Privatisation in the European Union. Public Enterprise and Integration (original) (raw)

2003, Privatisation in the European Union. Public Enterprise and Integration

This book is ultimately concerned with the transformation of public enterprises in the light of privatisation policies and the process of market integration and, in particular, seeks to assess the future role of public services in the European Union. Public enterprises have been at the heart of economic and social life since the rise of nationalism and the formation of new States during the nineteenth century and they enjoyed their ‘golden age’ between the post war period until the end of the 1970s. Attacks on public enterprises, which had been voiced since their creation, became sustained following the crisis of the 1970s. These attacks were prompted by a host of factors, including the perceived poor performance of the mixed economies during that period, which was compounded by the debt crisis in the 1980s in many developing countries, and the subsequent collapse of centrally planned economies in the 1990s. As a new rhetoric and credo in the Market replaced the post-war faith in the State, there was an assumption within the dominant modes of thinking that a change of ownership from public to private status would release enterprises from the ‘shackles of bureaucracy’ and lead them via the ‘cold winds of market forces’ to economic efficiency. Though this had a powerful influence on key international institutions such as the World Bank and the IMF, this dominant discourse was debated, but not necessarily accepted in all quarters. As is shown in this book, the rhetoric had a patchy influence on EU governments, being important in certain countries at particular moments in time. Moreover, the discourse contained many contradictions, over-simplifications and mistaken assumptions. More recently, in certain World Bank and IMF policy publications, it has been admitted that enthusiasm for pro-market reforms was sometimes total, unquestioning and thus blind, and that a trail of corruption has been left behind following privatisation activity and this must be rectified through the introduction of transparent regulation and good corporate governance practices (as predicted by authors such as Harriss- White and White, 1996 and then demonstrated by Stiglitz, 2002). Part of the weakness of the pro-privatisation rhetoric was a misunderstanding, or at best a gross simplification, of what public enterprises were and why they had been created, or why and how it was that they had emerged by default under a State as ‘entrepreneur in the last resort’. The way in which dominant discourses helped shape attitudes towards public and private enterprises is examined in the first chapter. This is then deconstructed and shown to be riddled with contradictions, prejudices and ideology. A brief, but timely, reassessment of public enterprise history reinforces this argument, drawing attention to the problems of defence, the need for public finance, the lack of private initiative, the existence of market failures and desires to avoid foreign influence amongst others.