Public good, private bad

People who have followed the posts on this blog will know that I have been explaining how privatisation benefits the rich at the expense of the poor but it is probably worth pulling it all together in one post so here goes.

Privatisation of public services has been a key part of the neoliberal Thatcherite project of the past thirty years. Privatisation of public services makes the rich richer and the poor poorer. This neoliberal project is all about dumping costs onto the poor whilst creaming off more of society's wealth for the rich.
So how does it work? Quite simple really but it has to be bolstered by one big crucial lie. The lie is that the private sector is always, but always, more efficient than the public sector alternative. No evidence is ever produced for this but it has been repeated so often over the last few decades that most people accept it as a fact. There is evidence though to show that the private sector is not more efficient than the public sector. Here is an example that comes from the International Monetary Fund! (IMF) - see this paper. Here is a quote you might find interesting:

“….the empirical evidence and the theoretical debates do not support this assumption. There is a consistent stream of empirical evidence consistently and repeatedly showing that there is no systematic significant difference between public and private operators in terms of efficiency or other performance measures. The theory behind the assumption of private sector superiority is also being shown to have serious flaws”.

But we do need to consider what is meant by 'efficiency'. Normally it is taken to mean that the private sector can deliver public services at a lower cost - as if that was all that mattered anyway. The fact that the private sector can deliver services at a lower cost is questionable to say the least. But let’s consider what happens when a public service is privatised. A private company moves in and takes over the service and the workforce that delivers it. The company needs to make a profit so the first thing it does is to cut the workforce and lower the terms and conditions of the remaining workers. Workers have their pay, holidays and pensions slashed. The cost of resulting unemployment and low pay is pushed onto the taxpayer and the cost of the profit is pushed onto the remaining workforce. In fact the employer is literally taking money out of the pockets of its new employees and giving it to shareholders - hence a direct transfer of money from the poor to the rich. This is not lower cost delivery it is dumping the costs onto workers and the wider society. Its not efficiency - it is legalised robbery.

But it’s much worse than just this. Because we don't have competing public services (i.e. you only have one waste collector in your local council area) - what you end up with is a private monopoly. Once the public sector alternative has gone what happens if the company providing the service goes bust? Well it has to be bailed out. Why? Because even if you wanted to you couldn't just bring in another company to take over at short notice – wheelie bins have to be emptied. We are also sold a lot of guff about competitive tendering as if hundreds of companies were competing for every public service contract. This simply isn't the case and contracts are awarded to one of a few usual suspects.

What we end up with is a very cosy private monopoly replacing the public service and easy money for the people who own the company. In time, costs can be hiked up to increase profits and all this is at the taxpayer’s expense. No private company could ever compete with an efficient public sector alternative. Why? Because the public sector alternative does not have to make a profit therefore it will always offer better value for money. In addition, the public sector can always borrow money for investment at a lower rate of interest then the private sector which again saves the taxpayer money. The reality is that the most cost effective way to deliver public services is the public sector option. That is the way services should be delivered, paid for collectively by all of us and delivered without the profit motive.

Of course, it is an essential part of the privatisation project that the public sector is excluded from competing with the private sector because it is unacceptable to the privatisers for the public sector to be seen to provide better value for money and competing successfully. That is why everything has to be privatised. And that is why the public sector is now being privatised by stealth - slowly but surely. Once the Tories get into power they will have the confidence to accelerate this process because they will claim that they are eliminating 'public sector waste' and delivering ‘better value’ in a time of budgetary restraint.

Privatisation of public services is basically a racket. Its hard for people to understand that their government would want to institute a system which costs them more, reduces their employment opportunities, dumps costs onto local communities and only benefits capitalists but that is the kind of government we have. That is what New Labour stands for. In the long run we will all have to pay more for less and those who benefit will be the better off.

How to beat capitalism

Historically socialists have followed the' Marxist' model. By that I mean capture the power of the state and use it to control the means of production. By doing this you can put power into the hands of the people and liberate them from exploitation by the capitalist class. There are basically two ways of doing this: Communism, and democratic socialism. Both have so far failed. Communism, in the Soviet Union, liberated workers and greatly improved the condition of women, but failed to find a successful alternative economic model and degenerated into a dictatorship rather than a 'dictatorship of the proletariat'. Democratic socialism, whereby socialist parties have come to power through elections, has simply failed to control capitalism, again largely because the parties failed to pursue an alternative economic model and were content to 'manage' capitalism through social democracy. I know some people will argue those parties weren't socialist but that's another argument too complex to go into in this post.

There is a pattern here. The key thing is the economy and the creation of money. Having a capitalist economy and a socialist - or social democratic - government doesn't do much for most of the population apart from ameliorating the worst excesses of capitalism. It is certainly preferable to right-wing 'free' market alternatives but it doesn't solve the underlying problem. For a long time, capitalist entities like the big corporations have been more powerful than governments. Many corporations have turnovers which are larger than the GDPs of well-developed nations. Now, through global entities like the World Trade Organisation (WTO) - in which secretive panels of 'experts' are able to overturn national legislation, they have formally elevated commercial interests - the right to make money - above democracy, above all our democratic rights.

What the credit crunch has shown us is the true power of these capitalist entities. The mask has slipped. The 'free' market model has come unstuck through de-regulation, and selfishness and greed - the twin engines of capitalism. We, the poor, the unemployed, the disabled, the low paid, and the working and middle classes, have been forced to bail out capitalism. The losses have been nationalised and the gains are still in the pockets of the people who brought the system down. That is socialism for the rich and the market for the rest of us.

In his book, The Great Transformation, written in 1944, the socialist economic historian Karl Polanyi explained how economies work. He said that they are 'embedded' in society. By this, he meant that they are inseparable from the way we live. They are what we do. This may sound obvious but classical economists, such as Ricardo, have tried to separate the economy from society as if it exists separately in its own right. This is crucial because it allows conventional economists to ignore social and environmental concerns. They just don't figure on the balance sheet. Economists routinely ignore human suffering and environmental degradation caused by capitalism. This helps to give capitalism economic validity because it becomes simply about making money - forget about people and the environment. This is why economists are able to make ludicrous statements like - "It benefits all of us if production is moved to countries where labour costs are lower" - really? Does it? Who does it benefit? Not the people who have lost their jobs and the communities that are devastated. Of course, there have been dissident economists like Marx and E F Schumacher who wrote 'Small is Beautiful - a study of economics as if people mattered'. But Schumacher and Marx have been completely ignored by capitalist academia and media.

Karl Polayni: realised that society and economy are indivisible

Democratic socialists have made a similar error to the economists because they have assumed that politics is also separate from the economy. If you have political power you can change things. But as we have seen that is not true, not unless you change the fundamental basis of the economy. What socialists and progressives need if they are really going to change society is economic power. Capitalism can only be beaten economically. Therefore we need an alternative economic model and we need to start to build that model now. But what is an alternative economy? It is one where the means of production are owned and controlled by the people, and the creation of money is under democratic control.

For the means of production, there are basically two options: Nationalise industries or put them directly into the hands of workers to run and control themselves. Total nationalisation and state control, as in the Soviet Union hasn't worked well because people are not empowered and often they have little incentive to produce anything. They end up still as workers controlled by bosses. The real alternative is economic democracy. This is something that can be achieved through co-operatives. By co-operatives, I mean businesses owned and controlled by the people who work in them. Not possible? Think again. There are already many such successful businesses around. One example is the Unicorn Grocery, a worker-owned co-operative in Chorlton, which is thriving. There are many other examples.

Some cynics will no doubt say that this can only happen on a small scale but I don't believe it. There is nothing to stop larger scale businesses from being run in this way. The co-operatives in Mondragon in Spain provide us with an example of large-scale worker-owned and controlled businesses. Even models like John Lewis and Gore-Tex, which are not wholly worker-owned co-operatives in the sense that the Unicorn Grocery is, offer us a better alternative than voracious capitalists such as Tesco.

The beauty of the co-operative model is that we don't need a revolution or a socialist government to get started. There is nothing to stop people from starting co-operatives now. I have given examples in other posts such as the workers in Argentina who took over factories and started running them as going concerns during the economic crisis there.

In addition to this, we have to put the creation of money, and the control of its supply under democratic control. We need to ensure that only the state, through state-owned banks, rather than private sector banks, can create money. Alongside this, we also need to ensure that there are smaller local and regional banks. We also need a decentralised energy production system where locally owned companies generate energy from renewables and a centrally controlled energy distribution system.

None of this means that we shouldn't bother with socialist or political parties or be trying to get progressive governments elected. Changing our economic model isn't going to happen overnight. We need the support of governments who are friendly and can help with investment. In the shorter term nationalisation of the banks, railways, water, power generators, education, and health is essential for moving us away from a capitalist economy. It's a long haul but this is the only way forward. You cannot beat capitalism politically - it has to be done economically. Socialists and progressives need to start thinking seriously about building a new economy and making it happen - now.

Mark Thomas supports the Green Party - here's why

Mark Thomas has been an active campaigner against the kind of selfish 'free' market capitalism which lead to the credit crunch and the current recession. Here he speaks for himself about why he supports the Green Party:

The Green Party Promises £165 per week pensions

The Green Party's policy on pensions is great news for pensioners in the UK. See the GP news release below:

Today, on National Pensions Action Day (Monday 6 April), the Green Party announces its key election pledge for pensioners - a £165 a week non-means-tested citizens' pension for every pensioner in the UK. The pledge will form part of the Green New Deal for Older People, which the Green Party will launch in the build-up to this year's elections (1).

Jean Lambert MEP, the Green Party's spokesperson on social affairs, said today:

"The Green Party today celebrates Pensions Action Day with possibly the best action a political party could take for British pensioners: a policy that would lift all our pensioners out of poverty."

The National Pensioners Convention (NPC) have been calling for a pension at or above the official poverty level, which is defined as 60% of median population earnings less housing costs.For 2007/8 this would have meant a single person’s pension of £151 per week - compared to the actual full state pension of £90.70 and a pensions credits guarantee level of about £120 a week. The NPC has recently pointed out that:

- Between 1997 and 2006, the number of British people living in severe poverty – defined as living on less than 40% of median population income – increased by 600,000.

- Last year the poorest quarter of UK pensioner households saw their incomes rise by less than 1%, well below inflation. The poorest single pensioners saw their real incomes drop by 4%.

- At least 15% of UK pensioners – over 1.5m older people – are living in persistent poverty (below 60% median population income for three out of the last four years).

- Pensioner poverty in the UK has risen in the last year by 300,000 - equivalent to 822 people a day - and now reaches 2.5m (1 in 4 older people). Two thirds of these pensioners are women.

Jean Lambert, who was elected in 1999 as London's Green MEP and now sits on the European Parliament's Inter-Group on Ageing, commented:

"If the other parties are unwilling to lift pensioners out of poverty, then it's clear pensioners will need to elect Greens to fight their corner. Voting Green is about building a better future - and that includes a secure economic future for older people."

Jean Lambert MEP will lead the Green Party delegation in support of the NPC demonstration in London. She will be joined by Darren Johnson AM, the Green Party's trade & industry spokesperson and its parliamentary candidate for Lewisham Deptford, and Cllr Romayne Phoenix of Lewisham Borough Council.

The G20 Protests

Being someone who has attended demonstrations and taken part in pickets I have experienced police brutality first hand. For example, during the miners strike I was kicked on one picket line and on another one the pickets, including women - some with young children in pushchairs - were taunted by the police - this included throwing stones at us - they wanted to provoke a response so they had an excuse to pile in and give us a beating. On that occasion nobody on our side reacted - we continued to picket peacefully.

So, our police have a history of battering demonstrators - it even happened on the Countryside Alliance demo when we had the amazing sight of toffs being battered by police on our tellies. There is no doubt that some police officers enjoy the chance to exercise gratuitous violence with impunity. Why impunity? - because they always get away with it. Hardly surprising when the they get unconditional support from the 'free' press who always brand protesters as violent/anarchist/loony leftist/ terrorist agitators. Clearly the press were looking for a good riot on April the first. If you watch footage of the protests you will see that in many shots there are more photographers than protesters.



The police know that a good ruckus is great PR for them. They can provoke trouble and batter people and then claim that they need more powers, equipment and money to deal with 'public disorder'. Governments, who slavishly support the police and their operational independence, are only too happy to oblige.

So we come to the sad death of Ian Tomlinson who followed in the footsteps of Jean Charles De Menezes and Blair Peach. The Guardian's video footage shows him being batoned and knocked over from behind by a riot policeman as he walked away peacefully. Did this assault contribute to his death from a heart attack several minutes later? No doubt there will be many arguments about that over the coming months.

One thing is certain though, if a demonstrator had assaulted a policeman and he had died a few minutes later from a heart attack, that demonstrator would have been arrested and would now be on a murder charge.