The state, markets and the private sector

Colleagues,

I am just back from a short trip to meet with colleagues allied to a GFTU project I am currently managing and our meeting was hosted by project partners at Toulouse Business School. More details of the project are here: http://tinyurl.com/bwo4e32

On the flight to Toulouse I was struck by the symmetry of two articles in Sunday’s Observer which posed fundamental questions around the role of the state as a guarantor of fundamental safeguards of, first, our civil freedoms and second, our basic needs.

The first article (http://tinyurl.com/73bo3qg) focuses on the concern of the Independent Police Complaints Commission (IPCC) on its current inability to fully investigate the role of a private sector employee, when engaged in security or policing activity, and there is an allegation of misconduct.

Naturally the subtext of this concern is the rapidly expanding grasp of the private sector across all aspects of the UK’s criminal justice system (police, prisons, probation, immigration detention, border controls etc etc). As the article states:

The Independent Police Complaints Commission – responsible for investigating deaths in custody, public complaints and allegations of wrongdoing – wants the power to investigate all staff who carry out police duties in a move to preserve public confidence in the service. At the moment the IPCC has no automatic power to interview or discipline private staff, even if misconduct or individual failures contribute to a death.

Deborah Glass, deputy chair of the IPCC, told the Observer: "We believe it is vital for public confidence that all those who perform police-like functions and powers are subject to independent oversight.

"It cannot be right for someone doing the same job as a police officer not to fall within the IPCC's remit simply because the police have contracted the job to a private company. But any change in this area requires a change in the IPCC's powers. We have told the Home Office that we believe these powers are necessary, indeed crucial."

Why then is the Home Office dragging its feet in extending this crucial entitlement to the IPPC? Why, as the private sector inches closer to taking on frontline policing roles, would the government allow an essential feature of the state to occupy a privileged vacuum wherever its operations were conducted by the private sector?

The rationale for this must lay centrally in the Coalition’s strategy to open core areas of public sector service delivery to the market. The article also, rightly, underlines a concern of the prominence of ex-public officials in the network of private sector companies across the criminal justice sector.

The theoretical and practical overlap arises with an article by Will Hutton (http://tinyurl.com/73bo3qg) where he argues in favour of the principled position of the Argentinian government in nationalising a Spanish-owned gas and oil company that the Argentine state had previously privatised. The reason for this intervention (an echo of Chavez) was the imminent sale of the company, YPF – owned by the Spanish Repsol , to the Chinese state-owned company Sinopec. The rationale for the government’s intervention, Hutton argues, is the state’s ultimate right, and I would argue its essential role, to safeguard national interests where a purely market-based approach might conflict with the basic needs of its citizens. As Hutton argues:

For too long, companies and the rich worldwide, egged on by American Republicans and British Tories, have shamelessly exploited the proposition that there is only one proper relationship between them and society: they do what they want on their own terms. And society must accept this because it is the sole route to "wealth generation". Capital exists above state and society.

Fernández's actions, however clumsy and unfair in their execution, are part of a growing worldwide reaction to the excesses that this proposition has brought. Repsol does not, and did not, have a God-given right to sell control in YPF to whomever it pleases while Argentina's interests can go hang. It exists in a symbiotic relationship with the society in which it trades. The right to trade and to own are privileges that come with reciprocal obligations as the Ownership Commission, which I chaired, argued earlier this year. They cannot exist in a vacuum because companies' actions have profound effects.

Moreover, companies, especially energy companies, need public agencies to help mitigate the risk of undertaking huge investments in a world where the future is unknowable. Across the globe, business and the rich insist on denying these elementary truths. Now they are reaping the whirlwind as a hostile reaction gathers pace worldwide. Capitalism's self-appointed custodians have become its worst enemies.

Hutton concludes by turning his spotlight on the UK and asks rhetorically what the implications of the Argentinian adventure should mean for British governance as it relates to the market, the state and the private sector:

Labour leader Ed Miliband was roundly and universally criticised as a leftist innocent just seven months ago when he differentiated between good and bad capitalism; now he looks extraordinarily prescient.

If more of his party – especially the shadow cabinet – would rally to his cause, there is a phenomenal political opportunity. The mood is changing. It needs to be channelled: the creation of a new and different compact with business, finance and the rich. It is what electorates across the world want to see. President Fernández, in her gauche way, has tapped into a global mood.

Whilst the essential thrust of Hutton’s argument is to welcomed, we need more than the Labour Party as the advocate of this proposed new compact: the legacy of New Labour (and of Miliband’s role within it) is far too closely associated with turbo-charging the Thatcherite neo-liberal assumption that market should reign supreme, that regulation should be of the ‘light touch’ variety and ultimately, that the private sector was just as reliable, if not moreseo, as the public when providing public services and providing for the essential utilities that we all need and rely on.

Plenty to think, and worry about, here. As ever questions/comments are welcome.

Ian