The neoliberal assault on the public sector
The offensive against the public sector and social services has become universal and worldwide. This is not only an attack on the notion of public property in a 'public sector'. It is also the motor behind a wrenching change in the way societies meet human needs. Because this change operates at such deep levels, it has been difficult for the labour movement to mount a counterattack. Maxime Durand Capitalism in the post-war period developed - and increased its productivity and economic performance - in a very specific context, in which the extension of the public sector and social services was seen
To understand this, a distinction must be made between social services (health, education and so on), infrastructure or networked public services (energy, transportation, the post office and telecommunications), and public sector industries (national banks, mines, etc.). Also to be taken into account are the differences between countries, for example between the United States and Europe, or between imperialist and Third World countries.
In one way, these services still represent the realisation of dreams of millions of workers, won only after long and difficult social struggles. However, at the same time, for most of the post-war period, the public sector has served as a source of stability and legitimacy for capitalism. A model under attack
The welfare state, public services, and full employment were the global solution to the crisis that began with the Great Depression of the 1930s and led to fascism and world war. They were also a response to the revolutionary upsurge embodied in the Soviet Union and China, and a wave of potentially revolutionary social movements in Europe and Japan. These solutions later buttressed a period of astonishing dynamism for capital, despite, or perhaps because of, the numerous regulatory mechanisms with which the market was now fettered. Theoreticians of this model concluded that capitalism, organised in this manner, could overcome the contradiction between the unceasing 2 International Viewpoint #296
THE CHOICE
IS YOURS then your doctor says you need a blood test, you can go public or private -
If you go to a hospital lab, your Medicare dollars circulate in the public hospital system where they're needed.
USE YOUR UNIONIZED HOSPITAL LABS!
If you use a private lab, your Medicare dollars are used to boost profits and search for maximum profits and the need to expand markets to absorb a rapidly growing production.
The public sector, broadly defined, therefore fulfilled an economic function. Suddenly, its results allowed capital to claim a new legitimacy. The system could now claim (though not without opposition) that it could prevent any future crises, that it could guarantee jobs for all, a highquality social safety net, and a rapid growth in purchasing power.
The neoliberal offensive represents a total reversal of this system - and a concerted effort to discredit the previous model.
In France, this backsliding to the situation existing 50 years ago has challenged every gain won at the end of the Second World War: the minimum wage, social security, collective bargaining, and nationalisation. A widespread attack
These reversals are the result of a combination of three larger, interconnected tendencies. First of all, at the economic level, the quick-fix solutions of the postwar period are finally running out of steam, thus bringing to an end the long wave of post-war economic expansion.
For example, once social spending in a particular field becomes autonomous from a purely market-oriented logic, it can grow to the point where it no longer boosts demand, but rather is an "excessive" pressure on profitability.
Secondlv. capital's offensive leads to a change in the relationship of social forces. both at the domestic and international levels. In domestic politics, the depth of the crisis discredits social democratic policy, which in any case is being applied in an increasingly timid fashion.
Meanwhile, the collapse of the bureaucratic regimes in Central and Eastern Europe contributes to the decline of even the notion of any real alternative, and increases global pressures, particularly in the Third World.
The third tendency is globalisation, which facilitates ideological pressure world-wide, and increases the ferocity of the attack on most social gains. In the public service sector, large multinational groups have been created that have been granted a certain autonomy in relation to national states, and which are able to position themselves to pursue their own interests without interference, usually in the form of privatisation, or an "opening" to private capital investment.
While differences obviously exist
among economic sectors and among nation states, the neoliberal attack has assumed universal proportions. Indeed, the similarities are striking between the arguments used to advance neoliberalism and its various strategies in the different countries. In Mexico, the telephone privatisation and the reorganisation of the (shoddy) pension system into a myriad of competing private pension funds was undertaken based on the same logic used in Europe. By a sort of "combined and uneven development", it is in the countries of the Third World that the neoliberal project finds its most radical expression. The social budget is constantly reduced to meet certain pre-established "norms", be it for the required prepayments of the public debt or for servicing the debt.
This universalism is also embodied at the organisational level. For example, IMF experts turn out structural adjustment plans from the same mould throughout the world. The OECD has been assigned the task of overseeing the construction of fiscal systems in Eastern Europe. Finally, the World Bank has produced a report on retirement and social security, codifying the transition from state programs to capitalised pension funds for the entire planet. A market offensive
What do old age pensions and the price of a stamp have in common? Essentially, both services are made available in a relatively socialised manner. Social security pensions were a way of separating the accumulation of funds for old age from individual savings and organising a kind of social solidarity between those who could work and those who could not. It was society as a whole (and not an insurance company that guaranteed that those who paid their social security deduction today would in the future receive a retirement pension, following certain rules which were not solely individual. The price of a stamp has been fixed in a similar socialised manner: the fundamental principal of universal pricing means that it costs the same to send a letter from New York to Alaska or to the other side of the street. The price of the service is not proportional to its individual cost.
These socialised services reduce the influence of market laws for goods and services. The neoliberal offensive, on the other hand, aims to eliminate this social characteristic and implement the full rule of a free market in every realm. It is not only the property forms in the public sector here that are in question, but more fundamentally, the way in which social needs will be met in the future. Liberalisation means individualising the supply of goods and services. The neoliberal argument
The neoliberal offensive is partially based on supposedly objective arguments: the ongoing process of change will make traditional public services obsolete; demand for such services will be so diversified that it will not be possible to base service on standardised deductions; on the supply side, technological change will make possıble a different, more flexible organisation of service and supply networks, in which private initiative can play a vital role. And so on.
It is true that these changes make it possible to transfer to the private sector those elements of the public sector that can best stand on their own and which are most profitable. The corresponding tendency is to split the public sector into management of the infrastructure and the utilisation of the network in question.
However, even if such a reorganisation could be viable, this in no way means that such changes are necessary. This distinction between technological potential and actual necessity is a key point in the
The neoliberals' second "objective" argument involves efficiency. In certain circumstances, where the public sector functions especially poorly (the traditional example given is the Italian postal service) it is difficult to oppose a privatisation process that is supposed to redress all the problems. However, the evidence here is misleading. A subtle shift often arises in the definition of efficiency, once the public service in question has been eliminated. A private enterprise that focuses on protitability will thus be considered more "efficient" than a public service that covers an entire territory. In other words, the "superior" private sector provider only selectively satisfies social needs.
The claims of the private sector must therefore be considered from the standpoint of results, not profits. In fact, several examples already illustrate how privatisation falls short of even very generous criteria of efficiency. What is the logic in carving up British Rail? Privatisation based on that model has been taken to its absurd conclusions with the creation of seven different railway companies in Luxembourg alone. Global pressures
According to one popular argument, globalisation will make supplying public services at the national level practically impossible. To be competitive and to meet the new world trade norms, it will be necessary to squeeze the public sector to virtually nothing. This mostly ideological argument relies on incomplete reasoning. Its proponents end only by stating that the international opening is in itself incompatible with the existence of strong social services. But they cannot explain why European unification presupposes, 1n itself, the privatisation of public services and of whole branches of the social security system. In reality, the pressure on social services comes not from globalisation as such, but from the deregulation that accompanies it.
Air transportation is the only example of a public sector that has been objectively globalised, in the sense of bringing private contents resisting privatisation
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The neoliberal assault on the public sector
• Maxime Durand
6
Telecom reform in the Ill World
• Vickramabahu Karunarathne europe
5 German student protests
• Manuel Kellner
8 Italy: Rifondazione and the budget
• Franco Turigliatto
10 France: the feminisation of underemployment • Myosotis Walner
11 Holland: leaks in the Polder Model
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Greece: George Balafas freed
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Czech Republic: Labour upsurge
• Zdenek Prasil
13 Croatia: Human rights • interview with Helsinki Committee President
14 NATO: Instrument of Pax
Americana • Jean-Louis Michel americas
18 USA: Teamster trouble
• Dianne Feeley
20-23 Mexico:
20 New labour federation• D. La Botz
21 Cardenas takes office • F. Zamora
22 Opposition splits in response to PRI budget • P. Gellert
23 Zapatista communiqué africa
24 Egypt: urban solidarity with peasant protests asia
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Vietnam: labour protests in the export processing sector
• Gerard Greenfield
26 Polynesia: Fallout on French nuclear tests • Gabriel Tetiarahi
28 Turkey: Love, revolution and the dispossessed • Masis Kürkçügul
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South Korean elections: Trade
Union candidate regular features
History:
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Russian Revolution • B. Kagarlitsky
A Sudeten Marxist • E. Scholl
34
Conferences: Moscow meeting on the heritage of Leon Trotsky
35 books
Radical press review
36
NetWorking • Internet action
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* Defending the public sector and state-run companies directly into competition on the same terrain. Only global regulation could have demonstrated the logic of state control in this area, but this became impossible from the moment that many of the central participants (the United States and Britain) imposed significant deregulation policies.
But air transport is, thankfully, an exception. In Europe, at least, competition between public and private enterprise in sectors like health or education is still relatively restricted. And more importantly, the "market" does not have unrestricted access to the physical infrastructure and equipment. A British capitalist would find it difficult to establish a high-speed train company that could compete with France's nationalised rail company SNCF inside France. Capital is mobile, but infrastructure, like institutions, are much less malleable
In other words, no tendency has yet arisen towards the creation of a single global price in the many sectors not directly exposed to competition. The weight of norms and regulations has a strong effect on the opening of borders. Even within a relatively homogenous territory like Europe, considerable differences remain in pricing, fiscal systems, and
Tremendous resistance to these changes has emerged across Europe. In France, one wing of the public debate has targeted the creation of public services "on the French model", which would differ considerably from the European norm under construction. But the public sector strike of November-December 1995, its echoes in neighbouring countries, and other struggles around these questions have all affected the discussions taking place around the margins of the Maastricht Treaty.
One result has been the notion of a "universal service, guaranteeing the tulfilment of social needs, although the actual practice of the European institutions has been much more in an ultra-liberal direction that matches the Treaty in letter and in spirit. This is clearly a response designed to side-track opponents, while streng thening a neoliberal logic with "two tiers": a very narrowly conceived minimum service sector and a field day for private initiative everywhere else. 4 International Viewpoint #296
Counter-arguments
Thirty years ago, most economists agreed there was a theoretical justification for the existence of a public sector. The arguments used then have not lost their weight today. One primary example applies particularly well to the networks (health, transport) built up using public funds. Heavy infrastructure means large investments in upkeep, extension, and modernisation. If these networks are opened to private exploitation, investors will obviously do their best not to shoulder any of these expenses and they will see it as completely natural that such support should come from the national budget.
It would therefore be necessary to create regulations and to define a system of financial obligations, and later to ensure co-ordination between the various private enterprises involved. That is why, even in the most ultra-liberal programs, it is necessary to draft regulations to fulfil different functions. The absurd vision in which regulation is purely an administrative deviation does not hold water.
Whatever mechanisms are decided, a certain number of rules must be laid down and social choices made. Clearly there is a great risk that privatisation will go handin-hand with a short-term vision that not only leads to less concern for safety or quality, but entails burdening the state with the bill for operating expenses.
The second argument pointing out the logical contradictions in the dominant neo-liberal way of thinking. If globalisation is meant to create a real world market, wouldn't the most rational and efficient solution be flexible co-ordination instead of competitive fragmentation? If European unification has as its goal the creation of a unified territory, is the best way to achieve it really by breaking up the existing networks of transportation, of the postal system, and of energy distribution?
Even the Maastricht Treaty speaks explicitly about the "interconnection" of networks, but does not draw the logical conclusions that seem to arise in other sectors. Why not a single European energy policy, a single transportation and telecommunication policy, etc.? What economic entity has ever been created without coordination, inter-linking or unification of different economic networks?
Finally, of course, one can leave aside purely technical considerations and recognise that this is a social choice which cannot simply be deduced from the "primacy of productive forces". . After all, the movement towards liberalisation and privatisation is intimately connected with the denial of and selective response to social needs. This is the central aspect of the debate. Either society believes some needs must be satisfied by social means, by providing some services in a way that is largely unconnected to the purchasing power of the individual, or society makes the opposite choice to meet only those needs that are profitable. It is clear that the second option not only takes for granted social inequality, but accentuates and amplifies it.
But while this argument is justified, it is not enough to convince people. The basic difficulty arises because the public sector and the welfare state are a form of intermediate socialisation that have taken a whole series of needs out of the realm of the pure market, without, however, acknowledging that this logic goes beyond the logic of the market. This intermediate nature explains why the public sector must be detended, but also why such a detence requires outlining a project that goes beyond the market.
Any discussion on social services has to do, finally, with how social needs are met and therefore, at least indirectly, with socialism as our goal.
Between a purely market-based logic and the "free" provision of services as a socialised undertaking, there is a whole gamut of solutions that involve elements of public taxation or budget subsidies. Neoliberalism has as its goal the universal reintroduction of market mechanisms. The socialist alternative aims, on the other hand, to guarantee the satisfaction of basic human needs at a level that will provide a decent standard of living. Our kind of efficiency
This is the sort of project around which struggles over public services should be organised. The basic idea should be that of rights, which moreover are increasingly demanded by the social movements: the right to a job, housing, health care, and education. People don't fight for social services from some abstract attachment to state property over private property, but because social services are vehicles that rationally and universally meet social needs.
Putting our idea of efficiency into practice -an efficiency not measured by short-term profits in specific sectors- can become a general demand for democratic management. Defence of the public sector cannot be a defence of waste or bureaucracy, because if it is, neoliberalism will win. Concretely, this stance implies that the labour and social movements in general take up these demands so that it is not left to the workers in each public sector to defend social services by means of defending their own jobs and working conditions.
But the greatest difficulty, at least in Europe, is to raise universal demands with specific national applicability. Neoliberal policies have enormous similarity from one country to another, even when they are aimed very different situations. But because people tend to fight best for something that already exists, the mistake of the labour movement has often been to feel it could defend a national model or to try and develop a more homogenous and international definition of social services. But the few experiences of international co-ordination, like that of the railway workers, which led to an international day
Students take to the streets of action in 1992, show this is impossible. National traditions make it impossible to create a truly common platform of demands. Think... global?
That brings us back to a broader debate on how to organise social struggles at the national level when international coordination is involved. The latter cannot be conditional on the basis of some future (and uncertain) convergence. Instead of calling for symbolic slogans like a European minimum wage, it would be better to advance the idea of an articulated system of minimum wages that takes into account the uneven development of different countries.
Co-ordination does not absolutely identical practice. A common front of struggle over public services is to a large extent an organisational device. It is not hard to imagine a day of international struggle in defence of social security where each country puts forward its own specific demands, while supporting those of its neighbours.
So far, mobilisations have taken the form of mass rejection of the anti-democratic attacks on public services, but the success in terms of participation in demonstrations has depended on the ability of organisers in each country to base actions on the desire of broad sectors to participate in democratic control, exercised by society as a whole, over the definition and the management of public services. In France, the November-December 1995 public sector strike showed the need for and the potential of such actions. It was a defensive struggle around services, but also an affirmation of aspirations that went deeper than some simple economic adjustments.
The situation in many countries is characterised by a deep ambiguity. On the one hand, the neoliberal offensive proceeds with an inexorable logic that seems to crush everything in its path. But at the same time, its system is fundamentally tragile because it cannot succeed in legitimising itself in the long run.
For the first time in the history of capitalism -at least on this global scalethere is a consciously orchestrated policy of systematic social regression. Capital has clearly stated that full employment and social security have become luxuries it can no longer support, but it has not managed to explain why championed 20 or 30 years ago is no longer possible.
The obstacles are many, the retreats by the labour movement are often enormous, but common decency and good sense are on the side of popular hopes and dreams.
The major concern is no longer how long we will have to suffer neoliberal policies, but how can they be defeated? Such a point of view, the first signs of which are on the horizon, suggests the next step: a new, non-bureaucratic commitment to going beyond the market. *
Germany At the end of October, 600 students at the Justus Liebig University in Giessen presented themselves for a preparatory course. The university administration 'selected' and admitted only one in ten of them! The students' frustration sparked a movement which spread from one uniManuel Kellner
On 27 November, 40,000 students demonstrated in Bonn. On 4 December over 100,000 participated in regional demonstrations, in the capital of each of the Länder (states). As well as about 100 universities, there are signs of mobilisation in some secondary schools
The struggle is exemplary in a number of respects. First of all, it is a unitary and pluralist movement. Secondly, the participants realise that they cannot rest inside the "ivory towers." In Cologne, they distribute leaflets in the town centre, and outside the main factories, explaining their frustrations, and linking their own problems to those of working people, immigrants, and all the other victims of the government's anti-social and neoliberal policies.