Undemocratic and Socially Malign

Ross McKibbin · A4e

Whatever the outcome of the A4e affair, it is a symptom of virtually everything that has gone wrong with British political life since 1979 – and especially of the worst thing, the privatisation of the state and its functions. The decision to hand over so many of the state’s responsibilities – and not only in Britain – to the private sector or voluntary associations or charities has had several terrible consequences. First there is the loss of expertise. The state has built up historically a huge fund of knowledge and experience which is simply not available to voluntary associations, however enthusiastic they are. The result is notorious wherever the Big Society is found. The contracted bodies do the easy bits while passing back the difficult and more important bits, like finding jobs for the unqualified unemployed, back to the state. It is exactly the same as with the PFI projects: the profits are privatised while the risks remain with the taxpayer. That is why the history of the welfare state is the history of the decline of private welfare. It was, among other things, never up to the job.

Such privatisations are also profoundly undemocratic. The state might bully you or its agents be rude, but at least as a citizen you can claim legitimate rights in dealing with it. It stands for a democratic bargain. There is no democratic bargain with the privatised employment agencies or schools. As a citizen you have no legitimate or democratic claims on them. You are a social inferior who wants favours and you are expected to behave appropriately. They are there to reinforce social hierarchies and are more important to those who run them than to those they are supposed to serve. The rhetoric of social engagement, community spirit, all-in participation, is designed to conceal the reality of privatised welfare both from those who practise it and those who are subject to it. That is another reason why an increasingly democratic state once, but no longer, turned its face against private charity.

The privatisation of the state has had a profound effect on the social structure of Britain. From the moment the great privatisations of the Thatcher era occurred a whole new social class was created. They are the bankers, lawyers, consultants and lobbyists who arranged the sale of state assets and simultaneously enriched themselves. The same riches are now being showered on the innumerable private firms to which have been contracted the state’s functions, there now being few assets left to sell, whether it is prisons or employment agencies. There is little or no evidence they do what they do better than the state but they are, nevertheless, paid huge amounts for doing it. There is now a powerful social stratum that has no obvious useful social purpose but is parasitic on the state, its assets and functions, and has almost inexhaustible demands. So powerful, however, is the ideology that justifies all this and so well entrenched is it among all parties that it is impervious to the fact that private social welfare does not work and has socially malign effects. Furthermore, there will always be people naive or ignorant enough to mistake the official purpose of the privatised society, which is to add to the social good, for its actual consequence, which is to make a comparatively small number of people very rich at the expense of the rest of us.


  • 7 March 2012 at 8:16am
    streetsj says:
    This is nonsense on so many levels; from beginning to end. Do you not understand Dr McKibbin that criticism is powerful if it is based on fact and reason and flabbily useless when it issues, prejudiced, from the gut?
    Why is privatisation such a bogeyman? Not everything done by the State needs to be owned by the State. Indeed they would have to own everything to supply fire engines to firemen and luxury toilet tissue to mandarins.
    Privatisation didn't start in 1979 – I remember buying shares in BP in 1977 (or possibly 78) - it started as a process of getting out of state ownership those things that should never have been in it in the first place: airlines, telephone companies, oil companies etc. And to argue that "the state might bully you or its agents be rude, but at least as a citizen you can claim legitimate rights in dealing with it" is meaningless nonsense. With state monopolies abolished you can say stuff it to BT, or I'll pay half to go with easyJet: those are "legitimate rights" to deal with it properly.
    When you get on to agencies that are more naturally monopolies - water, rail etc - the argument becomes more nuanced. To me the greatest argument FOR privatisation is the railways: clearly crassly handled and poorly structured the result is still infinitely better than BR which must have been one of the worst run, most appalling services in the world. And even though gas supply to a domestic dwelling is another obvious monopoly, privatisation has found a way of introducing competition so that British Gas does not have it all its own way, that as a customer you do have some choice and, more importantly, the competition introduced (so long as it is strongly regulated) increases efficiency which feeds through into lower prices.
    There is nothing magical about ownership. The issue comes down to handling the contractors/employees skilfully – the issue though is the same whether you own the enterprise or not; whether it’s building prisons or issuing driving licenses. And lawyers, consultants, bankers, builders, arms dealers have always got rich by playing the State. I would have more confidence that they would be kept in check by a profit seeking private firm than a bunch of civil servants.
    What must remain in the State’s hands is the policy and the strategy. Not that they’re very good at this either, but that is the bit that has to be genuinely democratically accountable. So get over the ownership of the means of production and concentrate your energy and thoughts on the policy and strategy that’s what really matters not the tedious old anti-Thatcher rhetoric.
    More nuance please.

  • 7 March 2012 at 9:49am
    jezza says:
    "The state might bully you or its agents be rude, but at least as a citizen you can claim legitimate rights in dealing with it. It stands for a democratic bargain." What legitimate rights? Waht democratic bargain? You simply cannot argue with a monmopoly whether it is state or private becasue you have no alternatives. The monoploy knows this and can deal with you as it likes. When anything - state or private - has a monopoly on a service, the service provided will be mediocre and uneven. If there is no incentive to improve or innovate then the servcie will remain paralysed and static. A cursory examination of any centrally controlled state over the last hundred years is surely enough proof even for a diehard socialist.

  • 7 March 2012 at 12:43pm
    CMK says:
    There's a pleasingly Pavlovian element to the above two comments. A cogent and well argued critique, by Ross McKibben, of one discrete part of welfare privatisation in the UK elicits two comments that exemplify the ideological stridency and complete ignorance that characterises the harder edges of neo-liberal faith (and it is a faith, immune to empirical evidence).

    One commentator above thinks that the solution to a problem with British Telecom is to take their business to easyJet! To each his own.

    Railways in the UK better now than under British Rail??!!??

    The latest disaster with court interpreting is another example of the deleterious effects of privatisation.

    What neither commentator addresses is that in a privatised market, particularly when it comes to what were formerly public utilities, the market participants don't compete with one another. There is a tacit cartel aided and abetted by the regulator whose first duty is the protection of company profits. Or, they go through the motions of competing, but don't compete in any meaningful sense as they don't want to jeopardise their profits but cutting prices to undercut their 'competitors'. So, in the UK you have a situation where gas and electricity prices are rising inexorably pushing more and more people into fuel poverty and the gas and electricity companies are laughing all the way to the hedge fund.

    What privatisation is fundamentally concerned with is securing private business by hiving off rock solid public functions (such as utilities) which cannot be allowed to fail, for the consequences of such failure would be socially and politically disastrous. Privatisation equals easy guaranteed profits (with the state making good on unexpected losses in a lot of cases) with minimum effort and with the prospect of decades of the same into the future. When understood in that context the rush to privatise every state function makes sense. Privatisation entails, paradoxically, a form of 'protectionism' for private businesses who are, when they secure a former state monoply, insulated from recessions, market collapses and all of the other vissicitudes of capitalism.

    Incidentally, on A4E 'The Guardian' is reporting today of the lavish entertainment ('champagne culture') enjoyed by A4E employees. In one example, there was, apparently, very little change from 2,000 pounds following a night out for TEN employees!!

  • 7 March 2012 at 2:54pm
    streetsj says:
    CMK perhaps you yourself might try some empirical evidence:
    This data shows domestic fuel prices (gas/electricity) over the last 8 years compared with the rest of Europe; with tax and without tax; for large and for small customers.
    See how that fits with your presumptions. Fuel prices have been rising due to quite another capitalist conspiracy theory altogether.
    I don’t think any hedge funds would have benefitted from your advice to go long utilities either.
    And if you think Mckibbin is so cogent perhaps you can explain what obviously puzzled both “jezza” and me: what does “The state might bully you or its agents be rude, but at least as a citizen you can claim legitimate rights in dealing with it. It stands for a democratic bargain.” actually mean?

  • 8 March 2012 at 11:40am
    outofdate says:
    At least we can all agree that the single most important prerequisite for any public service to work is for it not to be run by the British.

  • 8 March 2012 at 2:10pm
    James Alexander says:
    I guess outofdate intends to amuse with wry humour, but after a year being driven out of my skull by the Fred Karno outfit called EDF (private, French, utility provider) nothing is funny any more on this front. My cry for help to the Ombudsmand ran to four pages, detail very boring, but these people couldn't keep a one-cabin automated toilet clean and suppied with paper. The press makes it clear they are notoriously not alone in their privatised incomptence, and that I am not alone in being driven to distraction by it. And yes they bully horribly; in the midst of their year-long accounting cock-up EDF threatened me repeatedly with debt-collectors and loss of credit status. In my case the (toothless) Ombudsman found in my favour, told them what they had to do, so they responded by 'losing' the Ombudsman's letter! Collectively, these companies appear to shrug off the Regulator's fines - so whose paying those, shareholders or us, the captive profit-fodder?

    Lost track of whether some of EDF's French Directorate went to gaol last year - they were certainly having their collars felt. If they get to build any nuclear reactors here, move to Iran, it'll be safer.

    Don't know on which planet streetsj and CMK live and enjoy their for-profit supply of natural monopoly services, but it sure ain't Planet Earth, UK division.

    • 8 March 2012 at 11:54pm
      outofdate says: @ James Alexander
      I was entirely serious, but we can add the French if you like.

    • 9 March 2012 at 9:57am
      James Alexander says: @ outofdate
      Be interesting then to hear your theory of British (British? English?) particualrity spelt out a bit. Once you start admitting other nationalities in response to examples like mine, where will you stop? Can't think its national character driving the current obsession with with sales and selling, the reciprocal indifference (other than the huge output of PR drivel) to competence and service. Surely its the profit motive as gloabal religion.

      Pat on cue, we learn this am that EDF has copped a record fine (guess who'll pay for it) for mis-selling, with three others 'under investigation'.

    • 9 March 2012 at 12:06pm
      outofdate says: @ James Alexander
      Nah, EDF is a blip, a fluke, incompetence remains firmly in English hands. You have to ask who first embraced privatisation, and took it to these extraordinary lengths, and oversees it with such aplomb... There's something in the national soul now resists rational organisation, efficiency, decency and common sense in inverse proportion to the pride the nation ostensibly takes in these values. Probably a kind of death wish, an impatience with the agonisingly slow pace of decline...

    • 9 March 2012 at 3:15pm
      James Alexander says: @ outofdate
      Teah, I see where you are, and I'll agree with you. Maybe its going to be like football, Johnny Foreigner takes enthusiastically to the English game, soon does it better.

  • 9 March 2012 at 2:39pm
    streetsj says:
    The beauty of being a liberal is being free; being free from dogma that insinuates your being so that even the past is transformed.
    EDF is just another company; it is incompetent in all sorts of ways; you can move to someone else - they might be better they might not - or more to the point you must make sure that you keep the money. Then you can ignore their hollow threats; they are not the State, that is the point. If you have the money they have to take you to court where they will lose.
    CMK snorts about the railways being (much, much) worse under BR. His memory is deceiving him if he really thinks it was better. BR was THE standing joke of its time. This story was told to me by Peter Parker himself: read it and remember; and lose your chains of dogmatic censorship.

    • 9 March 2012 at 4:54pm
      James Alexander says: @ streetsj
      Tosh. Just silly to pronounce such pompous insights into the psyche of people you've never met, just silly to label a differing view 'dogmatic censorship'.

      'Sswitching is freedom?' - in your dreams: my bank manager has seen it all, and advises me 'never switch, they're all disasters'. And if you think freedom, 'the beauty of being a liberal', consists in stubbornly sitting on a pile of unpaid bills, threats, and credit blacklistings, waiting for your day in court - then you're an anorak, freedom is the new sad, get a life. For myself, a welcome liberation would be to be to be free of being forced to negotiate the mad mazes of the privatised services and utilities find-the-lady, now you see it now you don't, pricing 'systems'. Those are the chains I could do without, thanks.

      I don't expect any credence from you (why should you give me any, you don't know me - though I do at least give my real name) but I not only lived under and remember BR, I lived under and remember only too well the private railways before it, and the sheer national elation and relief of the great leap forward that followed nationalisation. I agree with you there is nothing magical about ownership. Most of the rage that is spluttered about BR, including yours, is fable and urban myth; and it's hard to differentiate what should be credited to models of ownership and management, and what to technical advances. (Railway coffee is better than it wsas because the machines are better, not because of privatisation.) The big issues are subsidies and fares, and to think that all has not been progress on those front since privatisation is not, I hope, 'dogmatic censorship'. Nor perhaps would references to track maintenace standards, eh? Its all too clear there which organisation knew how to run a railway, and which didn't!

      No. For me a great new lease of freedom would be a return to paying for the necessary services and utilities of civilsed society at simple, standard, common rates, by the mile, the KwH, by the minute, the litre, etc, without all the lying, juvenile, screeching PR bollocks about 'deals' that I know I'm on the losing
      end of. I lived half my life under that dispensation, and it worked. It was better, believe me, fairer, left everybody freer to pay attention to real life. It decreased anxiety.

      And if anything got really objectionable, if I was badly treated, I got further, quicker, more change, by taking it to my MP, who was more accountable, needed my good opinion more than your bored pen-pushing Ombudsman. I think that's what McKibbon may be on about.

    • 9 March 2012 at 8:50pm
      streetsj says: @ James Alexander
      My name is Streets. J Streets.
      I welcome choice, even if sometimes it's a bore having to exercise it.
      Like voting.

    • 10 March 2012 at 2:47pm
      outofdate says: @ streetsj
      You can't se--- Oh, maybe you really do. See, I'd agree with you for example that preventing parents from sending their kids to any school they bloody well like is fascism, and worse, meddling. But where, my dear good fellow, is the choice if my area happens to be policed by, say, Rentokil (who really do have a security arm)? You want I should move house if I think they're a bit too enthusiastic about living up to their name? Fine, I move house. New area's policed by DerangedChristiansProFor and entails a 17-hour commute. Still, it's near shops. Trouble is, I can only get gas from Tievin Swaine. Well, move again, life's a veritable smorgasbord of choice from start to finish...

      Or in short, you live in Cloud Cuckoo Land.

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