PRIVATIZATION": THATCHERITE PANACEA
Baldwin, Marc
LONDON-Selling state-owned industries has become a policy throughout the world. In Britain, "privatization" is nothing less than a bid for a new Conservative hegemony. By looking at three...
...With Thatcher's "dissatisfaction" rating at 67 percent this winter, the policy is a case study in Thatcherite failure...
...Presumably the motive force for economic recovery will be domestic investment...
...they have attempted in some cases to put them into the hands of workers, to provide direct education in the virtues of stock ownership while making renationalization more problematic...
...Increased reliance on the vagaries of the market to control wage levels under recession conditions has allowed the Thatcher regime to avoid directly confronting the labor movement...
...Patrick Dunleavy, "Voting and the Electorate," in H. Drucker, P Dunleavy, A. Gamble, and G. Peele, Developments in British Politics (New York: Macmillan, 1985), p. 54...
...The NFC acquired Merchants Home Delivery of Los Angeles for £14 million and has set up household removals joint ventures in Australia, Hong Kong, and Singapore...
...Surprisingly, little explicitly anti-union legislation has 283 been proposed...
...By avoiding incomes policies and by privatizing, Thatcher assures that unions face a multiplicity of troubles in troubled times...
...Samuel Brittan, "The Politics and Economics of Privatization," The Political Quarterly 55 (April–June 1984), pp...
...In the absence of targeted state investment, reliance on the privatized companies to invest in Britain has merely encouraged, as in the NFC case, further capital flight, and disinvestment from manufacturing...
...The final stumbling block of privatization and Thatcherite hegemony is widening wage differentials...
...Thatcher's economic policy—deflation and supplyside attacks on regulations and unions—leads to denationalization and contracting out of services as a way of depoliticizing production decisions...
...These initiatives represented explicit acknowledgment of the social nature of production...
...Ultimately what holds together the disparate elements of the privatization policy—liberalization, asset sales, contracting out, vouchers, fees for use—is their label...
...White-collar employees are the dominant shareholders so that from the start wage differentials have been reinforced by stock ownership differentials...
...In the case of NFC, worker/shareholders compose 55 percent of the workforce and own 83 percent of the company's shares...
...Rather, wages tend more closely to reflect market pressures...
...The parcels division will see considerable "restructuring": "This includes chopping 800 jobs and closing depots at Roadline division...
...But also important for the project's outcome will be the negative lessons of the privatized companies...
...At present, the strategy is to stress the long-term perspective of monetarism, namely, that the economy takes time to transform...
...Making the modern dinosaur extinct," Economist, February 23,1985, pp...
...What these efforts reflect is minimal structural change to promote Conservative hegemony...
...Nevertheless, there remains in Britain general commitment to full employment, the welfare state, and mild corporatism...
...Sir Peter Thompson, executive chairman, has added performance bonuses to existing differences so that management who met or exceeded performance targets got bonuses of up to 40 percent of pay in 1984...
...They also show no concern for egalitarian internal distribution of stock nor for changes in management structure...
...Privatization also plays a direct role in weakening the base of the Labour party...
...It is interesting to note that not all asset sales will be focused on individual investors...
...It is a classic management buy-out...
...109-128...
...3 The assistant editor of the Financial Times has even advocated giving away the stock of public corporations.' Sales of council houses and stock to smallholders expand the social base to which Conservative party rhetoric can appeal and make renationalization politically difficult...
...Only one-third of Cable & Wireless shares are preplaced with institutions as against 61 percent when British Telecom was floated...
...z Obviously, if the public sector is highly unionized and the base of the Labour party has shifted toward this sector, privatization will have electoral payoffs for the Tories...
...There were fewer than thirty profit-sharing schemes when Thatcher came to power...
...For example, British Telecom sales included a "loyalty bonus" payable to those who held their shares for three years or more, a one-to-one share issue drawn from the government's remaining 49.8 percent holding .3 Future sales promise to be even more heavily weighted toward enlarging the pool of individual stockholders...
...A few shares of stock are not much incentive to vote Tory in the face of enormous income disparities, unemployment, and capital flight...
...That failure is apparent in three elements of the NFC "success" story...
...II "PRIVATIZATION" IN ALL ITS FORMS Consistently lim its the role of government in production and wage arrangements...
...To win a competitive advantage, NFC has been cutting out fat and weak spots: its redundancy costs topped £5 million in 1982 and 1983 and £2 million last year...
...Finally, privatization embodies Thatcher's ideological vision and alters the socioeconomic landscape to support that vision...
...72-74...
...Denationalization efforts have not only taken asset shares out of government hands...
...In 1980, 90 percent of white-collar and manual workers in nationalized industries were unionized...
...Looking entirely at aggregate economic criteria obscures the deep structural crisis of the economy, as speculative profits mask industrial disaster...
...Sir Peter got £22,200 on top of his £76,000 a year salary through such schemes...
...The NFC plans to double its profits by 1990, but the route is "to invest £520 million . . . about 75 percent of it in Britain and most of the rest in America...
...Thatcher's project will have to contend with this rising unemployment...
...Although employee ownership is not inherently bad, the few British initiatives are being articulated into a recessionary economy with no national industrial policy support...
...75 percent of manual workers and only 39 percent of whitecollar employees in private industry were unionized...
...Thatcher has been turned back by their feeling that she is "selling the family silver...
...III THAT THATCHER INTENDS TO ALTER IRREVOCABLY the political and economic landscape of Britain is apparent...
...Private manufacturers recognized 68 percent and 32 percent respectively.' The second trend is in electoral alignments...
...76-77...
...284 In February 1985, the Economist opened an article with the declaration, "Britain's National Freight Consortium (NFC) is making free-market economists proud.'" But the article went on to provide a case study in the failure of the free market to address the structural crisis of British capitalism...
...285 Blockade of Hormel's corporate office May 10, 1986...
...Patrick Dunleavy notes that "Labour is becoming (indeed has already become in terms of its MPs) a public-sector and trade-union party, rather than a party oriented towards the working class as a whole...
...Following the bad example of the privatization of British Aerospace in February of 1981, where the number of shareholders fell from the initial 158,000 to 27,000 in ten months due to speculation, the government has pursued a wide range of policies to encourage extended shareholding...
...By looking at three prime goals of the policy—depoliticization of industrial policy, weakening the base of the Labour party, reasserting capitalist ideology—we can better understand the policy and its failure...
...q Notes ' David Thomas, "Unions and Denationalization," Public Money 4 (December 1984), pp...
...Privatization" consistently asserts the value of private over public even when the impact on public welfare is negative or ambiguous...
...Thatcher has rejected not only former Prime Minister Heath's tripartite talks in the National Economic Development Council and Labour's Social Contract, but also the minimal joint economic management fostered by Harold Macmillan in the early 1960s...
...33-36...
...Rather, the invisible hand of tight money has been allowed to do its work...
...Two trends converge...
...But it is also possible that the gap between the highest salaries and those of the majority of workers will be perceived by workers as their common problem...
...Economist, op...
...The international reality of free-market prescriptions is proving too much for many Conservative MPs...
...National Freight keeps on trucking," Economist, February 23,1985, pp...
...The government's legislative anti-union attacks have focused on more peripheral rights...
...The combination of privatization, recession, and limitations on union involvement in politics (banning political and sympathetic strikes, mandatory votes on political funds) adds up to a powerful attack on the Labour opposition...
...Thatcher recently suffered tremendous embarrassment over the sale of Westland Helicopters to the American conglomerate United Technologies, and, within weeks, a Tory revolt against the sale of a British Leyland subsidiary...
...IV BUT THE SECOND TREND EVIDENT IN THE NFC calls that long-term faith into question...
...Union experience has not been across-theboard decline in wages after denationalization...
...It is easy to overemphasize the extent of British postwar consensus around the welfare state...
...Brittan advocates this strategy for the Alliance parties...
...One is the marked predominance of public employees among the unionized...
...Like the rest of Thatcher's monetarism, privatization has nothing to offer the struggling sectors of the British economy...
...Management recognized manual unions in 98 percent of nationalized establishments and whitecollar unions in 94 percent...
...A quarter of the adults in Reagan's America own stock shares, compared with 7 percent in Britain in 1984...
...Philip Stephens, "Individual investors expected to provide half privatization cash," Financial Times, December 9,1985...
...286...
...In keeping with Thatcher's designs: "Heavy television advertising, for example, will be restricted to flotations of companies which are regarded as safe, with predictable profit growth...
...In particular, a look at one of the supposed victories of the Thatcher revolution reveals the incapacity of freemarket nostalgia to confront the structural crisis of the present period...
...This argument is pursued at book length in Dunleavy and Husbands, British Democracy at the Crossroads (London: Allen & Unwin, 1984...
...6 All this fostering of individual stockholding and management buy-outs has hardly been a Tory platform in the past, and the boldness of Thatcher's claims today is a far cry from the defensive attention to the need to raise funds and cut government borrowing that marked the policy's public face in her first government...
...Pay differentials may serve to fragment the workers in privatized industry, promoting infighting rather than solidarity...
...by December 1984 there were 804...
...The other glue that holds privatization together is the minimal structural change intended to make the policy stick...
...The first problematic prescription NFC offers is unemployment...
...That the initiative will fail despite the various precautions is also clear...
...It is this consensus that Margaret Thatcher is attacking with privatization...
...Government projections intend for private investors to provide at least half of the £14.75 billion to be raised through privatization in the next three years...
Vol. 33 • July 1986 • No. 3
