Back to the Market
| DOI | 10.1177/095207678600100304 |
| Date | 01 July 1986 |
| Author | J. R. Shackleton |
| Published date | 01 July 1986 |
| Subject Matter | Articles |
Back
to
the
Market
J.
R.
Shackleton,
Polytechnic
of
Central
London
Abstract
The
recent
explosion
of
interest
in
privatisation
and
deregulation
is
not
a
purely
Thatcherite
or
eveni
purely
British
phenomenon.
This
paper
outlines
the
measures
carried
out
or
currenitly
planned
in
a
number
of
leading
economies,
examines
the
econiomic
rationale
for
these
policies
and
relates
this
to
their
political
popularity.
The
discussion
is
linked
to
a
reconsideration
of
earlier
accounts
of
the
expansion
of
the
State's
involvement
in
the
economy
(particularly
the
received
account
of
the
history
of
nationalisation).
It
also
looks
forward;
is
the
current
episode
merely
a
temporary
reversal
of
the
State's
expanding
role
in
the
economy,
or
is
the
movement
back
towards
the
Market
a
more
fundamental
one?
1.
INTRODUCTION
The
ever-growing
reach
of
policies
of
privatisation
and
deregulation
is
one
of
the
major
political
phenomena
of
the
1980s.
Much
has
been
written
by
economists
and
interested
parties
on
the
Left
and
the
Right,
but
analysis
by
political
scientists
has
so
far
been
rather
limited.
An
attempt
is
made
here
to
examine
the
political
origins
and
context
of
current
policies
as
well
as
their
economic
rationale.
We
begin
by
delineating
our
subject
matter.
Definitions
of
privatisation
vary
considerably
(Shackleton,
1984;
Peacock,
1984;
Kay
and
Thompson,
1986;
Economist,
1985).
I
prefer
a
broad
categorisation,
embracing
various
alternative
means
by
which
the
public
sector
is
exposed
to
market
forces.
Public
attention
has
centred
on
asset
sales
by
nationalised
enterprises,
varying
from
direct
sales
of
peri-
pheral
assets
(British
Rail
hotels)
through
management
buyouts
(National
Freight
Consortium)
to
full-scale
stock
market
flotatibns
(British
Telecom).
The
Govern-
ment
estimates
that
over
40%
of
what
was
state-owned
industry
in
1979
will
be
in
private
hands
by
the
end
of
the
current
Parliament.
Elimination
of
cross-subsidies
and
closures
of
loss-making
mines,
factories
and
other
plant
are
also
forms
of
privatisation
in
that
they
free
resources
for
use
in
the
private
sector.
Then
there
are
the
measures
related
to
the
Welfare
3tate
and
other
publicly-provided
services..
Policies
here
include
cuts
in
publicly-funded
activities,
raising
of
Health
Service
*
This
is
a
revised
version
of
a
paper
delivered
at
the
PSA
Conference,
April
1986.
Public
PolicY
anid
Admninistration
Volume
I
No.
3,
Winter
1986
20
charges,
contracting-out
of
various
NHS
and
local
authority
services.
There
is
also
the
very
significant
expansion
of
council
house
sales
to
tenants.
Deregulation
policies
are
intended
to
reduce
government
intervention
in
parts
of
the
economy
where
the
State
is
not
directly
involved
as
producer
or
consumer,
but
has
instead
laid
down
rules
over
such
matters
as
pricing,
output,
conditions
of
services,
health
and
safety
etc.
Deregulation
involves,
inter
alia,
opening
up
com-
petition
in
areas
where
producers
have
previously
been
protected
(buses
and
other
transport,
telecommunications),
decreasing
the
power
of
institutions
which
have
interfered
with
market
forces
(trade
unions,
shopping
laws,
Wages
Councils)
and
reducing
the
red
tape
which
has
purportedly
inhibited
the
growth
of
small
businesses.
Two
observations
before
we
proceed;
first,
the
British
government's
conversion
to
wholesale
privatisation
is
of
very
recent
origin.
Previous
postwar
Conservative
administrations
engaged
in
very
little
denationalisation
(Steel
in
the
1950s,
Thomas
Cook
and
the
Carlisle
pubs
under
Edward
Heath);
public
spending
rose
as
fast
under
Tory
as
under
Labour
governments,
and
although
there
were
some
famous
deregulatory
episodes
(the
scrapping
of
many
controls
by
Churchill's
incoming
government,
and
the
abolition
of
Resale
Price
Maintenance
under
Macmillan),
by
and
large
Conservative
ministers
were
as
inveterate
meddlers
as
their
Labour
counterparts
-for
instance
in
relation
to
incomes
policy.
Even
in
1979
the
Con-
servative
election
manifesto
made
little
of
privatisation
and
deregulation.
Second,
it
is
very
important
to
make
clear
that
Mrs
Thatcher's
administration
is
not
by
any
means
alone
in
this
new
emphasis.
Privatisation
is
gathering
force
throughout
the
world
(Economist,
1985).
The
West
German
Governmenit
is
con-
templating
selling
Lufthansa,
Japan
its
State
railways,
Canada
its
telecommiluni-
cations
network.
Italy
is
marketing
shares
in
many
of
its
state
enterprises
including
banks,
aerospace
aind
electronics.
In
the
United
States
prisons
and
hospitals
have
been
sold
off
to
the
private
sector,
while
under
President
Reagan
deregulation
has
accelerated
enormously,
with
even
politicians
such
as
Senator
Edward
Kennedy
jumping
on
the
bandwagon
(Crandall,
1983;
Bailey,
1986;
Thackray,
1985).
In
France
the
victory
of
the
Right
has
confirmed
the
trend
towards
privatisation
which
was
already
beginning
in
the
last
months
of
the
Socialist
administration
(Paillet,
1985).
Perhaps
even
more
revealingly
in
view
of
the
earlier
Statist
prefer-
ences
of
nationalist
politicians
and
planners, privatisation
is
taking
place
on
a
large
scale
throughout
the
Third
World
(Kaletsky,
1985;
Wilson,
1984).
Officials
from
China
are
even
reported
to
have
visited
Britain
to
discuss
the
problems
of
privati-
sation.
It
is
evident,
then,
that
although
our
main
focus
is
on
the
UK,
any
examina-
tion
of
privatisation
and
deregulation
cannot
simply
be
confined
to
a
discussion
of
Thatcherism
and
the
peculiarities
of
British
politics.
2.
THE
STATE
AND
THE
ECONOMY
In
order
to
understand
changes
which
are
currently
taking
place
in
the
State's
role
in
the
economy,
we
have
first
to
consider
the
explanations
which
have
been
offered
for
the
high
degree
of
state
intervention
we
find
in
all
nmodern
capitalist
economies.
Public
Policv
and
Administration
Volume
1
N).
3,
Winter
1986
2
1
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