The Law doth punish man or woman
Who steals the goose from off the common,
But lets the greater felon loose
Who steals the common from the goose
Anti-enclosure saying, 18th Century England
Privatization is not simply a change of ownership. It is a change in the role, responsibilities, priorities and authority of the state.
Dozens of governments around the world have embarked on the road to privatisation since the mid-1980s. As a result of electricity privatisation and deregulation there have been black outs, price spikes, price manipulation, bankruptcies and electricity shortages around the world. Privatisation and deregulation has seen the goal of reliable, universal electric service, delivered at a reasonable price, replaced by the goals of economic efficiency, competition and consumer choice.
Water privatisation has also been a disaster. Rates have soared and pollution increased. Those who cannot afford the new rates have had their water supply disconnected. Diseases such as cholera have made a come back in poor nations where alternative sources of water are contaminated. Privatisation has transformed water from a human right to an ‘economic good’ that must be paid for by those who use it. And now the large European water conglomerates are preparing to buy up municipal water supplies in the US.
Yet, despite its lack of popular support and its inability to deliver on promises of lower prices, privatisation in its many forms has become the accepted wisdom amongst governments and opinion leaders. By the early 1990s, the term ‘privatisation’ had become an accepted part of the language, East and West. New markets were opened up all over the world as developing countries joined developed countries in allowing transnational companies to provide their essential services.
Privatisation of public services have taken various forms:
- Monopolies [usually government] replaced by markets (energy and telecoms);
- Private ownership has replaced central government public ownership (water, energy, telecoms and rail);
- The role of local authorities has been cut back from owner of services and products to a more restricted regulatory role (buses and social housing);
During the 1980s and 1990s public services were reformed in various ways throughout the USA, Western Europe and Eastern Europe, Africa, Latin America, South-East Asia and in Australasia. These included the sale of government enterprises; the introduction of new forms of management practice and incentive structures in remaining public services; the contracting out and private provision of activities within public services; the introduction of user charges; and the deregulation of essential services.
Proponents of these measures argued that introducing competition and commercial concerns into public service provision would expose the newly privatised firms and corporatised government enterprises to the disciplines of the market so that they would become more efficient and rates would be reduced. It was also supposed to raise revenue for governments, provide new sources of investment capital for expensive infrastructure and reduce the role of government in the economy.
Governments, entrusted with carrying out the will of the people and protecting public assets, were coopted by all manner of devises, ranging from the sophisticated persuasion of corporate-funded think tanks to the less than subtle pressures exerted by international lending organisations, all combining with frequent and generous financial contributions to the campaign funds of political parties and offers of future career opportunities for retired politicians and bureaucrats.
As a result there has been a massive transfer of ownership and control over government assets worldwide to private companies. The companies that have taken over these public services in most countries are transnational companies with little interest in the welfare of local citizens. Increasingly these companies are concentrating—through mergers and acquisitions—into a small group of very large conglomerates that dominate the provision of national and international essential services.
Planning and long-term forecasting of demand, as well as the upgrading of worn-out infrastructure, used to be an essential part of providing a reliable public service. The need for long-term planning and coordination were major reasons why governments took control of services such as water, telecommunications, transport and water in many countries around the world in the first half of the nineteenth century. But in the eighties the need for planning and maintenance began to take second place to the business-driven to commercialise public services. Following privatisation, the planning function of government bureaucracies was abandoned altogether and surrendered to market forces.
In replacing government planning, market forces are supposed to ensure there is enough supply because the market is assumed to have the ability to balance supply and demand through competition. In practice, the market has turned out to be a rather poor mechanism for ensuring adequate supply and reliable service. In the market, shortages are supposed to lead to high prices which, in theory, provide an incentive to build new facilities and infrastructure. But for some services, such as electricity, there is more financial reward in creating shortages and so most companies prefer to avoid risky investments that will only lower the price by increasing supply. For other services, such as water, poor consumers cannot afford higher prices and the expansion of networks (that is, the provision of water to poor neighbourhoods) is not commercially viable.
- 'Globalisation:Water Privatisation', PowerBase
- ‘Water’, Global Action Database and Archive
- Public Services International Research Unit (PSIRU)
- Public Services International
- ‘Privatization’, CorpWatch