A Privatisation Too Far?

Posted on April 15, 2011

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‘A privatisation too far’. Many would be surprised to know how Margaret Thatcher reportedly viewed the idea of privatising British Rail. Although the Thatcher administration privatised much of the national industrial infrastructure, British Rail was finally sold off by her successor, John Major. The mania for privatisation even saw Britain’s first private prison open its doors in April 1992. A few days later, Kenneth Clarke became Home Secretary, and now as Justice Secretary, he has announced that the Government will move from allowing private companies to open new prisons, to the privatisation of the first public prison – HMP Birmingham.

Making profit must be a primary aim of any successful private company.
Though it might not define its raison d’être as making money, it cannot do anything unless it makes money and must regard this as of an importance at least equal to its other goals. We define mercantile endeavours as efficient if they can lawfully maximise their profits without compromising other key objectives.

Prisons have many objectives. A good prison punishes convicted criminals, deters would-be offenders, and incapacitates the potentially dangerous. Another important aspect of prison life, once called correction (in the days when people still believed that criminal behaviour, rather than being the result of some unfortunate medical condition which ought to evoke our sympathy, was morally delinquent, and that individuals could be held responsible for it), is now known as ‘rehabilitation’. Making profit, however, is not even a remote aim of a prison. Even where inmates are subjected to manual labour, prisons will always remain financial black holes which can never be expected to make profits. But no country can do without them, unless it wants to return to the days in which the only choice in punishment was between killing, maiming, or dismembering the offender (or all three!), and indeed even the lean judicial processes involved in this rough kind of justice impose a financial burden on the State which cannot be turned into a money-making exercise. A prison is not a mercantile endeavour, and the most efficient prison is the one which best punishes and corrects criminals, not the one which manages to make (or save) the most money.

Everyone wants the best public services possible at the lowest cost, but when our concept of efficiency is defined in a reductionist manner, solely in terms of mercantile success, rather than being related to the specific aims of the enterprise in question, we end up with services which are both financially inefficient as well as inefficient in respect of their other aims. Few question the fact that privatised railways have turned out far less efficient than their nationalised predecessors, even if efficiency is understood only in its reductionist sense.

Mercantile trade is a good and noble enterprise in itself, but the tendency to view every other enterprise within this framework has a distorting effect on public discourse. Efficiency has come to be narrowly understood in a way which is appropriate to business, but of doubtful applicability to other types of endeavour. Similarly, when our idea of a ‘rational’ decision is one which maximises our material benefits, we can be sure that that our discourse is being haunted by the ghoulish homo economicus who exists nowhere except in the imaginations of economic Darwinians. The danger is that much of life comes to be seen in ‘transactional’ terms proper to the world of business only.

We have already seen the effects of this distorted logic on our railways. Fortunately we were spared the sorrow of seeing what it might do to our ancient forests, or should I say to our ancient ‘investment opportunities in the timber industry’. The effects of privatisation on prisons we are yet to see.

A proper understanding of the principle of subsidiarity is critically important for good governance. Subsidiarity is often wrongly thought to be about pushing services down to the lowest level on which they can possibly be adequately performed. Yet the important thing is not so much that the task be performed by the lowest possible agent, but by the appropriate agent. Some things are not private, local, or even regional concerns, but are of concern to the entire nation, and are vital for the protection of the common good, such as armed forces or prisons. No-one likes a ‘nanny State’, whether it comes in the form of a State which covets industrial power, gives birth to a sprawling and useless bureaucracy, or meddles in the social affairs of citizens.

But for all this the State does have a proper role. It is not evil, and there are some tasks it not only can perform, but ought to perform.

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