Corporate Interests behindNew Public Management

Helene Bank, Special Advisor, Campaign for the Welfare State, Norway

ESF 2010 Istanbul

Response to Crises

”What I really need of you is Market access”– Robert Zoellich, former USTR ( Cancun WTO ministerial 2003)

”I will never rest until all the water of the world is privatised”

– Rebecca Mark, Former CEO of the Multinational Azurix water company (2000)

”Increased competition between private and public sector will strengthen Norway and the private sector through the crisis”

– P.C. Rieber, President of the Norwegian Business Council (2009)

Financial Crisis is not New

Post 1929 – strong financial regulatory regime – policy space for various political systems

Post 1945 – Rebuild production capacity, Keynes model of production gives policy space for Welfare states to develop

1970ies – Financial crisis (market saturation: over-production, unemployment, profitability crisis, loan pushing to the South)

Export the problems to the South and to public sector – Neoliberal, Washington consensus, Thatcherism

1990ies – Financial collapses in the perifery, Real economy could not meet the profit demands of capital

Fundamental changes in global governance – market rule and financial liberalization in an unipolar world

Financial versus Real Capital

020406080

100120140160180

1980 1995 2000 2005 2006

GDP GloballyFinancial valuesTr

illion

s $

World Economy 2007Daily trade, billion US$ (Source IMF)

0

20

40

60

80

100

120

Mrd USD

World Trade 40

GDP World 120

Trade in bonds andstocks….

World Economy 2007Daily trade, billion US$ (Source IMF)

0

1000

2000

3000

4000

5000

6000

Billion US$

World Trade 40

GDP World 120

Trade in bonds andstocks 120

Derivatives andcurrency speculation5510

Financial Crisis was never solved

2007 – 2008 - ? Credit crunch. Financial bubbles, money values were not rooted in real values

– Nationalization of financial sector debt, no regulations. – Counter cyclical spending

– within neoliberal frame of minimum state and market rule

2010 - ? Sovereign debt crisis. – Still unregulated financial institutions speculates against state bonds

and currencies – Post crisis prescriptions equals EC and IMF pre-crisis policies– EC and IMF use the crisis to increase their momentum. – Workers and welfare pay the price, especially in the €-perifery

Capital Response to Financial Crises: EXPAND MARKETS!!!!!!!!

Market access in developing countries Expand what is regarded as markets Appropriation/Prıvatısatıon of commons Financial de-regulations Expand lending (Risks and debt nationalised)

TOOLS: WTO, GATS, IMF, EU/EEA, OECD, G20, NPM …

Expanding market into public sector and the commons

Let market govern! – Priviatization, tendering, outsourcing (1980ies -> )

New Public Management NPM – Stepwise reforms to force and cheat the unions( 1991 -> )

Product-market reformLabour-market reform Financial sector reform (1998->)

G20 …will implement measures ….G20 declaration, annex I, para 13, June 27. 2010

Product, service and labour market reforms in advanced economies, particularly those economies that may have lost some productive capacity during the crisis.

Labour market reforms might include: better targeted unemployment benefits and more effective active labour market policies

It might also include putting in place the right conditions for wage bargaining systems to support employment.

Product and service market reforms might include– strengthening competition in the service sector; – reducing barriers to competition in network industries, – professional services and retail sectors, – encouraging innovation and further reducing the barriers to foreign

competition.

NPM Objectives:

Undermine power of the labour unions

Privatize public assets and create a straw for private companies into public budgets

NPM- IdeologyCompetition as ideology

«Competition is good, both in sports and in the school. It contributes to create winners, not loosers as the leftists argue.»

(Torger Ødegaard (Conservative Party), Minister og Education, Oslo City)

NPM-IdeologyView on the role of Public Services

”The only role for public sector is to ensure education for those who can never become a profittable market, and who become even more marginalized in a society where the rest of its members continue their progress.” OECD

NPM-IdeologyView on Public Workers

Public workers act solely out of self interest- >Citizens needs are secondary- > Skewed vision of public workers

Dis-belief any motivation by - >professional ethics - >professional interest and challenges- >loyalty and solidarity

Respond through -> top-down governance, -> increased controls, -> out-dated management systems from industrial mass production

NPM- A five headed Dragon

Budgeting welfare as expenditures – not investments

Tendering: Compete with wages and work conditions (Pirat sector – social dumping)

Accounting Std (from public (Kameral) to private sector hybrid)– Pension ( favorise Pay as you go)– Property

Bureaucratic conrol regimes Distrust workers and users

Favorise private companies, undermine unions, and create a paradise for consultants (who makes the rules and standards)

New Public Management (NPM) ideology= governance through distrust

Tests and bureaucratic reporting routines Competition: means of creating disciplin Wages as motivating factor, individual and local bargaining

( Carrot and stick) Centralise power, decentralise responsibility Distrust in workers Split sectors into units that can be outsourced ”core

activities”

Preparing for outsourcing/privatizationNPM Measuring and reporting

Purchaser/provider split Explosion in reporting requirements Shift focus from welfare to what can be counted in terms of

work operations Change of language Quality, professionalism and etichs is secondary Private sector accounting, basis for comparison with private

sector Build on distrust and need for top down control Takes time from the real welfare services Increase work load for the public workers and individualise

their struggles for doing a good job

NPM – stepwise privatisationFrom Public Governance to business Examples from Sweden, as presented in a Norwegian green paper (2000)

1. Create market-like systems within the public unit. purchaser/provider split, result units etc.

2. Units financed through entirely public funding: Tendering, eventual dis-allow public unit to participate the tendering.

3. Units are outsourced from the public control, eventually to a government owned company, The establishment can happen through the above steps.

4. The company can be owned by the government, or as a next step, be privatized.

Privatize and Outsource!Example Norway ( independant of colour of government)

IMF advice to 2002 Norwegıan reforms IMF 2007

”Product-market -reform” will strengthen private sector

Increase deregulation and privatization

Reduce the voluminous share of public ownership

Cap any growth in public sector spending

2002: Road construction, Postal Services, Railway, hospitals becomes companies with independent boards. Private sector models for organizing public sector

2005: 10 state units to be governed by private sector accounting

Commend the gvt for its ”product-market reform.

Suggest continued reforms securing increased competition between public and private sector

Continue management reforms to facilitate privatization

From Resistance to Counterpowers

Bumpers – that created so-called ”late reformers”: Strong labour unions Large welfare states Universal rights to welfare services Labour laws - Right to participate

Resistance – from global to local: Broad alliances against privatization and GATS Monitoring big companies Monitoring their ”agents” (IMF, WB, WTO) Global solidarity actions Challenge the neo-liberal paradigm

Counter power and alternatives Bolivia water war

Scotland re-nationalised hospitals

Norway – Unions secures decisive influence in quality development of their municipalities

Toulouse Urban and inter-city transport back to public ownership

East Africa Legal Assembley ( Parliament) took over the WTO

Numerous examples from all over the world

Scotland re-nationalised their health sector

Hospitals and health services 100% public

Abolishment of private sector organisation and management (was not needed to compare with private sector when the development should happen within public sector)

Bulk financing Overall quality goals – indicators linked to to equity in health Budget disciplin and improved fulfilment of political objectives

It all started with labour mobilization and strikes

Norwegian municipalitiesNorwegian municipalities Quality development from within

Quality reform – preconditioned no outsourcing and privatization

3-partite agreement - democratization Research followed development/programme Developement of quality- and process indicators Bottom up governance – nedded exemptions from some

national regulations Proud to be a municipality worker

It started as a union resistance against privatisation

Opportunities of the Crises

Another view on people Democratic control with banking and finance Securing the real economy Restructur production and consumption to social and

environmental sustainablilty A Trading and financial system that re-distributes just and fair

– Private -> public– Rich -> poor– North -> South

Requires active and solidaric social movements North and South that cooperates, and not let themselves into competition by economic power interests

Another view on people

Human beings are social and in solidatity with other human beings

Human beings are interdependant

When social movements gain power, they organise societies in a solidaric way

Therfore: WE must strengthen the citizens, users and employees democratic control

«..nothing of this will happen without an enormous pressure on our politicians in these important times. No polite lobbying, but that peoples take to the streets again and start the types of direct actions that led to the New Deal of Roosevelt in the 1930ies. If not, we will have just superficial changes before everything is back on old tracks.»

Naomi Klein, 26.9.2008.

Welfare State – limited market activities

The visible features– Public Institutions– Budgets and financing through taxation – Universal services/access

The invisible factors behind– Power relations between capital and labour– Capital control– Common goods – are ”Commons”

Result of social struggle Not first priority of labour unions, but capital response to

the alternatives -> The class compromise

Controlling the market – pre crisis

Gold standardCapital control

Credit control Conditionalitieks to investors

Labour laws etc. Substantial public sector

Society with a given distribution of the wealth

The Neoliberal Offensive

Labour laws etc. Substantial public sector

Society with a given distribution of the wealth

Democratise finance, production and markets?

Democratic control Natural ressources and knowledge

Capital controlShield production and societies

Reconstruct prod. and consumption to social and environmental sustainability

Consession rules on companiesAntitrust regulations against monopolisation

Labour law etc.Solidarity with foreign workersDemocratisation/right to participate

Stor offentlig sektorBolverk mot videre Konkurranseutsetting

Local societiesGlobal struggle