privatizing europe:
We are living in difficult times. In Italy privatisation began with the state-owned industrial corporations. Now the Prodi government is carrying it through to essential local public services – to what we consider to be ‘common goods’. In Germany they are still in the process of selling off their infrastructure: energy, railways, telecoms and so on. Everywhere, the views that emerged during the Thatcher and Reagan years in conservative parties have become all too common in parties of the centre-left – in spite of the growing evidence of the failure of privatisation and liberalisation from the standpoint of both consumer satisfaction and public finance efficiency.
(...) Privatisation in the UK has gone furthest. The sell off of industrial corporations such as steel and coal is historical memory. Britain is now engaged in opening up local government, health, education and part of the criminal justice system to private business. Public bodies are to become commissioning organisations, purchasing services from public, private and voluntary sector organisations. They are also being required to create new markets of competing providers where they do not already exist.
(...) In theory at least, governments claim to use liberalisation to stimulate competition and to make it difficult for institutions with a monopoly or near monopoly to fix prices. Hence liberalisation of services is said to benefit the consumer. Privatisation, on the other hand, is the partial or complete transfer of public industries to the private sector. It was used by Margaret Thatcher in its purest form – the outright sale of those industries – to defeat the trade unions.
(...) Italy provides a good example of how the impact of privatisation in reality conflicts with the theoretical claims of liberalisation. Last year, Perluigi Bersani, the minister for economic development during the first Prodi government (June 2006-February 2007), launched a liberalisation programme with the aim of attacking the privileges of monopolistic corporations, including taxi, insurance and pharmaceutical companies and mobile phone companies that impose unreasonable pay-as-you-go tariffs. Bersani’s attempt to protect consumer interests in the private sector will no doubt come up against strong corporate vested interest. The fact that it is necessary illustrates how disastrous were the consequences of the privatisations in the 1990s, when Italy went from being an economy dominated by state monopolies to one dominated by the oligarchies of private companies.
(...) Our experience in Italy illustrates one of several problems with privatisation and liberalisation that are common throughout Europe: the end of a state monopoly has not translated into the realisation of a competitive market. Instead it has produced private oligarchies and massive profits for private companies, with very little going to public authorities, which continue to face dire problems of underfunding and debt. Financial institutions have been the main beneficiaries of the privatisation of infrastructure in Europe. Across the continent it is the same story: a deterioration in those services that were liberalised and a shared experience of huge job cuts and a weakening of trade unions.
(...) The passage from public to private that has taken place in Europe has demonstrated the link between privatisation (of industries, infrastructure and public utilities) and the increasing influence of financial markets on the direction of the economy and society. In many European countries, privatisation has been directly linked to diffused shareholding and ‘popular capitalism’, whereby shares in what were public industries and services are sold on the financial market and bought up partly by private citizens but mostly by international investors such as insurance companies.
(...) The political implications of this need seriously to be discussed; it underlies many of the contradictions facing left-wing parties today. There is only one explanation for the propensity of erstwhile parties of the left to support privatisation: in rejecting their past these ex-socialist and ex-communist parties decided they wished to strike a deal with the new holders of financial power.
(...) Democracy is another fundamental problem that needs to be addressed. Privatisation has gone hand in hand with ‘individualistic’ and authoritarian political ideologies. The EU is witnessing a disastrous lack of civic participation in its policy-making. This has been highlighted in research by Greenwich University’s Public Services International Research Unit (see www.psiru.org), on behalf of the European Federation of Public Service Unions, that is highly critical of the official report of the European Commission on services and liberalisation.