«ANSA Alternatives to Neo-liberalism in Southern Africa The search for Sustainable human development in Southern Africa Editors: Godfrey Kanyenze, ...»
• Social reformers, revolutionaries and other social activists sought to have public services as part of a moral and political campaign to improve the quality of life of the people. The growth of cities and industrialisation generated public health issues brought about by the massive population growth in large-scale settlements and the concomitant problems of waste disposal, sewerage and demand for water. A bulk infrastructure and services were required on a large scale to combat the dreaded rise of disease and plagues in various European countries and there was widespread clamour that these should be provided by public authorities as opposed to private individuals and families.
• Capitalists sought to have public services in order to pass on some of their costs of production onto the state and to ensure that there was an adequate and appropriate supply of workers. From this perspective public services were important for capital accumulation.
2.2 Public services and capital accumulation The society under which mass urbanisation and industrialisation took place was a capitalist one and capitalism requires workers, transport, energy and infrastructure for profit-making and capital accumulation to take place. Without the labour power of workers – their bodies, their health, skill and availability – there can be no production and no profit.30 Throughout the history of capitalism the sphere of reproduction has been a combination of the "private" or family (nuclear and extended) responsibility and the responsibility of public authorities. In the higher levels of urbanisation and industrialisation, the state took on an increased reproductive role through the provision of public services – education, health, transport, sewerage, safety etc. It was seen as a primary responsibility of the state to ensure that capital accumulation could take place by providing public services on a large scale while it was mostly the women in families and communities who continued to provide services such as bringing up children, preparing meals and caring for the sick and the elderly, both domestically or "privately". In many parts of Africa women performed these services of reproduction not only in their immediate families but also in extended families, kinship systems and communities. Because these services were unpaid, capitalism has enjoyed the benefits of cheap labour and the unpaid labour performed by women, which is an important source and perpetuation of the patriarchal oppression of women. But the sphere of reproduction has another aspect to it. Many sections of the public service have always presented opportunities for private investment and profit making in the services themselves.
"Preparing workers" means that they are to be available to work and to carry on working in an appropriate way for the duration of their working lives as being within the sphere of reproduction.
However, since the 1920s imperialist countries, particularly after World War 2 when Keynesian31 economics became consensus, and in the postcolonial world of the 1950s and 1960s, states generally tried to limit the commodification and commercialisation of public services because they were deemed to be a threat to capital accumulation as a whole if too many spaces in public services were opened for profiteering.
Within the public services sphere, this did not mean that the services were provided free of charge. There were always ways in which public authorities could generate revenue to pay for things such as infrastructure, labour costs etc. (i.e. to provide these services in the context of a capitalist system). From national and local taxes and municipal rates, to getting people to pay for what was called "trading services" (e.g. water) and then using this to subsidise services such as sewerage, road works and street-lighting, where individual charges could not be calculated. Public authorities worked on the basis of progressive taxation, cross-subsidisation, price controls, social needs etc. rather than price mechanism or cost recovery as is the case for the buying and selling of other commodities under capitalism.
2.3 Public services in different countries This is a general overview only that takes the world as a uniform, homogeneous whole. In reality, there were important country and regional differences in this general trend. In the rich industrialised countries of the imperialist world, important differences existed after World War 2 between Europe and Japan, where public services and welfare states were the norm, and the USA, where some services, such as electricity, remained private capitalist enterprises (although highly-regulated by public authorities). In the case of the colonies and ex-colonies of the developing world, the provision of public services was often only focused on enclaves around major cities and sea-ports while large sectors of the population still provided services to themselves "privately" through subsistence farming, the domestic education of children, the use of river water and local dams etc. (all on the basis of exploiting the unpaid labour of women and children mostly). Combined with the fact that colonialism and imperialism developed parasitic enclaves of industry and manufacture, the provision of public services was often confined to these enclaves directly linked to the appropriations of the Empire.
John Maynard Keynes published his General Theory of Employment, Interest and Money in 1936, and his ideas of regulated capitalism, grew after the Wall Street crash of 1929 and became economic orthodoxy after World War 2. After the crisis of over-accumulation in the 1960s and ‘70s and the attacks on the welfare state, neo-liberalism and the Washington consensus, carried out through institutions such as the IMF, became the new orthodoxy.
When the waves of anti-colonial struggles, which emerged in the aftermath of World War 2 in Africa and Asia, lead to newly independent states now called the "developing countries", the new governments tried to extend the terrain of the public sector. Alongside attempts to use the newly independent state machinery to promote import substitution, to regulate capital flows and promote national cohesion, the new governments tried to extend public services to rural areas, to new services (such as subsidies for basic food) and to expanding the size of the public administration. Of course these commitments varied from government to government and these attempts were overlaid with internal class and nationality struggles that often interrupted and suffused with the machinations of the Cold War. However, whatever the track record of these governments were, from military dictators to populist nationalists, from social democrats to capitalist roaders, from pro-Washington to proMoscow – the new governments took over the public services model inherited from the colonisers and tried to extend it as services provided by the state.
3. Public services and globalisation
3.1 How public services became "just another economic sector" A fundamental change took place in capitalism since the 1980s. In the 1960s and early 1970s, the capitalist world started experiencing declining profit rates and entered a phase of crisis marked by over-production and over-accumulation. The surpluses generated could not be invested in ways that ensured profitable returns on an expanded scale. Mainstream economists agreed that international markets were saturated and investors were often forced to sit on surplus money without profitable sources for investment. Capitalism sought a way out of this impasse and attempted to restructure social relations internationally in order to return to sustained profitability. This restructuring of the world has come to be called globalisation and its ideology, neo-liberalism (ILRIG has published a series of Booklets called An Alternate View of Globalisation Vol. 1–6 on this matter).
Globalisation sought to return to profitability in two critical ways:
• By opening up money markets and freeing capital flows and allowing individual capitalists to make profits through a plethora of financial instruments across borders
• By investing in areas, which were previously cut off from private investment or were highly regulated by state and public authorities (chiefly public services).
Since the 1980s the public services sector has become a main arena for investment. Some writers have looked at the massive programme under globalisation as a way of opening up public services to private monopoly capitalism, as a new phase of primitive accumulation, of "seizing the global commons" and as a new kind of imperialism called imperialism by dispossession (Harvey 2003) where public services, particularly in developing countries, become a site for private investment and profit repatriation by transnational companies.
Because public services have become an important arena for capital accumulation, states have restructured public services to help capitalists
make profits. The restructuring includes the following:
• Full privatisation
• Outsourcing services
• Public-private partnerships.
Privatisation has been carried out in a number of different ways since it was first introduced by Margaret Thatcher in Britain. In this extreme form in Thatcherite Britain, the state drove through a process of privatising large public utilities such as water, the railways, telecommunications and the national carrier, using sweeteners to make the deals easier for private capitalists, underwriting the deals by providing cover and writing off or taking on the responsibility for the past utilities debt etc. Public-private partnerships (PPPs) have been in vogue since the late 1990s after many major utilities were sold off. PPPs involve mechanisms like the Private Finance Initiative in Britain (where the public hospitals are financed by private capitalists from whom they then go on to rent services) and BuildOperate-Transfer initiatives in South Africa where the state underwrites private toll-roads and then allows the private company to get all the revenue for a certain period of time.
Privatisation was carried out in Africa as a direct result of structural adjustment programmes and with the collaboration of local elites eager to get a share in the sale of public enterprises. Significantly, in the first phase of privatisation in Africa, this kind of privatisation was focused on key enterprises, such as mining, energy and telecommunications that earned profits in international markets.
In Zambia the main focus of the newly neo-liberal state of Frederick Chiluba was the Zambian copper mines, which had been nationalised after independence. The privatisation of the copper mines was driven through as part of a project by a new elite in collusion with international investors.
The bulk of regional revenues in the 1990s were accounted for by a few large transactions in Ghana (Ashanti Goldfields and Consolidated Diamond Mines), South Africa (telecoms, steel, petrochemicals) and Nigeria (selected oil fields).
After the setting up of the WTO in 1995 and the setting up of the General Agreement on Trade in Services (GATS), in particular, the focus has been on privatising water and electricity parastatals i.e. services.
Today throughout Africa, public services have become an arena for French, German, British and, increasingly, South African TNCs to fight for new areas of investment.
Privatisation case studies in Africa Mozambique The privatisation of water in Mozambique was connected to the WB/IMF debt relief programme. In 1999 the country received close to US$3.7 billion in debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. The relief was granted because of the government's reform policies, which included wide-ranging privatisation. Water privatisation centred on the company Saur. Although Saur withdrew in 2002 from the private consortium running water in Mozambique cities, the contract continues. The concession was awarded to Aguas de Mozambique, a joint venture between Saur and Aguas de Portugal (AdP) in 1999, beating competition from Suez and Vivendi. The contract is for the supply of water services to 2.5 million people in the following five cities: Maputo, Beira, Quelimane, Nampula and Pemba. Aguas de Mozambique is 38%-owned by Saur, 32%-owned by AdP and 30%-owned by local investors. For Maputo and Matola the contract is valid for 15 years, whereas for the other cities it will expire after five years. At the beginning of 2002 Saur sold its shares in Aguas de Mocambique to Portugal's Aguas de Portugal public company. In 1999, Saur led a consortium with Aguas de Portugal to take on a concession in Mozambique, but sold their shares to their other European partner, Aguas de Portugal, in 2002. The reasons for Saur's withdrawal have not been made public. Following Saur's withdrawal, AdP was left with a shareholding of 73%.
Mozambique's Mazi group holds the remaining 27% of the shares. Mazi is formed by various entities: the SCI holding belonging to officials of the ruling Frelimo party and headed by former industry minister, Octavio Muthemba; the Fundacao Para o Desenvolvimento da Comunidade headed by Graca Machel; the MG-Mocambique Gestores company of Armando Guebuza and Teodato Hunguana and the Foresta e Turismo (Flotur) of former Renamo opposition leader Raul Domingos.
Tanzania The government of Tanzania has been attempting to privatise the Dar es Salaam Water Supply and Sewerage Authority (DAWASA) since 1999. Subsequently three out of four firms pre-qualified for the tender. Two firms submitted bids but both attached a number of different conditions. After lengthy debate, it was resolved to re-tender with a requirement that the international investor forms a local company with at least 20% of the shares to be held by local investors.
Zimbabwe Two proposed privatisations in Zimbabwe have been abandoned or postponed as a result of multinational companies deciding to withdraw: (1) Biwater, 1999, after extensive negotiation and rumours of corruption, withdrew from a water privatisation project in Zimbabwe on the grounds that local consumers could not afford tariffs that were sufficient to generate an adequate commercial return for the company. According to the then Biwater country manager for Zimbabwe, Richard Whiting, "From a social point of view, these kinds of projects are viable but unfortunately from a private sector point of view they are not," (2), Saur, 1999.