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Corporate Interests behind
New Public Management
Helene Bank,
Special Advisor,
Campaign for the Welfare State, Norway
ESF 2010 Istanbul
Response to Crises
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”What I really need of you is Market access”
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”I will never rest until all the water of the world is
privatised”
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Robert Zoellich, former USTR ( Cancun WTO ministerial 2003)
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
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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
Trillions $
Financial versus Real Capital
180
160
140
120
100
80
60
40
20
0
GDP Globally
Financial values
1980
1995
2000
2005
2006
World Economy 2007
Daily trade, billion US$ (Source IMF)
120
100
World Trade 40
80
GDP World 120
60
Trade in bonds and
stocks
….
40
20
0
Mrd USD
World Economy 2007
Daily trade, billion US$ (Source IMF)
6000
World Trade 40
5000
4000
GDP World 120
3000
Trade in bonds and
stocks 120
2000
1000
Derivatives and
currency speculation
5510
0
Billion US$
Financial Crisis was never solved
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2007 – 2008 - ? Credit crunch. Financial bubbles, money values
were not rooted in real values
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Nationalization of financial sector debt, no regulations.
Counter cyclical spending
– within neoliberal frame of minimum state and market rule
2010 - ? Sovereign debt crisis.
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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!!!!!!!!
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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
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Let market govern! – Priviatization, tendering,
outsourcing (1980ies -> )
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New Public Management NPM – Stepwise
reforms to force and cheat the unions( 1991 -> )
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Product-market reform
Labour-market reform
Financial sector reform (1998->)
G20 …will implement measures ….
G20 declaration, annex I, para 13, June 27. 2010
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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
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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:
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Undermine power of the labour unions
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Privatize public assets and create a straw for
private companies into public budgets
NPM- Ideology
Competition 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-Ideology
View 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-Ideology
View on Public Workers
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Public workers act solely out of self interest
- >Citizens needs are secondary
- > Skewed vision of public workers
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Dis-belief any motivation by
- >professional ethics
- >professional interest and challenges
- >loyalty and solidarity
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Respond through
-> top-down governance,
-> increased controls,
-> out-dated management systems from industrial mass production
NPM- A five headed Dragon
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Budgeting welfare as expenditures – not investments
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Tendering: Compete with wages and work conditions
(Pirat sector – social dumping)
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Accounting Std (from public (Kameral) to private sector hybrid)
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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
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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/privatization
NPM Measuring and reporting
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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 privatisation
From 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 2002: Road
reform” will strengthen construction, Postal
private sector
Services, Railway,
hospitals becomes
Increase deregulation companies with
independent boards.
and privatization
Private sector models
for organizing public
Reduce the
sector
voluminous share of
public ownership
2005: 10 state units to
Cap any growth in
public sector
spending
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
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Bolivia water war
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Scotland re-nationalised hospitals
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Norway – Unions secures decisive influence in quality
development of their municipalities
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Toulouse Urban and inter-city transport back to public
ownership
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East Africa Legal Assembley ( Parliament) took over the WTO
Numerous examples from all over the world
Scotland re-nationalised their health sector
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Hospitals and health services 100% public
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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
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It all started with labour mobilization and strikes
Norwegian municipalities
Quality development from within
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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
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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
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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
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Human beings are social and in solidatity with
other human beings
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Human beings are interdependant
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When social movements gain power, they
organise societies in a solidaric way
Therfore: WE must strengthen the citizens,
users and employees democratic control
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«..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
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The visible features
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The invisible factors behind
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Public Institutions
Budgets and financing through taxation
Universal services/access
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
Credit control
Capital control
Labour laws etc.
Conditionalitieks to investors
Society with a given
distribution of the wealth
Gold standard
Substantial public sector
The Neoliberal Offensive
Society with a given
distribution of the wealth
Labour laws etc.
Substantial public sector
Democratise finance,
production and markets?
Reconstruct prod. and
consumption to social and
environmental sustainability
Capital control
Shield production
and societies
Consession rules on companies
Antitrust regulations against
monopolisation
Local societies
Global struggle
Labour law etc.
Solidarity with foreign workers
Democratisation/right to participate
Democratic control
Natural ressources
and knowledge
Stor offentlig sektor
Bolverk mot videre
Konkurranseutsetting