Wednesday, September 2, 2009

Privatization versus capitalism

There are several contemporary political debates surrounding the issue of privatization - should defense be privatized (as in Blackwater), should health insurance remain privatized or should it be socialized or nationalized? Should banking be privatized or nationalized?

Often, people point to the obvious corruption of "privatization" programs as nothing more than corporate welfare - private industry soaking taxpayers through sweetheart contracts with the government. Furthermore, there is a certain extent to which some government agencies and programs can be held more accountable since there is a presumption, for most government agencies, that government records are a matter of public record, whereas the records of private companies are not subject to public scrutiny except under certain conditions.

Unfortunately, the only problem with these observations is the association of this kind of crony privatization with capitalism. Expropriation, whether performed by the state directly or outsourced for greater "efficiency" is still expropriation by any other name. The Romans privatized tax collection, a practice called "tax farming", a terrible system of oppression. Efficiency is usually a good thing, but in the production of "bads" - such as taxation - is a bad thing. And vesting the state's activities with the safeguards afforded to private individuals should be frightening - the whole purpose of government transparency, after all, is to keep its powers in check. Privatization, in many instances, is nothing more than a way for the government to circumvent public scrutiny.

I have made the case many times for the complete eradication of the state and its replacement by competitive production of the many services it monopolizes, including even conflict-resolution (law) and security (police/military) services. But I want to be absolutely clear that this "privatization" has nothing in common with the "privatization" in political discourse today, e.g. the "privatization" of security production by Blackwater. This crony privatization retains all the bad features of government production (monopolization, coercive revenue collection) and adds new bad features from the private sector (secrecy, non-accountability, private plunder of public funds). It's a "worst of both worlds" situation. An anarchic society in a state of natural order would be incompatible with the crony privatization of Republicans which is still monopolistic, and coercive. Privatization is not an end in itself - it should be a means to the end of competitive production of goods and services that have been monopolized by the state for some time. The goal is to bring about capitalism, not nepotistic public-private partnerships.

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