RE: EOpriv: El Salvador and surge in privatization push

[Shann Turnbull <sturnbull@mba1963.hbs.edu>]

If COG wants to take up Vic Thorpe's suggestion below that the problems
of privatization be a topic for our conference next October then I would
like to offer a contribution.  As I stated at our last conference,
distributed control can be more important than distributed
ownership.  My contribution would be to show how distributed control
can be implemented to legitimize distributed ownership as well as showing
how to introduce distributed ownership. 

The UK Prime Minster, Margaret Thatcher, made the UK a role model for
privatization around the world.  However, the failure of their
railways has proved that there are serious flaws in this approach. 
The World Bank and IMF would appear to be blind to the empirical evidence
that has become so blatantly obvious to UK citizens, academics, treasury
officials and the government.  As a result I was commissioned by a
leading UK "think tank", The New Economics foundation, to write
a booklet to suggest an alternative approach for governing social and
public interest activities.  I have just completed A NEW WAY TO
GOVERN that will be made public in February that could provide a basis
for a paper and/or discussion at the Washington D.C. conference.  I
can send a pre-publication version to anyone that is interested in
writing a review for a suitable high profile publication.

I have pasted in below the opening four paragraphs and the closing two
paragraphs.
-----------------------------------------------------------------------------
This pocket book describes a new way for the State to govern
society.  It is based on a new method of governing bureaucracies,
social and regulated enterprises or complex private firms by replacing
command and control hierarchies with network governance.  Network
governance by stakeholders introduces economic, social and political
advantages by providing a basis for institutions to become
self-governing.

Self-governance requires management hierarchies to be transformed into
network organisations governed by the competing interests of strategic
stakeholders.  Strategic stakeholders are the employees, clients and
suppliers on whom all organisations depend for their existence and
survival.  Financiers of enterprises are not included as strategic
stakeholders.  This is because all viable businesses, must by
definition, become self-financing and so become financially independent
in sustaining their existence.  This makes it practical to phase out
investors over time.

Network organisations can be designed to allow economic forces and market
competition to be replaced with social forces and political competition
to improve their economy, efficiency and effectiveness.  It is by
this means that the private self-interest of executives can be harnessed
to further the public good.  The introduction of social forces and
political competition into government departments, social or private
enterprise to improve their self-regulation and self-governance would
enrich democracy.  Inclusive stakeholder constituencies would
replace alienating command and control hierarchies with their ruling
elites.  Stakeholder governance also provides an alternative to
either State-run enterprise or the State regulating privatised or other
public interest companies.

The arguments here complement and develop some of the concepts of
Associative Democracy articulated by Paul Hirst and of The
Mutual State by Ed Mayo and Henrietta Moore (1)  a companion
pocket book in this series. 
--------------------------------------------------------------------------
[Six chapters between these lines]
---------------------------------------------------------------------------
A new way to govern society is also required to enrich democracy to
counter the alienating and colonising forces of globalisation.  The
forces of globalisation could then be used to promote self-reliance,
self-regulation and self-governance.  The size and cost of
government would be reduced and multinational corporations turned into
nested networks of stakeholder governed organisations accountable to
local citizens as proposed in my book, Democratising the Wealth of
Nations (2).

The science of governance (3) provides a basis for displacing the 1991
Nobel Prize wining theory that justified privatisation (4).  It is
the laws of governance that should determine the underlying institutional
structure and functioning of society rather than costs and prices that
drive markets.  The problem is that the role of markets increases
when organisations fail to develop on an ecological basis to allocate
resources on an efficient and sustainable basis.  A new way to
govern society is not just required because the old ways are failing but
to allow the institutions of society to become richly connected to their
host environment to nurture and sustain life on the planet. 
--------------------------------------------------------------------------
Notes
1.
<www.themutualstate.org/pdfs/the_mutual_state.pdf>
2.
<http://cog.kent.edu/lib/turnbull1/turnbull1.html>. 
3. Turnbull, S. 2002 (Forthcoming) 'The Science of Governance',
Corporate Governance: An international review, 10: 4,
October.
4.
<http://almaz.com/nobel/economics/1991a.htlm>

Regards

Shann

At 09:01 PM 20/12/2001, you wrote:
> So, it's Dirty Business as usual
> World Bank and IMF style in El Salvador
> also.
>
> It is interesting to see in this classic report on the impacts of
> 'market
> freedom' policies on a developing economy, the mention of education
> and
> health services.  Now that the first 'privatisation wave' has
> effectively
> smashed public ownership of industrial resources and energy
> infrastructures,
> property transfers to private hands have now got round to the core
> elements
> of human survival (water and health) and civilization (education). 
> With the
> recent accords coming through the WTO on 'trade in services' such
> transfers
> will increase - even in bastions of public intervention in such areas
> as
> Europe.  The result will be further polarization and marginalization
> in
> these essential aspects of human development, as it has been in every
> other
> area so far touched by this process.  A world of elites and drones
> is being
> created amid the rhetoric of 'freedom'.
>
> There is no way back to centralised state control over production
> and
> services for more just human ends.  But the distributed ownership
> response
> does need promotion as a model that can provide distributed
> democratic
> control.  The COG needs to develop this argument and sell it to the
> movement
> for 'globalization from below' - I strongly reject the term
> 'anti-globalization movement'.  It is something that I hope we can
> do in the
> coming year's conference.
>
> Vic Thorpe

Shann Turnbull  Ph.D.

P.O. Box 266 Woollahra, Sydney, Australia, 1350

Ph: +612 9328 7466 office; +612 9327 8487 home; Fax: +612 9327 1497;

Life long E-mail: sturnbull@mba1963.hbs.edu  Alternate:sturnbull@optusnet.com.au

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with other papers & book at
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