuals are a trojan horse for privatisation have been around almost as long as the policy itself. Hence, despite such apparently broad-based and long-standing support amongst the political class, the idea has been roundly rejected on the ground.&nbsp;</span></div><p class="MsoNormal"><span>The largest attempt to ‘mutualise’ the NHS to date was in Gloucestershire in 2011/2. Nine hospitals and a swathe of community-based health services previously provided by the NHS Primary Care Trust (PCT) were to be turned into a ‘staff-owned mutual’. The plans were developed initially under </span><a href="">policy</a><span> set out by Blairite Health Secretary Patricia Hewitt, but were given new impetus by the incoming Tory government’s plans.</span></p><p class="MsoNormal">The public - when they eventually found out, just three months before the hospitals were due to leave the NHS - were shocked. They were reassured that the idea was ‘staff-led’. The spirit of the Rochdale co-operators was invoked.</p><p class="MsoNormal">In fact staff had - in practice - been given no other options. This was the only alternative to full-scale privatisation, they were told. Staying in the NHS wasn’t an option. </p><p class="MsoNormal">Lofty talk about ‘staff ownership’ structures turned out to be pure spin. Questions about what democratic rights (if any) staff got in exchange for their ‘penny share’ were unanswered, even on the eve of the transfer. The head of a leading body in the Co-operative Movement was horrified when she heard she had been cited as an influence on the plans. “This isn’t a co-op - this is a management buyout without the cash”, she told colleagues.</p><p class="MsoNormal">Gloucestershire campaigners took the commissioners to the High Court in London - <a href="">and won</a>. After a day in court, scenting an embarrassing defeat, the government side backed down. They were forced to agree to go back to the drawing-board and properly consult - an exercise that revealed that 91% of staff and 96% of local residents opposed the ‘mutual’ plans and wanted to stay in the NHS. After marches and lobbies of MPs, the government reversed its policy (citing ‘exceptional’ circumstances) and Gloucestershire’s community services and its 3000 staff stayed in the NHS. </p><p class="MsoNormal">Elsewhere though, the plans went ahead. The South West, under the leadership of the bruising Sir Ian Carruthers (now chair of Healthcare UK), was a particular target. Staff across the region contacted Gloucestershire campaigners in despair but were unable to mount their own challenges in time. The public were largely kept in the dark until it was too late.</p><p class="MsoNormal">And what has happened to these ex-NHS mutuals? </p><p class="MsoNormal">It’s hard to find out. Unlike NHS Trusts, they don’t have to answer Freedom of Information requests, nor have board meetings in public or publish minutes. A few do - but most don’t.</p><p class="MsoNormal">But clues are leaking out. The organisations are cast adrift from the NHS, strapped for cash, forced to cut corners. Staff training has been cut. Demoralised staff have left and not been replaced.</p><p class="MsoNormal">Late last year, Plymouth Community Healthcare (one of the SW ex-NHS mutuals) <a href="">announced</a> that it was postponing all routine medical procedures by district nurses - blood tests, continence procedures and the like - due to staff shortages. When I asked the Plymouth ex-NHS 'mutual' for information about how such decisions were taken, and what the supposedly ‘democratic’ and ‘engaged’ new structure actually looks like, they told me that as a small organisation they did not have time to answer my questions properly.</p><p class="MsoNormal">I phoned around a few of the other ex NHS 'mutuals' in the South West, and found them similarly unenlightening.</p><p class="MsoNormal"> "Who owns you" I asked several. "Er.... no-one? Don't know?" came the response. </p><p class="MsoNormal">Even allowing for human vagueness, this is worrying. Attacking public ownership becomes much easier if concepts of ownership are blurred. Unsurprisingly, given their vagueness about who even owned them, few of these organisations could tell me anything meaningful about how I as a member of the public could hold them accountable for their decisions.</p><p class="MsoNormal">And many of these decisions are alarming. Hinchingbrooke hospital is the poster child for today’s report launch, handed over wholesale (through a ‘franchise’ rather than a ‘spin-out’) to a non-NHS body, so-called ‘mutual’ Circle Health. But staff there are heavily demoralised, magic budget solutions have not been found - and there was only <a href="">one nurse on duty in a ward for 21 people</a>, a recent Royal College of Nursing investigation found.</p><p class="MsoNormal">Staff loss is hitting everywhere - but it's hitting mutuals particularly hard. In almost every ‘spin-out’ to an NHS ‘mutual’, staff numbers dropped by a third in the upheaval, my own research has suggested. </p><p class="MsoNormal">Not that you have a right to know this now. When questions were asked in parliament, the minister&nbsp;<a href="">responded</a> “<span>The Department cannot provide details of individual social enterprise staff and turnover figures as they are commercial in confidence and belong to the social enterprises as they are now independent bodies.</span>” </p><p class="MsoNormal">On the very day that NHS regulator NICE launches yet more (non-binding) guidelines about <a href="">short-staffing</a> and transparency, this fact alone should give ‘mutual’ advocates pause for thought.</p><p class="MsoNormal">There’s more upheaval ahead for staff and patients as a result. Many of the contracts which were handed over to ‘mutuals’ in the last wave of this policy were given only for 3 years (as they were to untested organisations) and are now nearing an end. Commissioners in Bath (where Sirona took over) and across the country have already announced that they will now put the services up for full competitive tender to the private sector.</p><p class="MsoNormal">And there were other implications of the 'spin-outs' to mutuals. As a direct consequence of being turned into ‘mutuals’, NHS Trusts had their clinics and district hospital buildings peeled off and quietly handed over to PropCo, an unaccountable private company created by Cameron’s 2012 Act, tasked with maximising income from property development. </p><p class="MsoNormal">No longer able to raise loan finance on their assets, even at risk of their assets being rent-hiked or sold from under their feet, ex-NHS ‘mutuals’ are dependent on cutting corners to save money. In Nottingham, after physiotherapy services were handed over to a ‘mutual’, patients were <a href="">no longer offered ‘hands-on’ physiotherapy</a>, just factsheets. In Hull, soon after becoming a social enterprise staff were reporting shortages of basic supplies like bandages - and several clinics were promptly handed over to the private sector. </p><p class="MsoNormal">Headed by hand-picked cronies, no longer publicly accountable, but with no genuine internal democracy to replace it. Subject only to deliberately ‘light-touch’ regulation which gives directors remarkable freedom to behave as they choose. &nbsp;</p><p class="MsoNormal">A service that was owned by all of us, now owned by fewer of us, and accountable to hardly anyone. </p><p class="MsoNormal">When Norman Lamb tells you these plans are optional, that they will be better than the earlier incarnation, remember, that has been the line throughout the last 10 years. But away from the lofty words at think tank receptions, the reality on the ground with such ‘optional’ policies is that demoralised, scared NHS staff are told by demoralised, financially squeezed managers that there are no other options. Only through huge amounts of hard work and a considerable amount of luck were campaigners able to create other options in Gloucestershire. Elsewhere, they got away with it - and both legal challenges and the financial climate have been made much harder since we won this campaign.</p><p class="MsoNormal">So why, when the plans have been so unpopular, does the government persist in flogging this dead horse?</p><p class="MsoNormal">It’s all to do with staff engagement, they tell us.</p><p class="MsoNormal">But if the government really cared about staff engagement, why is it being so antagonistic to their representatives, the unions, refusing to hold proper pay talks, and talking of <a href="">scrapping their right to strike</a>? Why has it turned a deaf ear to the 83% of NHS workers who think the <a href="">main aim of government reforms is privatisation</a> not improving patient care? </p><p class="MsoNormal">Only this month, staff in Northampton pathology services who raised concerns about patient safety and the use of less well-paid, less skilled staff were ignored until they went on strike - at which point, management locked them out, and has prevented them from returning to work ever since. This is an unprecedented use of <a href="">union busting tactics in the NHS</a> - and the government has said not a word about ‘staff engagement’ and ‘patient safety’ in response.</p><p class="MsoNormal">In Gloucestershire, the secret KPMG papers revealed in court showed that the key ‘benefit’ envisaged was that the transfer of staff to a 'mutual' would enable a ‘harmonisation’ of NHS staff terms and conditions with those of (far lower paid) social care workers. In other words, the same old corner cutting and trying to get staff on the cheap, that is the eternal tactic of those who wish to turn a profit from privatising public services.</p><p class="MsoNormal">When the government talks about giving greater ‘ownership’ to staff it glosses over the fact that doctors and nurses - and the rest of us - <em>already</em> own our hospitals. If these plans are really motivated by concerns about problems like Mid Staffordshire, how does narrowing ownership from the whole community to just the hospital staff (or a small portion of them, alongside some private investors) really improve this? If the plans are so great for the public, why have they been implemented in such secretive fashion to date? In Gloucestershire, public engagement on the plans consisted of 2 abtruse press releases - one on New Years Eve - and one cryptically (and very boringly) titled meeting for hand-picked 'stakeholders'.&nbsp;</p><p><span>The reality is the government’s attempt to turn the NHS directly over to the private sector has hit stiff political opposition in communities up and down the country. Francis Maude predicted as much when - in a <a href="">leaked conversation</a> with the Confederation of British Industry shortly after the election - he warned them that the “political risk” of outright privatisation would be “unpalatable” to the government but that “</span><span>joint ventures between a new mutualised public sector organisation and a 'for profit' organisation would be very attractive</span><span>”.</span></p><p class="MsoNormal">Whilst some on the left have been sucked by the language of co-ops into a sunny, egalitarian Bolivarian fantasy, the reality in the current US/European climate is that these plans are just the latest incarnation of the attempt to break up the NHS up into isolated units that will stand - or fail - by their ability to compete in a cut-throat market. Cut adrift from the institutional support and financial muscle of the NHS, they will fail - unless they become even less ‘mutual’ and open to investment from - and effective ownership by - the private investors who are ever circling.</p><p class="MsoNormal">And this - I suspect - is the real goal of Maude and Lamb’s latest review. </p><p class="MsoNormal">Although already too lightly regulated to be properly accountable to patients, so-called ‘mutuals’ aren’t yet quite easy enough to offer an entry point for the private investors like Goldman Sachs and their ilk, currently queuing up to rebrand privatisation as some kind of ‘corporate social responsibility’ or ‘<a href="">good capitalism</a>’. They are touting products like ‘<a href="">social impact bonds</a>’ on both sides of the Atlantic as a way of “<a href="">attracting new investment</a> around outcomes based contracts” in public services. </p><p class="MsoNormal">The structure of the contracts means only investors with deep pockets will be able to offer them - and whilst they gain lucrative tax breaks and the veneer of 'philanthropy', for the public purse, the impact has been compared to the short term gains but long term crippling impact of the Private Finance Initiative. The social enterprise world is enthralled at the idea of '<a href="">social investment bonds</a>' and similar routes in for private capital. The shakiness of the social enterprise 'solution' was brutally exposed in Mid Surrey, where the award-winning ex-NHS 'spin out', Mid Surrey Health (hailed by David Cameron as "the future"), failed in its first bid to provide a swathe of NHS services, because it was unable to raise the £10million bond needed to convince commissioners it was stable. Commissioners duly <a href="//">handed the contract over to Virgin</a>, instead.</p><p class="MsoNormal"><span>Even before that debacle, though, the social enterprise literature has been littered with talk of the ‘<a href="">barriers</a>’ to ‘accessing finance’ from ‘mainstream investors’ to deliver ‘</span><a href="">blended returns’</a>&nbsp;(both feelgood and financial). What is clear - and what Lamb's new 'pathfinders' are most likely being set up to 'discover' is that for&nbsp;<span>the ex-Department of Health wonks writing this stuff, it's regulatory barriers to big finance investors that are the key obstacle to rolling out 'mutuals' - not the fact that no-one on the ground actually wants them.</span></p><p class="MsoNormal">Some bolder ex-NHS so-called mutuals have flirted with getting funding from the private sector - and handing share capital and profit margins back in return. But few - apart from Circle Health, a supposedly ‘employee owned’ provider <a href="">actually majority owned by Tory-donating city folk</a> - have really gone down this line. No coincidence, perhaps, that it is Circle singled out for special praise in today’s review.</p><p class="MsoNormal">Professor Chris Ham <a href="">hinted on his appointment</a> to Chair the review that all this talk of mutualisation and share ownership wasn't really geared towards employees. He suggested instead that <span>employees didn't need to actually own the organisation - oh no.&nbsp;“It’s a <em>sense</em> of co ownership of the organisation. It’s a <em>culture</em> of ownership - a culture of mutuality can be as important as having a structure of mutuality.” [my emphasis].</span></p><p class="MsoNormal"><span>Such blurring of the metaphorical and literal senses of ‘ownership’ is very convenient, but obscures the obvious question - why then change the structure and ownership at all? And&nbsp;</span>if the hospital is no longer to be part of the NHS and hence owned by us, the taxpayers, and it’s <em>not </em>actually to be owned by the staff either - who <em>will </em>it be owned by?</p><p class="MsoNormal">And if the profits don’t go back into healthcare - as Norman Lamb <a href="">hinted </a>today they might not need to, according to the Independent - where <em>will </em>they go?</p><p class="MsoNormal">Today’s review gives a few hints. Chris Ham says that a big push on mutuals “<span>should be accompanied by more proportionate regulation so that NHS organisations can look out to their patients, staff and stakeholders</span>”.</p><p class="MsoNormal">Quite who these other stakeholders are, and quite what kind of loosening of regulations would benefit them, remains to be seen. What is clear is that the private investment world, having broken consumer capitalism with their irresponsibility, now needs to profit from our most basic needs. And they are more than happy to play the white knights helping out mutuals to split up the only behemoth that can really stand up to their profiteering, the NHS.</p><p class="MsoNormal"><em><strong><span>Like this piece? Please donate to OurNHS&nbsp;</span></strong></em><a href="" target="_blank"><strong><span>here&nbsp;</span></strong></a><em><strong><span>to help keep us producing the NHS stories that matter.&nbsp;Thank you.</span></strong></em></p><p class="MsoNormal"><em><strong><span><em><em>Clarification: NHS Property Services has asked us to clarify that the official title for 'PropCo' is NHS Property Services and that it is a private company "100% owned by the Secretary of State" which is subject to the Freedom of Information Act. They advise us it is&nbsp;<span>tasked with "managing, maintaining and improving&nbsp;NHS</span><span><a></a></span><span>&nbsp;properties and facilities, working in partnership with&nbsp;NHS</span><span><a></a></span><span>&nbsp;organisations to create safe, efficient, sustainable and modern healthcare and working environments."</span><span>&nbsp;</span></em></em></span></strong></em></p><fieldset class="fieldgroup group-sideboxs"><legend>Sideboxes</legend><div class="field field-related-stories"> <div class="field-label">Related stories:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="/ournhs/dexter-whitfield/should-we-turn-nhs-into-co-ops-and-mutuals">Should we turn the NHS into co-ops and mutuals?</a> </div> </div> </div> </fieldset> ourNHS uk ourNHS Circle Privatising our NHS Mutuals Social enterprise Modernise: de-privatise Caroline Molloy Tue, 15 Jul 2014 12:56:00 +0000 Caroline Molloy 84476 at Privatisation leads to top down services. Public control should mean the public have a say. <div class="field field-summary"> <div class="field-items"> <div class="field-item odd"> <p>A new paper from the New Economics Foundation argues that public services should be taken back into public control - and the public should be given a real say.</p> </div> </div> </div> <p><span class='wysiwyg_imageupload image imgupl_floating_none 0'><a href="//" rel="lightbox[wysiwyg_imageupload_inline]" title=""><img src="//" alt="" title="" width="400" height="266" class="imagecache wysiwyg_imageupload 0 imagecache imagecache-article_large" style="" /></a> <span class='image_meta'><span class='image_title'>Aneurin Bevan addresses a crowd just outside Tredegar in 1960/</span></span></span></p><p>“The sound of a bedpan falling in Tredegar Hospital would resound in the Palace of Westminster.” So, it is alleged, said Aneurin Bevan, founding father of the NHS. Bevan’s famous bedpan principle illustrates the sense of social responsibility that underpinned Britain’s post-war settlement. Decades of working class struggle had pushed the state towards an interest in meeting social need and tackling inequalities. This was to be achieved, in large part, through free and inclusive public services. </p><p>But one person’s social responsibility is another’s top-down paternalism: the bedpan principle also alludes to the centralising tendencies of Bevan’s approach. Step forward seventy years and state-controlled services run from Whitehall are castigated as inefficient and overly bureaucratic, out of touch with our ‘consumer preferences’. On the back of this critique of the state, successive governments have pursued policies of marketisation, outsourcing and privatisation within public services. </p> <p><strong>The limits of the market</strong></p> <p>The problem is that market competition and private sector logic have failed to come good on the promises of their neoliberal proponents. Far from decision-making and knowledge being decentralised, power over public services has been concentrated in the hands of a <a href="">few supremely wealthy private providers.</a> </p> <p>Despite the promise of ‘efficiency savings’, evidence of decreasing costs is hard to come by. In fact, many local authorities are now taking services back in house, most often to <a href="">reduce expenditure</a>. This is despite the fact that workers in the private sector face <a href="">worse pay and conditions</a> than their public sector counterparts. </p> <p>Meanwhile, as private providers <a href="">‘cherry pick’ profitable services</a>, the finances of the public sector are shrinking, reducing its capacity to provide high quality services across the board – a problem which compounds the public sector debt burden left by New Labour’s <a href="">failed PFI experiments</a>. Amidst a steady onslaught of high profile scandals of private provision – from G4S’s years of <a href="">overcharging</a> of electronic tagging contracts to Serco’s <a href="">misreporting</a> of out of hours GP services – it has become ever more difficult to believe in the virtues of free market entrepreneurialism as a driver of public service quality and innovation. </p> <p>What, really, did we expect? Competition tends to lead to fragmentation and opposition between stakeholders, discouraging the partnerships and holistic thinking necessary for joined-up and <a href="">preventative</a> services. What’s more, private companies are legally obliged to prioritise shareholder-return, a goal not easily aligned with broader public policy priorities like meeting social need. </p> <p><strong>A new direction of travel</strong> </p><p>Is it still possible to realise the power of public services to tackle inequalities and help us live well? There is every reason to oppose the neoliberal agenda for public services. But is the answer to hark back to the ‘Spirit of 45’, which afforded frontline staff and citizens very little power over the services they worked in and used? </p> <p>Opposing the market in public services need not mean welcoming back top-down control. In <a href="">a new discussion paper from NEF</a>, we argue for a new direction of travel for public services: shifting power away from private companies, towards citizens and frontline staff. These are the people who are most <a href="">likely to care</a> about securing high quality services, delivered on the basis of fairness and equality. What’s more, these are the people likely to know best: when you work in or use services, day in day out, you get a real sense of what’s working and what needs to change. </p> <p>But doesn’t this ‘new agenda’ sound suspiciously familiar? The Coalition’s move ‘from Big Government to the Big Society’ has seen the state retreating and public spending slashed, with the gap left to be plugged by under-funded and overstretched citizens and community groups. The result, of course, has been increasing levels of <a href="">insecurity and inequality</a>. </p> <p>How can we shift power to citizens and staff in order to make public services better equipped to tackle social injustices, rather than compounding them? </p> <p><strong>Shifting power</strong> </p><p>Firstly, we need to think carefully about what kind of power-shifting measures we want to promote. By moving away from paternalistic expert-client hierarchies to a way of doing public services known as <a href="">co-production</a>, services can be designed and delivered through an equal partnership between citizens and professionals. This does not mean de-valuing or replacing professional knowledge, but integrating this with the experiential knowledge of service users.</p> <p>Existing systems of representative democracy can be enhanced by introducing forms of participatory democracy that give citizens more direct control. Across Latin America and in some UK authorities, <a href="">participatory budgeting</a> allows citizens to make their own decisions about public spending priorities. Iceland recently handed its <a href="">constitutional reform</a> process over to its public, via a range of online and offline participatory methodologies. </p> <p>In a similar vein, public agencies could learn from co-operative governance structures by including elected worker and citizen representatives on their governing bodies. While we’re at it, why not encourage public agencies to follow the lead of local authorities like <a href="">Newcastle</a> by shifting towards less hierarchical working cultures and giving frontline staff more autonomy and trust. </p> <p><strong>Getting the conditions right</strong></p> <p>A handful of isolated changes won’t work. What’s needed is a wholesale shift in policy and political culture. The first crucial step is for Whitehall to devolve power to local government, allowing councils the autonomy they need to shape services around local interests and knowledge. National standards of excellence and equality can be developed, with local government deciding on how these standards should be met. </p> <p>Secondly, we must break with received wisdom and acknowledge that <a href="">ownership matters</a>. <a href="">Legislation</a> advocated by the campaign group <a href="">We Own It</a> would facilitate a shift in ownership away from private hands towards the public sector and other socially oriented not-for-profit entities. While competitive tendering has <a href="">pitted the public sector in competition</a> with co-ops, mutuals and the community and voluntary sector, NEF advocates an <a href=";utm_medium=social&amp;;utm_campaign=buffer">alternative model of commissioning</a> that allows for a collaborative partnership between different publicly oriented institutions, paving the way for a revitalised and democratised public realm. </p> <p>Pre-existing inequalities of wealth and resources within and between regions must be tackled by re-distributive measures to ensure that all can benefit from more participatory and co-productive services. Meanwhile, a slow and steady move towards a <a href="">30 hour working week</a>, alongside action to tackle low pay, would re-distribute time, ensuring that<strong> </strong>people have the capacity to partake in this kind of ‘everyday democracy’.</p> <p>Finally, NEF’s research shows that public spending reductions are <a href="">decimating local services</a> and, despite <a href="">recent claims</a> of the Coalition, <a href="">undermining the</a> chance of achieving a lasting economic recovery. We should not accept the prevailing narrative of ‘inevitable funding constraints’. Austerity cuts to public services are <a href="">unnecessary and misguided</a> in economic terms. <a href="">We need a new macroeconomic strategy</a> based on government investment, including in our public services. </p> <p><strong>Conclusion</strong></p> <p>Governments invariably come to power promising to transform public services. This tends to lead to confusion, disorganisation and, in some cases, wholesale disaster. But a process of democratic transition led from the bottom-up – from the people who really know what needs to change and have a vested interest in these changes being effective – is very different from top-down re-structuring. </p> <p>We do not have to accept the wholesale transfer of services we all rely upon to unaccountable private hands. Nor is a system run by ‘experts’ for our ‘benefit’ the only alternative. </p> <p><em>You can read NEF’s new discussion paper on public services here: <a href="">Moving beyond the market: a new agenda for public services.</a></em></p><p><br /><em><strong><span>Liked this piece? Please donate to OurKingdom </span><a href=""><span>here </span></a><span>to help keep us producing independent journalism. Thank you.</span></strong></em></p> uk uk Modernise: de-privatise James Angel Thu, 03 Jul 2014 13:43:12 +0000 James Angel 84198 at