Posts tagged Privatization

Priorities

The government-installed administration at the University of Nevada at Las Vegas says that, what with the current round of massive state budget cuts, and the threat of future cuts one or two years down the line, they don’t have enough money to teach classes in unpopular majors. (Based on recent decisions from administrative committees, UNLV’s — excellent, but small — Women’s Studies program, among others, might just barely manage to escape the axe. For this round of budget cuts.)

But apparently they do have enough money to build a big memorial to dead government soldiers.

Of course they do; it’s a matter of priorities. When the allocation of money for the University is political, it’s always going to favor what’s politically popular over what’s educationally important. And there’s nothing more politically popular than Patriotically Correct monuments to dead government soldiers.

This is, of course, exactly why UNLV should be liberated entirely from government appointments of administration and from the government strings attached to government funding.

Supporters of the Women’s Studies department, and of academics at UNLV broadly, often view the prospect of privatization of the University with horror. I don’t—because if privatization just means turning UNLV over from governmental ownership to non-gvernmental ownership, that could mean a lot of different things. I understand the reaction, if they are thinking of the kind of legislative privateering where the University simply being sold off to the best-connected corporate bidder. What I think is that the University doesn’t belong to the state government in the first place, and so the state government has no right to sell it to anyone; it belongs to the students and the faculty who use it. And privatizing, or if you prefer socializing it, directly into the hands of the campus community is the only just way to dispose of the University.[1] It’s also the best thing that could possibly happen to education at UNLV. As long as a government-imposed administration is in charge of UNLV, UNLV will be about serving the priorities of administrators, and serving the priorities of the government. UNLV will be about learning and teaching when it’s controlled by learners and teachers; the sooner we end the government occupation of campus, the better.

NV out of UNLV!

See also:

  1. [1] Of course, a plan like that — just handing the University for free over to those who work and study in it, with no political strings attached, instead of coming up with some scheme to create a subsidized sale to an bureaucratic efficiency-minded corporate management, with lots of lingering state control over what they can do — is almost certainly something that will never come out of a committee of the state legislature. Or rather, it’s something that will never come out of a legislative committee unless they are forced to it by events on the ground. If it’s going to come about, it’s something much more likely to come about by a strategy of campus organizing, concerted strikes by faculty, staff, and students, and student occupations of buildings and facilities, aimed not at legislative influence in Carson city, but at asserting effective physical and cultural control over the campus. But I see the need for people-power tactics, instead of bureaucratic gamesmanship and legislative lobbying, as an advantage of my proposal. Not a weakness.

The ALLied invasion of Cato

(Via Austro Athenian Empire 2008-11-10 and a bunch of other places.)

Congratulations to Roderick for heading up a round-table discussion in the latest Cato Unbound on corporate power, with a fine introductiory essay on left-libertarianism, and left-libertarian takes on corporatism, the alliance of big government and big business, class, and vulgar libertarian conflation of freed markets with actually-existing capitalism. Our efforts to cover the world with lying, thieving mutualism proceed apace.

Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge?

No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

First, the no. Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries; moreover, success on the market comes with no guarantee of permanency, depending as it does on outdoing other firms at correctly figuring out how best to satisfy forever-changing consumer preferences, and that kind of vulnerability to loss is no picnic. It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.[1]

Corporate power depends crucially on government intervention in the marketplace.[2] This is obvious enough in the case of the more overt forms of government favoritism such as subsidies, bailouts,[3] and other forms of corporate welfare; protectionist tariffs; explicit grants of monopoly privilege; and the seizing of private property for corporate use via eminent domain (as in Kelo v. New London). But these direct forms of pro-business intervention are supplemented by a swarm of indirect forms whose impact is arguably greater still.

. . . So where does this idea come from that advocates of free-market libertarianism must be carrying water for big business interests? Whence the pervasive conflation of corporatist plutocracy with libertarian laissez-faire? Who is responsible for promoting this confusion?

There are three different groups that must shoulder their share of the blame. (Note: in speaking of “blame” I am not necessarily saying that the “culprits” have deliberately promulgated what they knew to be a confusion; in most cases the failing is rather one of negligence, of inadequate attention to inconsistencies in their worldview. And as we’ll see, these three groups have systematically reinforced one another’s confusions.)

Culprit #1: the left. Across the spectrum from the squishiest mainstream liberal to the bomb-throwingest radical leftist, there is widespread (though not, it should be noted, universal)[10] agreement that laissez-faire and corporate plutocracy are virtually synonymous. David Korten, for example, describes advocates of unrestricted markets, private property, and individual rights as corporate libertarians who champion a globalized free market that leaves resource allocation decisions in the hands of giant corporations[11]—as though these giant corporations were creatures of the free market rather than of the state—while Noam Chomsky, though savvy enough to recognize that the corporate elite are terrified of genuine free markets, yet in the same breath will turn around and say that we must at all costs avoid free markets lest we unduly empower the corporate elite.[12]

Culprit #2: the right. If libertarians’ left-wing opponents have conflated free markets with pro-business intervention, libertarians’ right-wing opponents have done all they can to foster precisely this confusion; for there is a widespread (though again not universal) tendency for conservatives to cloak corporatist policies in free-market rhetoric. This is how conservative politicians in their presumptuous Adam Smith neckties have managed to get themselves perceived—perhaps have even managed to perceive themselves—as proponents of tax cuts, spending cuts, and unhampered competition despite endlessly raising taxes, raising spending, and promoting government-business partnerships.

Consider the conservative virtue-term privatization, which has two distinct, indeed opposed, meanings. On the one hand, it can mean returning some service or industry from the monopolistic government sector to the competitive private sector—getting government out of it; this would be the libertarian meaning. On the other hand, it can mean contracting out, i.e., granting to some private firm a monopoly privilege in the provision some service previously provided by government directly. There is nothing free-market about privatization in this latter sense, since the monopoly power is merely transferred from one set of hands to another; this is corporatism, or pro-business intervention, not laissez-faire. (To be sure, there may be competition in the bidding for such monopoly contracts, but competition to establish a legal monopoly is no more genuine market competition than voting—one last time—to establish a dictator is genuine democracy.)

Of these two meanings, the corporatist meaning may actually be older, dating back to fascist economic policies in Nazi Germany;[13] but it was the libertarian meaning that was primarily intended when the term (coined independently, as the reverse of “nationalization”) first achieved widespread usage in recent decades. Yet conservatives have largely co-opted the term, turning it once again toward the corporatist sense.

. . .

Culprit #3: libertarians themselves. Alas, libertarians are not innocent here—which is why the answer to my opening question (as to whether it’s fair to charge libertarians with being apologists for big business) was no and yes rather than a simple no. If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing (though here, as above, there are plenty of honorable exceptions to this tendency). Consider libertarian icon Ayn Rand’s description of big business as a persecuted minority,[14] or the way libertarians defend our free-market health-care system against the alternative of socialized medicine, as though the health care system that prevails in the United States were the product of free competition rather than of systematic government intervention on behalf of insurance companies and the medical establishment at the expense of ordinary people.[15] Or again, note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about corporate libertarians they are not merely confused; they’re responding to a genuine tendency even if they’ve to some extent misunderstood it.

— Roderick Long, Cato Unbound (2008-11-10): Corporations versus the Market; or, Whip Conflation Now

Read the whole thing. It’s great.

The post has already provoked a lot of discussion. Some of it — for example, from Wirkman 2008-11-10, Peter Klein 2008-11-10, and Will Wilkinson 2008-11-10 — is insightful and raises important issues. I’ll also be interested to see the upcoming promised replies from Steven Horwitz, Dean Baker, and the Danny Bonaduce of the Blogosphere. The commentary is a bit much to cover fully here, and is getting hashed out in comments threads, anyway; but I will say that I’m a bit puzzled about this from Will Wilkinson:

But this hints at a thicket of trickier issues. We want a system in which profit-seeking behavior creates the greatest net positive externalities (like continuously increasing the consumer’s share of the cooperative surplus from mundane purchases). But positive spillover maximization within the constraints of a sub-optimal overall system is really desirable, despite the less-than-best incentive structure.

Dude, I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as far as I’m concerned.

In any case, it seems to me that whether or not Wal-Mart and its business practices ought to be regarded with admiration, contempt, or indifference is really an importantly separate question from the question of whether or not Wal-Mart would have a sustainable business model under freed markets. If Wal-Mart as we know it could not exist but for State privileges, that’s reason enough for libertarians to be wary of reflexively defending Wal-Mart’s bidniz practices as examples of the free market at work, even if it’s not yet clear whether or not libertarians ought to find Wal-Mart objectionable (as a matter of thickness from consequences, and it seems to me that Roderick’s point has to do more or less entirely with the simpler point about sustainability, not the more complicated point about how to feel about the State-dependent business in question.

Meanwhile, Jesse Walker also kindly posted a notice over at Hit and Run, which provoked a discussion in which Hit and Run commenters were fully able to live up to their reputation for fair, insightful, and thought-provoking discussion of issues in libertarianism. For example, here’s the top comment in its entirety:

joshua corning | November 10, 2008, 2:14pm | #

If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing

Fuck you Roderick Long.

I mention the Hit and Run thread, though, mainly because it contains the nicest illustration you could possibly hope for of vulgar libertarian reasoning. Roderick wrote:

In a free market, firms would be smaller and less hierarchical, more local and more numerous

To which R. C. Dean replies:

I don’t see why. Just to take one example of a market that is pretty free of overt government intervention of the kind listed above: Bookstores. Most smaller, less hierarchical local bookstores are now history, replaced by Big Box Bookstores and on-line booksellers that have huge inventories and lower prices.

So, you see:

  1. Big box bookstores are more successful than smaller, more localized bookstore in the (unfree, government-regulated, privilege-infused, development machine-driven) actually existing market.

  2. Therefore, big box bookstores will be more successful than smaller, more localized bookstores in the free market.

Far be it from me to bag on Borders and Barnes and Noble — I like them each a lot. But this notion that we can just look at their current market success, under the constrained and distorted conditions of the actually-existing unfree capitalist market, in which their business model is fundamentally dependent on the use of government highways to ship huge piles of books, on the use of the government development machine to seize huge tracts of land and lucrative subsidies to artificially encourage big box retail outlets, and, lest we forget, on government copyright laws that forcibly restrict booksellers to a limited number of centralized, monopoly-priced suppliers; without them, any jackass with a printer or a Kinko’s card could start her own local bookstore for little more than the cost of ink and paper — the notion, I say that we can just look at their current success on the unfree market and immediately infer it to be the result of processes that would continue with no noticeable reduction in a freed market, is desperately in need of a substantive argument that has not been given. Economies of scale only seem to matter here because, as usual, the costs of scale (like, the freed-market cost of consensually acquiring big blocks of contiguous land; like, the freed-market cost of competing with hyperlocal, extremely low-cost competitors that current laws force out of business) are being ignored, and while the rest of the (artificially centralized, subsidized, monopoly-protected) corporate market is assumed to remain fixed just as it is, even though the whole supply chain would in fact be radically altered by freed markets.

See also:

Urban homesteading

So, I have an essay coming up in next month’s Freeman (thanks to the encouragement and editorial efforts of the indefatigable Sheldon Richman). It’s called Scratching By, and the theme is to explain how it’s not the free market, but rather the State, in its role as the invisible fist of corporate capitalism, that creates the material predicament faced by poor folks in American cities. One of the topics that I touched on there, and which I mentioned before in my comments on the South Central Farmers, is government control and planning of inner-city land use. Government regimentation of land squeezes poor people economically; perhaps more importantly, it also keeps them permanently in hock to, and at the mercy of, a select handful of politically-connected developers and slumlords. Last week, Women of Color Blog (2007-11-09) alerted me to the latest example: HUD’s continuing refusal to let New Orleans public housing residents return to their old homes, even two years after the fact. All for their own good, of course, whether or not they happen to think that they are best off living as permanent refugees. The plan is to begin demolishing the homes, now forcibly kept vacant, in order to make room for government redistribution of the land to connected developers for the usual urban renewal projects.

A major human rights crisis exists in New Orleans and the Gulf Coast. It is a crisis that denies the basic rights to life, equality under the law, and social equity to Black, Indigenous, migrant, and working class communities in the region. While this crisis was in existence long before Hurricane Katrina, the policies and actions of the US government and finance capital (i.e. banking, credit, insurance, and development industries) following the Hurricane have seriously exacerbated the crisis.

One of the clearest examples of this crisis is the denial of the right to housing in New Orleans, particularly in the public housing sector. Since the Hurricane, the US government through the Department of Housing and Urban Development (HUD) has denied the vast majority of the residents of public housing the right to return to their homes. Unlike the vast majority of the housing stock in New Orleans, the majority of the public housing units received little to no flood or wind damage from the Hurricane. Yet, as of October 2007 only ¼ of the public housing units have been reopened and reoccupied. The Bush government refuses to reopen the public housing units in New Orleans because it appears intent on destroying the public housing system, demolishing the existing structures, and turning over the properties to private real-estate developers to make profits.

Based on the discriminatory Federal Court ruling issued on Monday, September 10th, all of the major public housing units in New Orleans are now subject to immediate demolition (the latest report from Monday, November 5th is that HUD will attempt to start the demolition on Monday, November 19th. However, this is being challenged by various legal advocates and will be delayed until at least Wednesday, November 28th pending a Federal court hearing). The first site on the schedule for demolition is the Lafitte housing project.

— My Private Casbah 2007-11-09: All Public Housing Units In New Orleans Set To Be Demolished

Now, I’m an anarchist. As such, I’m also intent — far more intent than George W. Bush could ever dream to be — on destroying the so-called public housing system. I hope to destroy it right along with the rest of the statist system of regimentation, rationing, command and control. But, the Department of Bulldozers’ opinions notwithstanding, destroying the system of control is not the same thing as knocking over the homes that the government controls. The hope is to liberate them and allow people to reclaim their lives from the domination of the State and the exploitation of state capitalism.

As far as these particular public housing units are concerned, the proper question to ask is, who rightfully owns the homes that are set to be demolished? In the eyes of the State legal system, that’s the Housing Authority of New Orleans, a quasi-governmental non-profit corporation substantially under the control of its patron, the federal government’s Department of Housing and Urban Development. But neither HANO nor any other creature of the State can be the rightful owner of this or any other property. States are nothing more than massive criminal enterprises; they have no land and no money except what they expropriate from others by force. Their claim to the Lafitte housing project, like all their other claims, is fraudulent, because piracy is not a legitimate means for acquiring title to anything.

So if not HANO, who are the rightful owners? Well, when property has been lost or abandoned, it rightfully belongs to those who find it and put it to use. In the case of New Orleans and its government housing projects, that means that the people who should rightfully be regarded as the owners are not HUD or HANO bureaucrats, but rather the current tenants. Each resident has gained a legitimate ownership interest in her home, and in the land that it is built on, in virtue of occupying and homesteading it. Radical libertarians should recognize, on free market principles, that the federal government’s interventionist efforts to lock poor people out of their own homes and pass the land along to the nearest professional slumlord for development should be regarded as nothing more or less than State-sponsored theft. Specifically, State-sponsored theft in the name of propping up the political-economic class system of landlordism.

The radical implications of the homesteading principle for urban housing extend far beyond New Orleans. In pretty much every major American city, there is a more or less permanent supply of vacant lots, burned-out plants, condemned buildings, and other land which has been held out of use for years, and will continue to be held out of use for years to come. Part of the reason that so much land remains idle is that formal title has often been seized by the city government or by quasi-governmental development corporations, through the use of eminent domain, and the lots are simply abandoned while they await government public works projects or developers willing to buy up the land for large-scale building. In a free market, vacant lots and abandoned buildings should be available for homesteading by anyone willing to do the work of occupying and using them — which emphatically includes poor people in search of housing, a place to set up shop, land to cultivate for food, or for whatever other use they can put it to. It is only government intervention on behalf of state capitalism that keeps these lots shuttered and keeps them locked up in the hands of government bureaucrats and real estate developers; without statism there would be no political process of expropriation, demolition, redistribution, and redevelopment. Free people would be able to establish property rights in abandoned land, and thus provide their own housing, free of landlords and bulldozers, through their own sweat equity.

It’s because of this that I’ve been following the Take Back the Land movement in Miami with a lot of interest and a lot of sympathy. Their first project, the Umoja Village shanty-town (1, 2), was as good an example as you could like of socializing the land through direct action. And now, Max Rameau writes that their new project is to Take Back the Housing:

October 23, 2007 marks one year since the rise of the Umoja Village Shantytown in the Liberty City section of Miami in response to the crisis of gentrification and low income housing. In the year since this “people power” action, much has changed and much more remains the same. Black and other poor communities are ravaged by the crisis of gentrification and low-income housing while the same government which extracts taxes from us, does nothing to alleviate the crisis. One year later, the issue of community control over land remains fundamental in solving the crisis.

As the real estate bubble explodes around us, vacant foreclosed homes litter our communities and speculators choose to hold onto vacant houses and apartments, waiting for the next market swing in order to make their millions. For it’s part, in spite of all the scandal and crisis, Miami-Dade County doggedly maintains an unconscionable and immoral stockpile of vacant public housing units, units which otherwise would shelter some of the 41,000 families languishing on the housing assistance waiting list.

All the while, the homeless population grows, particularly among the under-housed, those not living on the street, but doubling and tripling up in single family homes, including public housing, where the extra families live illegally, endangering the housing security of the entire extended family, sometimes right next door to a boarded up, vacant unit.

We are forced to conclude that Miami-Dade County intentionally leaves units vacant, or tears down public housing all together—exemplified by the HOPE VI funded Scott-Carver public housing project demolition—as a means of fueling the real estate boom. When governments take units of low-income housing off of the market, the value of the remaining privately held units increases, as families scramble to find new living arrangements. This is nothing short of tax financed market manipulation, designed to decrease supply at a time when demand is sky high, resulting in a government sponsored—not market driven—real estate boom.

… In spite of the crisis, scandal and controversy, the reality is that local governments continue to enrich wealthy developers and have intentionally failed to address this crisis in any meaningful way. Neither Miami-Dade County nor the federal government operates based on the interests of poor Black people. As such, we are left with no other option than to provide for the people for whom the government is not providing.

Take Back the Land, again, asserts the right of the Black community to control land in the Black community. In order to provide housing for people, not for profit, this community control over land must now take the form of direct community control over housing.

Consequently, Take Back the Land has initiated the process of moving families and individuals into vacant housing, whether public, foreclosed upon or privately owned and intentionally vacated.

As of this writing, several families have already been moved into housing and several more are desperately awaiting their turn. We will move families and individuals into vacant housing units all across Miami-Dade County.

— Take Back the Land 2007-10-24: Take Back the Housing

A true free market requires an end to what Benjamin Tucker rightly condemned as the land monopoly, and a radical application of the homestead principle, which means that an awful lot of squatter’s rights can and should be recognized as the basis of a just claim to the land. While I disagree with Tucker on some of the specifics of rightful land ownership — for example, I don’t think that rental contracts necessarily constitute abandonment of land — I do agree that absentee landlordism is artificially propped up by a pervasive and unjust system of government intervention on behalf of the rentier class. Abandoned land rightfully belongs to those who can reclaim it through occupancy and use. So three cheers from this libertarian to Take Back the Land, and here’s hoping that counter-economic urban homesteading will spread — throughout Miami, onward to New Orleans, and throughout every housing market currently clutched in the talons of land monopoly and state capitalism.

Further reading:

Sprachkritik: “Privatization”

Left libertarians, like all libertarians, believe that all State control of industry and all State ownership of natural resources should be abolished. In that sense, libertarian Leftists advocate complete and absolute privatization of, well, everything. Governments, or quasi-governmental public monopolies, have no business building or running roads, bridges, railroads, airports, parks, housing, libraries, post offices, television stations, electric lines, power plants, water works, oil rigs, gas pipelines, or anything else of the sort. (Those of us who are anarchists add that governments have no business building or running fire departments, police stations, courts, armies, or anything else of the sort, because governments — which are necessarily coercive and necessarily elitist — have no business existing or doing anything at all.)

It’s hard enough to sell this idea to our fellow Leftists, just on the merits. State Leftists have a long-standing and healthy skepticism towards the more utopian claims that are sometimes made about how businesses might act on the free market; meanwhile, they have a long-standing and very unhealthy naïveté towards the utopian claims that are often made on behalf of government bureaucracies under an electoral form of government. But setting the substantive issues aside, there’s another major roadblock for us to confront, just from the use of language.

There is something called privatization which has been a hot topic in Leftist circles for the past 15-20 years. It has been a big deal in Eastern Europe, in third world countries under the influence of the IMF, and in some cases in the United States, too. Naomi Klein has a new book on the topic, which has attracted some notice. Klein’s book focuses on the role that natural and artificial crises play in establishing the conditions for what she calls privatization. But privatization, as understood by the IMF, the neoliberal governments, and the robber baron corporations, is a very different beast from privatization as understood by free market radicals. What consistent libertarians advocate is the devolution of all wealth to the people who created it, and the reconstruction of all industry on the principle of free association and voluntary mutual exchange. But the IMF and Naomi Klein both seem to agree on the idea that privatization includes reforms like the following:

  • Tax-funded government contracts to corporations like Blackwater or DynCorp for private mercenaries to fight government wars. This has become increasingly popular as a way for the U.S. to wage small and large wars over the past 15 years; I think it was largely pioneered through the U.S. government’s efforts to suppress international free trade in unauthorized drugs, and is currently heavily used by the U.S. in Colombia, the Balkans, and Iraq.

  • Tax-funded government contracts to corporations like Wackenhut for government-funded but privately managed prisons, police forces, firefighters, etc. This has also become increasingly popular in the U.S. over the past 15 years; in the case of prisons, at least, it was largely inspired by the increasing number of people imprisoned by the U.S. government for using unauthorized drugs or selling them to willing customers.

  • Government auctions or sweetheart contracts in which nationalized monopoly firms — oil companies, water works, power companies, and the like — are sold off to corporations, with the profits going into the State treasury, and usually with some form of legally-enforced monopoly left intact after privatization. One of the most notorious cases is the cannibalistic bonanza that Boris Yeltsin and a select class of politically-connected Oligarchs helped themselves to after the implosion of Soviet Communism. Throughout the third world, similar auction or contract schemes are suggested or demanded as a condition for the national government to receive a line of tax-funded credit from the member states of the International Monetary Fund.

  • Yet Another Damn Account schemes for converting government pension systems from a welfare model to a forced savings model, in which workers are forced to put part of their paycheck into a special, government-created retirement account, where it can be invested according to government-crafted formulas in one of a limited number of government-approved investment vehicles offered by a tightly regulated cartel of government-approved uncompetitive investment brokers. This kind of government retirement plan is supposedly the centerpiece of privatization in Pinochet’s Chile, and has repeatedly been advocated by George W. Bush and other Republican politicians in the United States.

Klein and other state Leftists very claim that these government privatization schemes are closely associated with Right-wing authoritarian repression, up to and including secret police, death squads, and beating, torturing, or disappearing innocent people for exercising their rights of free speech or free association in labor unions or dissident groups.

And they are right. Those police state tactics aren’t compatible with any kind of free market, but then, neither are any of the government auctions, government contracting, government loans, and government regulatory schemes that Klein and her comrades present as examples of privatization. They are examples of government-backed corporate kleptocracy. The problem is that the oligarchs, the robber barons, and their hirelings dishonestly present these schemes — one and all of them involving massive government intervention and government plunder from ordinary working people — as if they were free market reforms. And Klein and her comrades usually believe them; the worst sorts of robber baron state capitalism are routinely presented as if they were arguments against the free market, even though pervasive government monopoly, government regulation, government confiscation, government contracting, and government finance have nothing even remotely to do with free markets.

I’d like to suggest that this confusion needs to be exposed, and combated. In order to combat it, we may very well need to mint some new language. As far as I know, privatization was coined by analogy with nationalization; if nationalization was the seizure of industry or resources by government, then privatization was the reversal of that process, devolving the industry or the resources into private hands. It is clear that the kind of government outsourcing and kleptocratic monopolies that Klein et al condemn don’t match up very well with the term. On the other hand, the term has been abused and perverted so long that it may not be very useful to us anymore, either.

So here’s my proposal for linguistic reform. What we advocate is the devolution of state-confiscated wealth and state-confiscated industries back to civil society. In some cases, that might mean transferring an industry or a resource to private proprietorship (if, for example, you can find the person or the people from whom a nationalized factory was originally seized, the just thing to do would be to turn the factory back over to them). But in most cases, it could just as easily mean any number of other ways to devolve property back to the people:

  1. Some resources should be ceded to the joint ownership of those who habitually use them. For example, who should own your neighborhood streets? Answer: you and your neighbors should own the streets that you live on. For the government to seize your tax money and your land and use it to build neighborhood roads, and then to sell them out from under you to some unrelated third party who doesn’t live on them, doesn’t habitually use them, etc., would be theft.

  2. Government industries and lands where an original private owner cannot be found could, and probably should, be devolved to the co-operative ownership of the people who work in them or on them. The factories to the workers; the soil to those who till it.

  3. Some universally-used utilities (water works, regional power companies, perhaps highways) which were created by tax money might be ceded to the joint ownership of all the citizens of the area they serve. (This is somewhat similar to the Czechoslovakian model of privatization, in which government industries were converted into joint-stock companies, and every citizen was given so many shares.)

  4. Some resources (many parks, perhaps) might be ceded to the unorganized public — that is, they would become public property in Roderick’s sense, rather than in the sense of government control.

Now, given the diversity of cases, and all of the different ways in which government might justly devolve property from State control to civil society, privatization is really too limiting a term. So instead let’s call what we want the socialization of the means of production.

As for the IMF / Blackwater model of privatization, again, the word doesn’t fit the situation very well, and we need something new in order to help mark the distinction. Whereas what we want could rightly be called socialization, I think that the government outsourcing, government-backed monopoly capitalism, and government goon squads, might more accurately be described as privateering.

I’m just sayin’.

Update 2007-11-08: Minor revisions for typo fixes, clarity, and to add a link I forgot to add.

Further reading:

Property to the People: the Leftist case for privatization

For those who may be interested, here’s a bit more about my troubles with the public utilities, and a reply to my friend Sergio Méndez’s comments.

A new router was ordered and arrived some days ago (you may have guessed as much from the increased volume of posts), and thanks to Microsoft Corporation decision to exit the wireless market, I managed to get a faster, more secure, and much more reliable wireless LAN (802.11g secured with WPA, nosy) in my house for fire-sale prices.

The water is back on, for the time being at least, and the power surges have—as far as I can tell—stopped. On the other hand, they didn’t stop before they had also fried my cable modem—meaning that for a while I was not only without a router, but not even able to plug my laptop in directly for Internet access for even a limited part of the day. Thanks, tax-supported utilities!

We’re renting the equipment from Comcast, so I took it into their payment center; they swapped it out for a new one with no questions asked and at no charge.

Meanwhile, the road outside of my house is still torn up, a month and a half after they ripped the pavement up.

I say this by way of an entre into replying to Sergio’s comments on my post. He quite rightly prods me about what is said and what is left unsaid in my post:

Charles, with all due respect…Do you actually think it will have been different if the public roads and electricity company was privately owned?

Short answer: yes. Longer answer: it would be a little bit different no matter what, but a lot depends on what is being envisioned as the form of private ownership.

I think that what Sergio has in mind here is something like the wave of IMF-driven privatization schemes for government utilities in Latin American and sub-Saharan Africa, and the Republicans’ idea of a programme for privatization in America (those Republicans, at least, who still harbor faint dreams of being something other than shameless lackeys for the Bush Administration’s economic royalism). I can sympathize with having a lot of misgivings over the idea of privatization if that’s the only kind that’s on offer; and in the present political environment (where brazen Mussolinism passes for free marketeering) it may very well be the only kind that’s likely to happen in the near future. But it’s worth remembering that privatization just means the transfer of businesses and resources from government control to control by individual citizens or groups of them—which does not necessarily mean selling them off in sweetheart deals to large corporations. It could mean something quite different, and something very much more humane and empowering.

I’ll have more to say about that in a moment. But first I want to note an important aspect in which even traditional corporate-driven privatization of utilities would have made a difference to the sort of crap that government providers put us through. One of the arguments that people give all the time when they are arguing for nationalizing utility services is that utilities need to be provided by projects that are accountable to the people, and not to the bottom line; thus, they should be entrusted to the elected government in a liberal democratic polity, and not left to the hard-bitten world of corporate commerce. But this neglects an extremely important point: the degree to which being accountable to the bottom line makes them accountable to the public—at least if the public here is taken to mean you, the individual person having to deal with them, and not some Rousseauian mystification of the the general will. (Since I entirely lack a general will, I’ll leave any questions concerning it to other, more enlightened commentators.)

Don’t get me wrong: corporations can be huge assholes. In this vale of tears, there are people who are foolish, short-sighted, irresponsible, avaricious, or cruel, and no small number of them seem to be in the world of business. I realize all this, and I want a radically different world; the red in my flag means socialism. But the black in my flag means anarchism, and I don’t see any reason to think that people in government bureaucracies would be somehow more angelic than those in corporate bureaucracies, so I think the important question to ask is one of incentives. And if you look at the incentives, the facts are that you, personally, can make a difference on the margin when you are dealing with a private company, whereas you can’t with the government. Think of it this way: who is going to be more accountable to you and more ready to help you with your problems—someone who could lose $60/month right now if you’re unsatisfied, or who has the power to take your money for the service whether you like it or not, who was appointed by some other person, who in turn might lose your one vote amongst the thousands or millions that determine whether or not they will keep their job—if you’re so pissed off that one or two or four years from now the crappy service from your public utilities happens to be the deciding factor for your vote? (And who, by the way, will suffer no marginal loss whatsoever of power or responsibility or income for having lost one vote that they had before….)

Let alone if you happen to live in a Black neighborhood (or a working-class white neighborhood), or if you are a woman, or a member of any number of other groups who are drastically underrepresented in the government and who are often dismissed or marginalized in the political process.

Of course, you might object that these are all reasons for democratic political reform: if it’s so hard for individual citizens (especially those without established political connections) to make any difference to how government-run utilities do business, then why not make politicians more accountable to the citizens, by instituting reforms like public comment periods, shorter election cycles, term limits, citizen recalls, voter initiatives, and so on? Well, fine—and I think these would all be laudable reforms. But if you get to change around the constitution of the government for hypothetical purposes, then I should certainly be able to put forward ideas based on a radically environment in terms of the coordination of businesses, private ownership, and privatization of government resources. If we’re talking about instituting fundamental reforms, then why not also talk about what privatization would be like with fundamental reforms to how services are privatized and who gets chances to buy up the resources?

Imagine what it would be like if privatization meant that you and your neighbors (organized into a neighborhood co-operative) owned the street in front of your house? If privatized parks meant selling land to the Trust for Public Land rather than corporate developers, or simply donating park land as public property (instead of government property: for the difference, see Roderick Long’s essay, In Defense of Public Space)? If privatized water meant that the local government would sell different parts and aspects its water works to a half-dozen local groups, including worker-owned union shops and not-for-profit co-operatives? If privatized electricity meant no more subsidies for huge, centralized fossil fuel plants and selling power wires to local neighborhood associations that work towards putting up small-scale solar energy production from panels on their roofs? That you and your neighbors were the ones who made the decisions about when your road needs to be fixed and who should be hired to fix it? That you can switch power companies if their service causes power surges and they refuse to compensate you for equipment destroyed, or switch water companies if they start turning the water off without warning for hours at a time? If it meant that utilities would be in the control of a vast, bottom-up network of individual people, voluntary associations, and local co-operatives making the decisions about what they want and need?

I can tell you one thing for sure: nobody on Olive St. would be paying for a bunch of assholes who leave our road torn up for a month and a half while they go work on other stuff.

If you want the services that matter to your life to be provided cheaply and reliably, with high quality and under your own control rather than the control of unaccountable bureaucrats, then the answer to Behemoth corporations is not a Leviathan state! The answer is a society based on local autonomy, co-operative production, and mutual aid—that’s cooperative, not coerced, and mutual aid, not the crumbs of tax monies that the sovereign deigns to drop from the table. Freedom makes your life better. And if it is done in a spirit of giving the people back their own, rather than in the spirit of cutting sweetheart deals with big corporate contributors, then it will especially make life better for people who have historically been oppressed and disenfranchised. That’s not actually the primary reason you should support it (your primary reason should be that other people are not your property). But some things are valued both for themselves and for their consequences; and as consequences go, this is as good a reason as any.