Exploding a myth

Print edition : December 13, 2013
A book that critically evaluates the many alternatives to privatisation practised across the world, which are enough to disprove the there-is-no-alternative theory.

ONE of the myths assiduously propagated by the votaries of the neoliberal ideology is that there is no alternative (‘TINA’) to privatisation. The championing of privatisation, of course, is based on the affirmation that a market-based economic order is superior to any other that has existed or can be thought of. Beneath the economic logic of privatisation, of course, is the more fundamental assertion of its link to capitalism, which is claimed to be the only social order compatible with individual freedom and thus with democracy too.

In the second half of the 20th century, there were many scholarly writings propagating this alleged intimate connection between personal freedom, the market economy and the capitalist order. The theoretical literature of the period, however, had recognised a category of goods —street lighting taken as a typical example—where the pricing principle of the market was not applicable as they were not divisible enough and no individual would bid for them as the benefit would become available to others as well. Such goods were referred to as “public goods” to be provided by the state with costs to be met through taxation. A case for the state was thus recognised in an essentially private enterprise system. The Great Depression had shown that the state also had a “stand by” role, and the theoretical rationale for it was provided by the British economist John Maynard Keynes. How crucial this role has been was seen during the financial meltdown in the United States in 2008. Disciples of free enterprise conveniently set aside these historical events and go on with the gospel of privatisation.

The operational aspect of the contemporary drive for privatisation is the demand that the state must withdraw from the economic sphere, leaving it to the professional players, especially the large corporations (most of them multinational) to provide goods and even services to consumers. However, a little deeper scrutiny is required to decide the roles of the public and the private in the economic sphere. Are “public” and “private” mutually exclusive and collectively exhaustive categories? Consider health services. Apart from government and corporate bodies, there are others that provide health care: in our country, typically missionary or charitable organisations. These need not be the only ones either. There are health services provided by local communities and those referred to as “non-governmental organisations” (NGOs). What is designated “public” too can take different organisational patterns—administrated by a department of the government or a public corporation, for instance, when it comes to a service such as the supply of electricity. With a multiplicity of agencies to deal with, other aspects also must be taken note of, particularly motivation. Here, what distinguishes corporate bodies is that their bottom line is clearly profit. The motivation of public agencies cannot be so sharply identified, and yet it is generally accepted that they too have aims and objectives. Some ambiguity appears unavoidable.

A major contribution of the volume under review is that it recognises this ambiguity and attempts a way out as part of the search for alternatives to privatisation. The contributors to the volume (27 in all) are drawn from many parts of the world. In the first instance they worked together in reviewing the existing literature on arrangements for provision of social services—health services, water and sanitation, and electricity—and commonly designed a procedure of research to identify and evaluate the variety of arrangements for this purpose in Asia, Latin America and Africa. The experimental research design that the volume contains and the vastness and variety of case studies make the work a unique contribution towards research and policy formulation. The contributors modestly state that the work is only a “mapping exercise” to gauge the scope and character of alternatives to privatisation in water supply, health care and electricity supply in different parts of the world.

To remove the ambiguity of what they identify as private and to evaluate the multiplicity of service providers, the contributors suggest that a meaningful criterion is to examine the extent to which the provisioning of the service gets commodified. It will be seen that for-profit bodies such as business corporations would want full commodification of whatever they provide. On the other hand, the state and its agencies may be primarily interested in providing services such as health care not only to individuals who can afford to pay but for the entire population irrespective of the ability to pay. Public agencies may have other and complementary criteria as well. For instance, the state may not want to be seen as a mere service provider, but one that promotes solidarity, that is, horizontal relations between citizens. Or, instead of appearing as an agency delivering services, the state may want the citizens to accept responsibility directly through local self-help groups. To go a step further, the state may accept health, for instance, as a human right (as was stated in the Alma-Ata Declaration of 1978) and that therefore it is its duty to provide health services for all its citizens. The rights-based approach to services has received a further fillip with the General Assembly of the United Nations in 2010 calling upon nations and international agencies to scale up efforts to provide safe, clean, accessible and affordable water and sanitation for all.

If, thus, there are different criteria in the provisioning of services, one must also accept that there can be a multiplicity of agencies for that purpose. The state itself may not be a single agency from this perspective. Departments of the government may directly deal with services, or they may set up what are called “public sector enterprises” for that purpose. Increasingly, there are NGOs as service providers, most of them on a not-for-profit basis. There may be community organisations or self-help groups. Under the circumstances the decision of the contributors of the volume to use profit-making as the objective and commodification as the means in identifying “privatisation” can be accepted as legitimate. A rule of thumb binary classification is, thus, possible: for-profit agencies can be considered as “private” and all not-for-profit agencies can be treated as “alternatives”. The initial task is to document that there are alternatives to privatisation. That is what the rich empirical material in the volume provides.

Cuba’s experience

Nationalisation of health services has been the standard alternative to privatisation. There is apprehension, though, that it will lead to bureaucratisation. Cuba’s experience shows that it need not be the case. After the revolution in 1959, the aim was to establish a public organisation of the health system with free and universal coverage. In 1961, the state took over the entire health services. In the 1970s, a programme of decentralisation was implemented with the establishment of “health areas” in the 14 provinces and 169 municipalities. A decade later “the family physician and nurse” model was introduced with the medical team actually living with communities and visiting homes providing medical care and health education.

In the mid-1990s, the National Council for Health Education was created to promote social participation in health care. By the end of the century, the entire population was covered and Cuba came to have the best health indicators in Latin America although its income level was relatively low.

Vietnam under the communist regime had a somewhat similar national health scheme. China too attempted a national health scheme which, though it did not achieve full coverage, vastly improved the health conditions of the population. The scheme was neglected once the “reforms” set in, but in 2003, a new Cooperative Medical Scheme, partly financed by the government but with contributions by members also, was started covering 800 million rural people. These cannot be treated as patently “leftist” schemes either.

A fairly comprehensive national scheme of health care is being tried out in Iran. During the 1980-88 war with Iraq, a “health houses” scheme was started mainly to take care of people in the sparsely populated rural areas. Health workers were selected from local communities to provide primary health care and serve as a link between the rural population and medical centres and hospitals in urban areas. The system is entirely funded by the national government.

Venezuela, which traditionally depended on the private sector for provision of health services, declared in the new Constitution after Hugo Chavez came to power that health is “a fundamental social right which is an obligation of the state, who will guarantee it as part of the right to life”. Popular clinics were created for primary health care. The medical team from these clinics would also do home visits. Health committees were set up to promote social participation.

Primary health centres (PHC) are widely prevalent in many countries in Asia providing medical care and health education, mainly in the rural areas. Malaysia, Thailand and Sri Lanka are noted for these services. Thailand, indeed, has a universal health care coverage scheme funded by the government. India too has had a primary care system, and a National Rural Health Mission was launched in 2005. Many countries in Latin America have brought health care into the more comprehensive social security system. In Africa, one alternative to privatisation is the community-based health insurance which aims to extend the benefits of insurance to populations that have been excluded from traditional social protection schemes. It is prevalent in Mali, Senegal, Ghana and a few other countries. Some countries like Ghana, Nigeria, Kenya and South Africa have national health insurance schemes based on contributions from members and their employers. African countries are also noted for faith-based agencies that provide medical aid at very concessional rates.

In Asia, water and sanitation are largely the responsibility of the states and are administered mainly by municipal corporations, thus bringing them closer to the people and making popular participation possible. There are instances of public/ non-profit partnerships wherein one or more public sector agencies work with one or more civil society or community-based organisations. A good example is the Tamil Nadu Rural Water Sector Programme. Under it a public sector board works with local communities for joint management of water services, including for irrigation. Similar programmes have been successfully practised in Bangladesh and the Philippines. Even in Hong Kong there have been attempts to prevent the commercialisation of drinking water.

In Latin America, which had a long history of the state accepting responsibility for the provision of basic infrastructure and services, there was a wave of privatisation from the early 1980s. Several private water companies emerged taking advantage of the relatively wealthy population in the urban areas and with ideological and financial support from international agencies.

But in the 1990s social movements such as the Coalition for Water and Life in Bolivia and Uruguay demanded that water be treated as a human right and became very vocal about democracy, accountability and transparency in the management of public services. In 2010, the U.N. agencies concerned declared Uruguay as the only country in Latin America that has achieved near universal access to improved water sources and sanitation. In Caracas (Venezuela) and Brazil, water companies have improved services by democratising decision-making. A worker-controlled water cooperative in Buenos Aires, Argentina, has been heralded by the U.N. as a model that can be replicated elsewhere. The Council of Potable Water in the rural areas of Honduras has been commended as a good example of a successful community-oriented water system.

In Africa, especially in the sub-Saharan countries where most organised efforts to supply drinking water are heavily commercialised, some governments have stepped in to take over the responsibility. There are many municipal water providers, but their structure and functioning have not been properly researched.

The electricity services of Latin America, once in the hands of for-profit companies, are increasingly being provided by various forms of public enterprises with much heterogeneity in terms of inclusion in ownership and managerial structures and diverse degrees of financial and administrative autonomy. Experiments have been taken up in Venezuela, especially in the capital Caracas, to involve citizens in diagnosing problems in their neighbourhood in terms of access to public services, including electricity. Argentina had for a while involved the Light and Power Workers Union as a key player in matters relating to electricity generation and distribution. Also, in many countries there is growing recognition that wind and solar energy projects are more environment-friendly than coal, oil, natural gas, or nuclear plants. Africa has a long way to go as far as electricity is concerned. While two thirds of Africans live in rural areas, only 19 per cent of them have access to electricity and the number of people without electricity is expected to increase over the next two decades. In most countries electricity supplies are fully state-owned. Ghana has a successful Self-Help Electrification Programme. Some countries have community cooperatives that produce and supply electricity in limited neighbourhoods.

In Asia, provision of electricity by governments had a meteoric rise from post-Second World War time to the 1980s, only to be challenged by a strong push for privatisation from the end of that decade. Private companies eagerly take over generation and transmission of electricity where, possibly, their operations are more efficient than those of government departments or public corporations. But they are reluctant, except in urban areas, to take over distribution. The not-for-profit alternatives must be viewed in that context. In Thailand, the government cooperates with a non-profit organisation for the generation of electricity from biogas. In the Philippines, community-oriented electric cooperatives work with government agencies for the distribution of electricity in rural areas. The restructuring of the power sector in Indonesia after the financial crisis of 1997 allows private companies to supply electricity to the national power grid, with transmission and distribution retained by the government.

The volume deals with and critically evaluates many more alternatives to privatisation, enough and more to call the TINA bluff. I strongly recommend it for study and action by those interested.

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