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Transcript of Electronic Journal of Sociology Privatisation
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Electronic Journal of Sociology (2003)
ISSN: 1198 3655
Theorising Privatisation: Policy, Network Analysis, and Class
Fran M. [email protected]
Abstract
In the last two decades of the twentieth
century many governments across the world
have displayed an unprecedented attraction
toward policies which encourage and allow
the marketisation of the public sector and the
privatisation of public assets and services.While the financial and social impact of this
policy shift has been empirically documented,
theoretical development regarding possible
underlying causal processes remains in its
infancy. This paper explores current theories
of the policy process of privatisation from a
sociological perspective, and proposes a
potentially useful direction for future policy
analysis.
In the 1980s Australian policy followed other nations (particularly Britain) in participating in
what Hood described as an international policy boom (1994:4) and reversed previous
commitments to a large and healthy public sector. Within the space of a few years, policy
shifted from a reliance on bureaucratic regulation and the use of public enterprise as
mechanisms for national development, to a new focus on cutting government budgets, self-
regulation, de-regulation, competition, privatisation and the marketisation of the public sector.
mailto:[email protected]://www.icaap.org/mailto:[email protected] -
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Evidence of this policy reversal in the Australian context is mounting, with studies
documenting the impact on wages, jobs and conditions (eg. Herd, 1998); on citizenship (eg.
Salvaris, 1995), on accountability and the provision of information to the consumer (eg.
Carter, 1998:17); on the fiscal health of the state (eg. Quiggin, 1996; Walker and Walker,
2000); on welfare (eg. Saunders, 1994; Nevile, 2000); and differentially across the spectrum
of social groups (eg. Langmore ,1987).
Policy Studies and the Policy Process
There have been however, far fewer attempts to analyse this policy reversal, to define its
characteristics, explain its origins, and theorise its global spread. In part, this lacuna is the
consequence of the comparatively recent emergence of the trend, for although privatisation,
commercialisation, and other state-private sector relationships are not new, they have seldom
previously been entered into with such vigour nor been so widespread (see Collyer et al.,
2001). However this theoretical black hole may also stem from problems within policy
studies itself. Despite the central importance of policy to the everyday life of the citizen, to
the structure and functioning of institutions, and to the exchange relations between countries,
the theory of policy has been a peculiarly undeveloped area of scholarship. In particular,
sociology, like anthropology, has in many ways failed to contribute to the study of policy
making and policy processes (for a discussion of the potential role for anthropology, see
Shore and Wright, 1997), though it must be acknowledged that sociology has invested heavily
in exploring the impact of both social and public policy, particularly on vulnerable social
groups.
This sociological deficit in policy studies is reflected in the way privatisation has become
defined in public discourse. Though there remains some contention over the concept (Thynne,
1995:3-4), the prevailing view is of privatisation as an economic or fiscal technique of
government, fundamentally concerned with the transfer ofassets or activities from the public
to the private sector (eg. Domberger and Piggott, 1986:145). While there is much truth to thisdefinition, it remains an extremely narrow and one-dimensional view, with an exclusive focus
on financial transactions and exchanges. More pertinent, at this point, is that this mainstream
definition assumes a particular kind of policy process in operation, in which privatisation has
been a rational, intentional, coherent, policy response to a fiscal problem. In the typology
devised by Dudley and Vidovich, this conception of policy would be akin to the rational
comprehensive model in which the best course of action and the public interest is determined
through a rational, linear, neutral process of collective decision making (1995:16-18).
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The rational perspective also presents policy making as a process which relies upon, and is the
application of, rational techniques such as the gathering of empirical data, the systematic
clarification of aims and objectives, cost-benefit analysis, economic modelling, and impact
simulation. In the policy literature, many documents offer flow charts and diagrams setting
out the stages of privatisation, often beginning with feasibility studies and options papers
and moving through to legislative and organisational changes before the sale process begins
(for an example, see Walshe and Daffern, 1990:90-3). Such analyses often confuse the ideal
case with the actual processes, and assume policy makers will, and have, learned from past
experiences. For example Domberger states that Governments now have sufficient
experience in the sale of public sector assets to avoid unintentional underpricing (1995: 44).
There is also little evidence that policy makers use rational techniques or existing research
evidence when making policy choices (Jansson, 2000:47) particularly in the case of
privatisation (Kay and Thompson, 1986:31; Collyer, 1997; Collyer et al., 2001).
This rational perspective on policy is highly problematic. It is steeped within a positivist
epistemology, proceeding on the premise that there is a readily identifiable problem which
can be addressed through policy (Bacci, 1999:17). Yet this is how privatisation is widely
presented and understood. For instance, at a time when the claims by pro-privatisation
advocates were at their most articulate in Britain, the Financial Secretary to the Treasury
stated The privatisation program is coherent, and well thought out (Moore, 1986:93). Claims
continue to be made that privatisation will address a very diverse range of problems such as
economic inefficiency and lack of innovation in the public sector, political interference in
the management of enterprises, unemployment, trade union power, welfare dependency, big
government, and the high cost of public services - to name just a few. Within the rationalist
perspective on policy, the basis of these claims are rarely questioned. Indeed policy is often
presented as a rational response to market forces or market problems (eg. Bradley and
Neja, 1989:12). Sociologically of course, social and economic problems are not fixed
properties of society but socially constructed, and there is a concern with how only specific
issues are recognised as a problem and placed on the political agenda (Edelman, 1987).
The Politics of Privatisation
Although the orthodox, economic definition of privatisation is virtually hegemonic, other
discipline areas have sought to develop alternative understandings of privatisation. For
example Feigenbaum and Henig (1994), Gormley (1994), and Chamberlin and Jackson (1987)
see privatisation as fundamentally a political phenomenon rather than economic,
administrative, or fiscal. From this perspective, privatisation is a policy strategy used to shift
power between various constituencies, alter the structural capacity of government and its
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responsibilities, realign and restructure decision making and institutions, and/or create new
interest groups and classes (cf. Henig et al., 1988; Samson, 1994:90).
These analyses throw light on the political aspects of the policy process, and generally avoid
many of the pitfalls of the rationalist approach by acknowledging the diverse aims of
government and the range of interest groups that have input into the policy process. In
particular, they avoid the fallacy of assuming policy to be the consequence of a normative
consensus between key individuals, and expressing a shared set of societal goals to which all,
particularly the state, aspire. This normative perspective of the policy process is one that has
come to us from TH Marshalls (1981) conception of the welfare system, in which policy is
the end product of an harmonious interaction between market economy, government and
welfare institutions, each defined by their distinctive value-realm. This normative focus is
extremely limited (Mishra, 1982:106). Without a theory of interest group struggle andcompetition, Marshall cannot explain the dominance of some value positions, and it
problematically assigns values and goals to organisations and institutions. Despite these
faults, the normative approach is prevalent, with many studies presuming that privatisation
policy is selected in order to achieve key goals such as equity, efficiency, reliability and/or
consumer choice (see for example, Wanasinghe, 1991; Waters, 1987; Gormley, 1994:230).
As already stated, an alternative to the consensus approach is to probe deeply into the nature
of the nation state and the policy process. Here it is proposed that policy is a fundamentally
political activity, that politics are not confined to the final, implementation stage of the policy
cycle (Dalton et al., 1996:106,118). Furthermore, the state is itself an arena of political
activity. It is not conceived as a neutral mechanism through which the will of the people is
expressed. Instead government often fails to act in the interests of the people as a whole, may
act in its own interests, and policy outcomes generally accord with the interests of the more
powerful members of society. This allows us to understand why privatisation policies might
be adopted by governments even where rational economic theory suggests it is not always the
best financial or economic solution; why privatisation is used even though the proceeds of a
sale may not cover more than a few years of dividends from the public enterprise; why it is
used even when the newly private firm demands a costly indemnity against previously
incurred risk; and why it is used where the costs of regulating the new company clearly
outweigh tax revenues returned to government.
This political approach acknowledges that power and resources are not equally distributed
across society, and that competition between these groups does not in itself prevent the
concentration of power within segments of society (cf. Bachrach and Baratz, 1977). Instead
power is unevenly distributed, and, despite the democratic processes of government, well
organised groups are able to influence public policy according to their interests (eg. see Dahl,
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1984). When used in empirical studies of privatisation, this theoretical approach is able to
reveal the multitude of interest groups which shape the policy process. For instance Kay and
Thompson found in their study of privatisation in the UK that the most influential interest
group in the decision making process is the senior management of the potentially privatised
enterprise (1986:29), and Gupta reveals that those who gain most from privatisation are the
political leaders, bureaucrats and the newly emergent capitalists (1996:46). Not surprisingly
perhaps, this group of studies tends to be highly critical of government rhetoric and pro-
privatisation discourse, disputing claims of greater cost efficiency, reduced administrative
costs, or a reduction in government outlays (eg. Gupta, 1996:46-7).
Policy and Pluralism
Despite its strengths, this approach to policy via the pluralist perspective has its (well
documented) shortcomings. One of these is the way it places an emphasis on policy as the
outcome of the action of key individuals. Here the underlying causes of privatisation can be
located in the differing motivations of key actors, each of whom has a specific goal and the
means to make policy through attracting supporters or by strategically altering the rules of
the game so that other actors must reassess their interests and strategies (eg. Feigenbaum and
Henig, 1994). Where it is used simplistically, pluralism may portray governments as having
human characteristics such as desires and objectives. For example:
Since the government was eager to privatize ... [and] fearful ofbeing accused of selling outto the private sector ... (Campo-Flores, 1994:241).
Although governments in developing countries are eager to increase the efficient use of theresources that they have at hand ... (Vernon, 1987:7).
More sophisticated uses of pluralism generally avoid such reductionism, though they do have
the tendency to conflate the various concepts of motivation, intentions, objectives and
interests, and fail to maintain a distinction between objectives, which are publicly
announced by the government in power, with objectives that are analytic constructionsimposed by the theorist (eg. Ernst, 1994:81,83; Whitfield, 1992:129). Pluralist studies also
remain open to the charge of offering a one dimensional perspective on power. This is the
very criticism levelled by Lukes (1974), who reminds us that policy rarely conforms to the
intentions of particular individuals, but results from collective forces and social arrangements.
Power is multifaceted, yet pluralism focuses only on observable acts of power, ignoring the
way in which action can be indirectly manipulated by the creation of a set of circumstances
that favour one set of preferences over another. Pluralist perspectives ultimately ignore the
impact of underlying social arrangements upon which the struggle for dominance is playedout. Applying Lukes expos on power to privatisation policy, Samson argues pluralism
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focuses only on policy decisions that are on the political agenda and fails to investigate how
agendas are narrowed to prevent the consideration of alternative proposals (1994:81). Thus
we can see that a pluralist conception of the policy process fails to offer an adequate analysis
of privatisation because it reduces power to the interaction between public figures, revealing
only the public face of power. As such it is in danger of over-rationalising the policy
process, presenting the outcome as the consequence of rational, intentional, and conscious
choices of individuals and groups.
Policy and Functionalism
Interestingly, when we seek to theorise policy change (ie. the rise in popularity of
privatisation), rather than explain the policy process itself, privatisation research is often
implicitly functionalist rather than pluralist in orientation. Here specific policy initiatives are
thought to result not from particular group interests and pressures but as a consequence of
becoming functionally necessary for societies that have reached a certain stage in their
development (Hall et al., 1975:6). Here privatisation policy is conceived as an inevitable
response to a societal need or prerequisite. Although it is rarely explained how this need
came to be recognised (or by whom), the policy literature is replete with functionalist
examples. Some imply that privatisation has become functionally necessary as a consequence
of normative or cultural prerequisites, while for others it has been an inevitable response to
new economic circumstances. For instance, Vernon proposes that privatisation occurs when
the time is ripe (1987:2); and Foster contends that privatisation is a response to the need to
reduce public expenditure and public borrowing in a period of severe economic crisis
(1994:493; see also Gupta, 1996:42; Flora and Heidenheimer, 1984).
Privatisation as a result of economic need is the more common of the functionalist
explanations. This is perhaps understandable given the prevailing emphasis on privatisation as
an economic or financial transaction. The idea here is that as a consequence of the global and
national economic downturn after the oil crisis of the early 1970s, governments found itincreasingly difficult to continue their support for an extensive welfare state and a large public
sector: and were thus driven to privatisation and other market oriented reforms (eg.
Franzway et al., 1989:24). This version assumes a) that policy is a function of economic
circumstances, b) that all countries were facing the same problems, and c) that they all
adopted privatisation as the solution. Yet the national differences are vast. For example,
where British public enterprises were restrained from capital expansion, Australian enterprises
were relatively efficient and endowed with flexible borrowing regimes (cf. Steel and Heald,
1982:337-4; Productivity Commission, 1998). Thus while some argument might be made that
Britain was forced to privatise, this need was not part of the Australian experience.
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Moreover, such a proposition assumes privatisation to be a mechanism for reducing
government outlays and is thus the best policy option in a time of scarcity. As yet there is no
conclusive evidence that privatisation has decreased government outlays, or that privatisation
is a more cost efficient means to provide essential services. This argument is discussed more
extensively below, but it is necessary at this point to note the tautological problem inherent
within this perspective: that is, the idea that we can argue a particular social practice occurred
because of the outcome that it subsequently produced (or claimed to produce).
Although functionalism has been criticised for this logical fault in regards to many areas of
social life, it appears to have been rarely tackled in social policy: possibly there is an
assumption that policy practices are different from other social practices, enabling us draw an
immediate and inevitable causal link between intention, strategy and outcome. Sociologically
this proposition cannot be sustained. Policy practice, like other social practices, needs to beunderstood as historically produced and socially contingent. Thus an answer to the puzzle of
privatisation cannot be founded upon financial or other system imperatives, nor upon claims
based upon the subsequent outcomes of policy initiatives.
Policy and Ideational Theories of Change
Among the alternatives to pluralist and functionalist theories of privatisation, are ideational
theories of policy change and policy spread. Here we find suggestions that privatisation
results from an intellectual disillusionment with the Keynesian approach (eg. Hall, 1993; Bell,
1997:25), a response to the fall of the command economies such as the USSR (eg. Gupta,
1996:39), the cross-national adoption of policy fashions (eg. Ikenberry, 1990), and the rise
of doctrines of economic rationalism and neo-classical economics (eg. Ernst, 1998; Self,
1990:19, 21).
There is much to be said for a theory of privatisation and policy change which depend, at least
in part, on the role of ideas, values and beliefs. A new paradigm has indeed emerged in
which privatisation is portrayed as a politically neutral process of economic exchange. Within
this paradigm there is a new moral imperative to remove public and collective forms of
ownership, and to seek social progress and efficiency through market mechanisms. This
package of ideas and beliefs, like all ideas and beliefs, are influential because they structure
the terms of political discourse (Bell, 1997:24). However, it is difficult to find empirical
support for an ideational theory of change: as even when there was strong presidential support
for small government during the 1980s in the USA, there were few asset sales (see Henig et
al., 1988:477,450). It is also difficult to build a theory of privatisation around the role of ideas.
An ideational theory of policy change offers an explanation only in terms of a policy
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fashion, implying an innocent or accidental pattern, as if other policy initiatives might
equally have emerged. Missing from such a conception is a sense of the social context that
shapes the reservoir of ideas from which policy makers draw, and within which problems
and opportunities for action occur. Thus in order to explain the systematic emergence of
privatisation in countries that are economically, culturally, and politically diverse, ideas must
be linked theoretically to social practices and social structures.
Policy, Ideology, and Discourse
Two concepts which potentially link the two realms are ideology and discourse, with the
latter tending to be a fashionable replacement for the former. A handful of studies have
emerged recently which imply that privatisation is the result of new (or revived) discourses or
ideologies concerning the role of the state and the relative merits of the private and public
sectors. For example Michael Pusey suggests there has been a fundamental change of
orientation towards civil society and culture (1991:224) and elsewhere it is suggested that
privatisation is the result of the adoption of fashionable ideologies (eg. Walker and Walker,
2000; Mansfield, 1987). These observations are not without foundation. It has been noted that
rather than a rational and careful consideration of the evidence, many studies of privatisation
merely assert the greater efficiency of the private sector, and fail to offer compelling evidence
to support their generalisations (cf. Mansfield, 1987:75; Heald, 1983:308). It is not difficult to
find evidence of simplistic assumptions and assertions of this nature within the literature.
For instance:
A state entity cannot be as efficient as a private entity in the production of the same output.We know that (Waters, 1987:55).
The generalization that private is more efficient than public is a reasonable enoughassumption (Vernon, 1987:7).
... government-owned enterprises perform poorly, provide an inadequate service or product,and serve as a burden on the taxpayer (Campo-Flores, 1994:235-6).
These and similar claims are endlessly repeated by advocates of privatisation, often with little
evaluation of the evidence for the relative efficiencies of the two sectors. Although there are
methodological difficulties with the comparative evaluation of such claims (see Collyer
1996), well designed and independent studies show that neither sector is inherently more
efficient (eg. Martin and Parker, 1997; Goodman and Loveman, 1991:35). What most
comparative studies of the two sectors generally fail to emphasise however, is the different
functions of the private and public sectors, and the failure of the private sector to perform all
previous functions of the divested public sector unit, leaving the state the least profitable areas
to assign to other units within the bureaucracy (and without the capacity to fund these
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activities through cross-subsidisation). Such an analysis should render the private/public
comparison invalid. However the new pro-privatisation paradigm has been so effective in its
message that any current defence of the public sector is considered illegitimate, out of date,
and utterly misplaced. Rationally produced evidence which stands contrary to the paradigm is
rejected and it is clear that a process is operating in which the truth, or the possibility of
discovering the truth, is being systematically obscured.
For some, this process is regarded as ideology, for others it is discourse. Unfortunately,
these concepts are rarely explicitly defined, and often embedded within an ideational concept
of social change where they are assumed to refer to a set of ideas or beliefs, or to the
communication of these ideas and beliefs. Indeed the words are often used inter-changeably
with rhetoric or doctrine (eg. Shore and Wright, 1997:18; Agger, 1998:8,19,23). These
definitions propose that discourses and ideologies have no material or observable existence:there is only the text itself. This prioritising of ideational phenomena makes it difficult to
adequately theorise the relationship between language and lived experience, and moreover,
social change cannot be explained. Only within Marxism is ideology defined differently. Here
it is a set of beliefs which serves the interests of its proponents at the expense of other social
groups (see for example, Hughes et al., 1995:38). This definition separates ideologies from
other common or prevalent sets of ideas, because they are fundamentally connected to the
activities of elites and interest groups as these seek to secure their own interests (cf. Marx and
Engels, 1976:67).
Policy and Marxism
There are only isolated examples of research on privatisation which use the concept of
ideology in its fully theorised, Marxist, and specifically Gramscian sense, where its definition
includes the customs, practices and behaviours which reflect, consciously or unconsciously,
ideas about society and the nature of reality (cf. Navarro, 1982:46). Here, ideology is the
organic cement which does not simply express the reality of the economic base, but isconstituted by both social practices and institutional arrangements, and thus bridges both
structure and superstructure (Daly, 1999:69). One of these studies is Samsons (1994), where
this conceptual framework is used to critique the prevailing, economic definition of
privatisation. Sampson regards this definition as part of an ideology of privatisation, in which
people are coerced into accepting a particular set of policy strategies. Although these policies
are harmful to some social groups this facet of privatisation is conveniently obscured by
another: a view that privatisation is a politically neutral, economic transaction. Beyond this
however, privatisation is more than the mere sale of public assets or the contracting-out of
services, it also involves public sector and welfare cuts, trends toward intensive market
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commodification, a new emphasis on self-provisioning, and the increased domestic burden
being placed on women and families. Samson argues that these aspects of privatisation are
kept hidden from the public, as a broader and more political definition of privatisation would
have politically negative consequences, revealing the full range of likely effects and
exposing the yawning gap between the beneficiaries of the policy and those who are harmed
by its introduction (1994:88-94). Thus for Samson, privatisation is an ideology which is not
just about ideas but is fully realised in social practices and institutions.
It is only when the Gramscian version of ideology, or the Foucaultian version of discourse,
are used, that we can successfully theorise policy change. If either is simply a system of, or
communication of, ideas, then there is no explanation for how these ideas change over time. It
is only when we use these concepts to refer to relationships between ideas, practices and
structures, that we can see that ideas and policies change because they are always part of anongoing struggle: that there is always conflict and dissent and a struggle for meaning and
dominance. And this social activity produces change - or perhaps rather, it is the process of
change in action.
Despite its appeal, few studies have examined policy change from this perspective: that is, as
a consequence of class conflict and dissent. Indeed the concept of class - once a major tool of
sociology - has currently fallen out of favour. Not only has it become unfashionable to use
class, but there is a particular reluctance to use it as an analytic rather than descriptive tool in
policy analysis (Mooney, 2000:157,161-2).
Policy and Capitalism
As a consequence of the demise of class analysis, the more common conflict approach is to
examine policy actors in terms of interest groups, often referring to them as stakeholders
(eg. Gupta, 1996; Chamberlin and Jackson, 1987; Henig et al., 1988) or as players (eg. Kerr
and Savelsberg, 2001:25). In most cases, these studies employ a pluralist framework in which
class denotes the characteristics of a group of similar individuals: they rarely refer to class as
an element of a social system. This means they are unable to explain possible links between
the interest groups and other developments in the social system (such as globalisation). Policy
is presented as an adhoc process of struggle between diverse interest groups and taken up by
the many national policy communities as a new policy fashion and coincidently imitating
the policies of other, apparently, successful nations. They do not show the possibility of
privatisation as a class project, in which government restraints on the market system are
systematically eased or removed, and where government activities are depoliticised by
transferring them to the market. Nor do they show how privatisation policy might alter the
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power balance between classes: such as in Britain where privatisation was directed at
curtailing the power of groups such as the medical profession, coal miners and steel workers.
This is because the balance of power between classes is not altered by changes in power
between different interest groups. Thus they are clearly unable to demonstrate how
privatisation maintains a system of class inequality, by taking from the majority of the
population their collective access to, and ownership of, public resources, while
simultaneously enriching already privileged groups.
Where class is used in an analytic or relational sense, these problems do not emerge. Notable
here is the analysis of privatisation by Samson (1994). Samson sidesteps the typological
problem presented by pluralism, where privatisation is a class policy only where there has
been an intention to alter class boundaries and where these projects are undertaken with
little thought to ideology (Feigenbaum and Henig, 1994:195, 200). Samson proposes insteadthat privatisation is always about class. He defines privatisation as a cultural and political
mission, in which a package of ideas about individual liberty and consumer choice is
intertwined with strategies and techniques for the management of the national economy. This
package of ideas and practices alters established relationships between both groups and,
importantly, between classes, and as such it can be understood as an hegemonic project
aimed at altering consciousness and power relationships (Samson, 1994: 79,90).
Samsons thesis on the class basis of privatisation rests on an interpretation of Marxism in
which the motivations of individual policy actors, and the characteristics of these actors (eg.
social background, level of education or past career choices) play little part. Instead this
approach concentrates on identifying key groups according to the objective effects of their
actions (eg. Therborn, 1982:229), and emphasises the structural and institutional restraints
placed on these policy actors rather than on their capacity for agency (see also Deacon and
Mann, 1999). It is a level of analysis which explains macro-level factors that can play a
major role in shaping the environment in which individuals behave and in which policy
choices are made (Bell, 1997:41).
This approach is however, problematic in the way it entirely collapses the individuals and
groups within the policy making community into the institution of the state. It assumes that
politicians choose privatisation because the state has a commitment to the maintenance and
reproduction of capitalist social relations: that the interests of the policy makers and the state
are the same (Mooney, 2000:165). The reductionism of this approach has been extensively
discussed elsewhere (see Hay, 1999:164-71, on the Miliband-Poulantzas Debate), and does
not need to be revisited here. Nevertheless some further points need to be made, given that the
recent global shift toward privatisation can only be explained within a coherent theory of the
policy process, and specifically, the policy process within capitalist societies.
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From an orthodox Marxist position the state is merely an agent of capital, and policy is fully
determined by class interests. This is the Althusserian interpretation of Marx, and it relies on
the view that capitalism has a hidden structure that generates, in a mechanistic way, its forms
and surface movements (Jessop, 2001b:3). It is a concept of structural causality wherein the
economic base of the society determines the political system, and thus the realm of policy. In
its favour, this framework offers a strong challenge to pluralism with its plethora of unrelated
stakeholder groups each acting to secure their own interests, where policy can be reduced to
individual intentions and motivations, and where policy outcomes show little overall
patterning or systemic bias. It also offers a challenge to neo-statism, where the state is
presumed to be an autonomous entity, fully able to pursue its own interests (eg. Dandeker,
1990; Skocpol, 1985); and to autopoietic theories of the state, in which the state is portrayed
as a self-producing, self-referential, self-controlling political system (cf: Jessop, 2001a:9).
Nevertheless, this orthodox Marxist position is untenable because of the way it limits the roleof policy makers to agents of capitalism, collapses their actions into the logic of the whole,
and theorises the policy process as a direct outcome of the logic of capitalist accumulation.
Fortunately there is an alternative Marxist interpretation of the policy process. Here there is a
rejection of economic reductionism, and a re-focusing on the complex interplay of structure
and agency (Mooney, 2000:162). This is an interpretation of that within Marxism which is,
Daly argues, already postmodern (1999:65). Marx tells us in the Grundrisse that everything
that has a fixed form appears merely as a vanishing moment in the movement of society:
The conditions and objectifications of the process ... are themselves equally moments of it,and its only subjects are individuals, but individuals in mutual relationships, which theyequally reproduce and produce anew (1973:712).
This passage highlights the idea of agency as fundamental to any notion of social structure,
and points toward a solution in the way it integrates structure and superstructure, economy,
state, culture and ideology into a relational, rather than just a causal, schema (Daly, 1999:69).
This interpretation of Marxism shares some similarities with the approach to the state taken
by Gramsci (1971). Gramsci provided an analysis of the institutional form of the state, how
this influences class struggle, and how this political struggle in turn shapes the institutional
form of the state. This method of analysis places emphasis on the state as an arena of action,
but not one which is separate from capital or other social relations, nor one which is fully
determined by capitalism. Instead the emphasis is on the reciprocal nature of the relationship
between base and superstructure (Jessop, 2001b:4). The Gramscian capitalist state is not
necessary, but contingent, and its actions are political and hegemonic, not determined or
economistic - even though it advances the interests of capital (in Marsh, 1999:327-8). This
reciprocity of state and capital is important because it allows for the possibility of a capitalisteconomic system connecting with a policy community, in which policy is often, but not
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always, capitalist in character or impact. Policy decisions may be made in the interests of
policy makers themselves, may assist specific capitalists, and sometimes may assist the
working class by protecting employment conditions or negotiating public access to privately
owned goods (cf. Collyer et al., 2001). Thus policy is produced through a process of social
struggle. The policy system is historical, unstable, contingent and contested.
What then, is the specific relationship between policy and capitalism? How is it that, as
Gramsci argued, the economic and political orders of society are coupled into an historic
bloc? (cf: Jessop, 2001a). For both Jessop and Harvey, the answer is found in the
construction of capitalism itself. As an historically developed system of social relations,
capitalism comprises both a system of economic relations and a system of political relations.
The state has a crucial role in the construction of economic forms of capital, and in how
capital is organised and circulated (Harvey, 1982:281-2). Or, as Jessop argues, the capitalrelation is incomplete and indeterminate, and relies, in a rather unstable way, on extra-
economic conditions (2001b:8). And because capitalism cannot reproduce itself purely
through market forces, the system of political relations is a part of the constitution and
regularisation of capital accumulation (Jessop, 2001c:9).
Policy Actors
It is with this framework that we can better understand the relations between policy and
capitalism. In a capitalist social system, policy reflects capitalist relations not because policy
is determined and unfolding according to a teleological plan or logic of necessity, but because
policy is created as a result of human behaviour and interaction in the complex interplay
between the political and the economic systems. And it cannot be created without policy
actors.
Throughout the 1970s and 80s, sociological analysis of policy focused on the structural
qualities of the social system, and was largely silent on the role of actors. Perhaps this might
have been, in part at least, a reaction to the increasing dominance of a neo-liberal discourse in
which the victim was blamed for their own plight. More recently however, there has also been
a rejection of over-arching structural categories and a developing interest in the role of actors
and active human subjects in the policy process (Deacon and Mann, 1999:417; Mann, 1992).
This has rejuvenated the search for theoretical frameworks that can explain the role of policy
makers in the policy process. Past attempts at linking agency with structural levels of analysis
through locating specific groups within the class structure have been theoretically
problematic: as Narravo (1978:86-7) and Johnson (1972) discovered when they sought to
empirically demonstrate the class location of the professions. They found they could only
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assert the connection as a truth through theoretical analysis, because at the empirical level,
the task involved conflating occupational or professional groups of individuals with an
abstract notion of class (eg. Willis, 1983:13).
The same reasoning applies if instead of investigating the class location of the professions we
seek to empirically examine the class position or role of policy makers. Again the problem
would be that policy makers do not constitute a class. This is a diverse group: policy (in its
widest sense) is produced by individuals and groups from many occupations and institutions:
media owners and employees, bureaucrats and politicians, owners and managers of private
firms, philanthropic organisations, community representatives etc. Class locations are mixed:
employees, owners of capital, petite bourgeois. Consequently, using an orthodox Marxist
analysis we cannot empirically demonstrate the class basis of privatisation without conflating
the concept of the group with the concept of class.
What is needed then, is a theoretical framework which bridges the empirical world of policy
making with the conceptual and analytical structures of the state, class and capitalism. This
framework must not be reductionist, it must not seek complete closure or full determinism,
and, most importantly, it must link macro and micro levels of analysis to make sense of the
relationship between the activities of the individual (and the group) and structural formations.
One answer to this problem is the policy network approach.
Policy Networks
There are a variety of approaches to policy network analysis. Some analyses tend to collapse
the notion of a policy network with that of a policy community or policy culture, and as such
emphasise a sharing of values and collective goals (eg. Marsh and Rhodes, 1992; Putnam,
1995). For example, Pross (1992:119) defines a policy network as a group of individuals with
similar outlooks and values and a common approach to policy. As such, it excludes actors
with alternative perspectives or different policy agendas. Moreover, although values and
norms are an important concern within the policy making process, a sole focus on this aspect
of social life results in a lack of attention being paid to the impact of the state (and other
institutions) on the policy process (Maloney et al., 2000). It also fails to include the role of
groups and organisations in the policy process, as it is problematic to assign a mindset or
worldview to a group or organisation, and, importantly, it overlooks the possibility that
policy outcomes may be an amalgam or compromise of various positions, views, and values.
Coleman and Skogstad take a different view. They argue that a policy network is a concept
reserved for describing the properties that characterise the relationships among the particular
set of actors that form around an issue of importance to the polic y community (Coleman and
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Skogstad, 1990:26). The focus of the policy network approach is thus the relationships among
the actors involved in the policy making process, rather than the values or characteristics of
the actors.
This reading of the policy network avoids the problem of trying to ascertain the intent or
motivation of participants in the policy process, and enables a greater focus on relationships,
particular relations of power, within the network. This form of network analysis has been used
in conjunction with a pluralist perspective, where there has been an examination of the role of
interest groups in policy process. Saward (1990) for example, examines the nature of
resources held or captured by different interest groups, and how these influence their capacity
to shape policy; and Whiteley and Winyard (1987) propose a typology in which policy actors
can be characterised according to their lobbying strategies.
There is no inherent reason however, why pluralism must be the only, or dominant theoretical
approach to network analysis. Pluralism doesnt offer an adequate explanation for the way
policy initiatives, such as privatisation, both reflect existing inequalities and become
structured into the operation of social institutions, thus ensuring a policy regime will become
entrenched and resistant to further change. One attempt at a solution for this problem has been
the path dependency approach (eg. Berman, 1998; Goldstone, 1998; Wilsford 1994; Greener
2002a, 2002b). This approach assumes that policy reflects established regulatory regimes,
entrenched institutional positions, established industrial structures, and past government-
industry relationships. This entrenchment of institutional patterns ensures policy becomes
fixed and difficult to change, so that policy development is likely to be incremental rather
than innovative. It argues that historical legacies determine future policy trajectories. As
Lfgren and Benner (2003:27) suggest, path dependency perspectives emphasise the
stickiness of institutional arrangements: once a nation has developed a particular
institutional set-up, it is difficult to change tack.
The path dependency approach provides an explanation for the apparent stability of a policy
regime: that it is the unique configuration of institutional relationships in each national settingwhich determine the policy outcome. Unfortunately, this approach doesnt account very well
for policy innovation: and this is important if we are to theorise the recent radical shift toward
privatisation. Empirically we know that policy designs are not created and then simply fixed
in time, but continue to be contested and remain malleable (Alexander, 2001). And although
institutional legacies can restrict change, social and institutional resources are also combined
in creative ways to produce new policy solutions and directions (Neilson, Jessop and Hausner,
1995:3-46). Moreover, cross-national comparisons have found that path dependency is not a
good predictor of policy direction, particularly when countries, each with very different
institutional histories, are facing profound pressures for radical change (Lfgren and Benner,
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2003:27). Even the idea of conjunctures, offered by Wilsford (1994) to explain policy
change, is not of assistance here. Wilsford argues that structural forces curtail policy
processes, keeping policy to established pathways, while conjunctures enable deviations and
radical innovations. The established pathways may occur initially as the result of quite
random variables (Wilsford, 1994:253), but then, like the QWERTY keyboard, channel
present and further policy along certain paths (ibid:256). Conjunctures, on the other hand,
are the fleeting coming together of a number of diverse elements into a new, single
combination (ibid:257), providing incentives for radical change.
The main difficulty with this approach is that Wilsford has no theoretical framework to assist
with distinguishing between factors or conditions that are likely to inhibit change, and those
which encourage innovation. His selection of conjunctures is ultimately adhoc, and this
produces dispute from others. For instance Greener (2002a:170-1) contests Wilsfordsselection of critical conjunctures to explain radical policy change for Britains National
Health Service, arguing that, amongst other factors, Wilsford places too much emphasis on
Margaret Thatchers authority, and on the disorganisation of the medical profession during the
salient period. As Greener argues, the conjuncture argument seems to place an excessive
burden onto fate and does not give us a coherent theoretical underpinning for how actors
are constrained or break free of structures (2002b:615).
The solution then, is to disregard both the pluralist and the path-dependency approaches in
favour of a combination of class and network analysis within the parameters set out in the
above discussion. This means employing a combination of the strengths of network analysis,
with its emphasis on the relationships within policy networks, and those of class analysis,
with its capacity to make sense of the continuing, asymmetric relations between actors in the
policy making process. With this combination, we can reveal the way that policy networks,
and their outcomes, are shaped by the class system at both the national and international
levels.
What would such a combined approach look like? We might take the example of theCommonwealth Employment Service (CES). This was an agency established in 1947, initially
corporatised, and then fully privatised in 1998. Over its fifty years of operation there were
several attempts to privatise it, most notably perhaps by the McMahon government, which
sought to allow private employment agencies entry to the job placement system. Its demise
began with the publication of the controversial Norgard Report (1977) which recommended
systematic changes in the operation of the CES, and the successful elimination of the
Professional Employment Service by the Fraser Coalition government. The end of the
organisation was secured with the passage of legislation in 1994 under the Hawke-Keating
Labour government, to allow the introduction of private sector competition. These changes
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prepared the way for the later full privatisation and dismantling of the CES under the Howard
Coalition government. Announced in August 1996, the CES ceased to function in its old form
in November 1997, interim arrangements were put into place, and the new Job Network
emerged in May 1998. Heralded under the rhetoric of enhancing consumer choice and
introducing the efficiencies of market competition, the new service (estimated at the time to
be worth approximately $AUS1.7 billion), offered via tender, contracts in which agencies
would be paid by government to place individuals into jobs. Over 300 contracts were signed
with private (for-profit) enterprises, community organisations, and one public organisation,
Employment National. The privatisation of the CES is a typical example of the emergent form
of privatisation for policy delivery, in which private operators distribute funds or perform
services that were once the responsibility of government.
. network analysis would reveal the characteristics of, and relationships between constituentsof the network, showing for example, their degree of autonomy or inter-dependence (as it
does in the work of Ornstein (2003) on Canadian corporate networks, or the work of Burt
(1983) on the market relationships between various industries). In the case of the CES,
network analysis would also indicate the prominent role of religious organisations in the new
Job Network, and the formation of alliances between agencies (particularly in the early
period, where many were without adequate skilled staff or resources to fulfill the terms of
their contracts). Class analysis on the other hand, would highlight the asymmetry in the
relationships of power between capital and labour, showing how privatisation shifted the
balance to favour employers and capital. For example, with the demise of the CES we see the
undermining of union power, as 5000 unionised, permanent public servants lost their jobs and
were shifted into casualised positions in the private sector, many working on contracts
offering poorer and less secure working conditions, and most no longer represented by a
union.
A combinednetwork/class analysis however, would reveal the way the policy networks are
shaped by the class system. To focus once again on the new Job Network that emerged in
May 1998, a combined approach shows, first of all, the way in which the state works with
capital to initiate and support the privatisation process. Evidence of this is found in the
awarding of contracts to favour private businesses, particularly those in electoral areas held by
a member of government. Indeed private job agency sites granted to safe government seats
were double the number of those in safe Labor seats (Haslem, 2000c). Evidence is also
provided in the stated intentions of government. In discussing the privatisation of the job
network, the discourse focuses explicitly on the need to form a social coalition between
businesses, community organisations and government. This coalition would enable the private
sector to expand their workforces, develop new business opportunities, and, in return for
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delivering welfare services, enable these entities to put something back into their
communities (Shanahan, 1999).
Secondly, the effects of the class system on the network itself are evident in the alliances
formed to place pressure on government. Some of these are large and formal alliances, such as
Job Futures, a consortium of 40 agencies; National Employment Services, representing over
60 agencies; and Jobs Australia, representing 300 delivery organisations. In 1998 these actors
lobbied for large funding increases of over $AUS1b on the grounds that 80 businesses were
about to go to the wall (Gratton, 1998; Dore, 1998). These alliances have enabled particular
agencies to monopolise resources, shape the rules and processes for inclusion and exclusion,
and ensure that the flow of benefits is toward private capital. As the powerful alliances swung
into action, they demanded not only large increases in their fees, but a role in the policy
process. Their demands included a role in designing the terms of subsequent tender rounds, tohave more areas of the job network placed under tender (rather than publicly provided), the
granting of base grants not tied to the fee-for-service system, and a widening of the
eligibility criterion to ensure agencies will be paid to service other groups of job seekers
(Green, 1998; Gratton, 1998). This heavy lobbying from placement agencies had its intended
effect, with several subsequent overhauls of the infant Job Network, including an additional
$AUS55m proffered just prior to the election and a further $AUS100m in grants and higher
payments prior to the second round of contracts (Dore, 1998; Dore et al, 1998).
Clearly missing from these alliances was Employment National, the one public provider of
services in the Job Network. This organisation was expected to operate as a corporate entity
on the same basis as its private sector competitors. The birth of this organisation was a
difficult one, given that it was the offspring of the previously much larger CES, and began its
new life with only 10% of its workforce and staff morale at a low ebb (Peake, 1998).
Moreover, it came into operation in an environment that was fiercely pro-privatisation and
opposed to government involvement in employment services. A Morgan and Banks opinion
poll of 3,700 businesses in 1997 indicated the business community was behind the
privatisation of employment services, with more than half stating they believed privatisation
would make the system more efficient (Sunday Telegraph, 1997).
While Employment National was initially provided with a 40% share of government contracts
(Haslem, 2000a), press coverage of its first year of operation was generally negative, with
constant demands for its removal from the network via privatisation. The criticism had the
intended affect, and in the second round, announced at the end of 1999, Employment National
was awarded only 1% of the contracts (McGregor, 1999). This left the Salvation Army as the
largest provider, with contracts worth over $AUS280m, and reflect[ed] the Howard
Governments push to deliver welfare services through community-based organisations,
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particularly the churches [which now] deliver nearly 25% of $AUS700 million worth of
employment services (Haslem, 2000b). Other reasons given for the demise of the agency
concerned problems with its tendering strategy, problematic performance, bias and
politicisation of the tender process (Kelly, 2000; Dore, 1999), and, more pointedly, the
deliberate destruction of its capacity to function effectively by the government (Haslem,
2000a; Haslem and Marris, 1999). The agency continues to operate in a limited way with
government financial support, although the threat of privatisation remains, most of its staff
have taken redundancy packages, and many of its offices have closed.
Thirdly, the operation of the network is clearly capitalist in the way it functions to channel
public funds to the private sector. Despite the stated intentions, these public funds are not
necessarily given to providers. Ten percent of the businesses that succeeded in obtaining
contracts perform no employment services, but merely subcontract these to other agencies (cf:Peake, 1998). Interestingly, this sub-contracting is done with the explicit permission of
government (Taylor, 1998). This case of the capture of public funds by the private sector
offers support for Jamroziks thesis that the welfare system, and social expenditure more
generally, has many beneficiaries other than the poor. Jamrozik (2001:51) argues that social
expenditure also enhances the social functioning of the service provider through the
provision of wages or salary for middle class occupational groups such as doctors, teachers
and social workers. Broadening the debate, Jamrozik (2001:49) argues that although not
usually classified as welfare, public expenditure is also provided to business and industry in
the form of tax concessions. Extending from this, it is not difficult to see how the private
sector has, in this and many other cases, managed to obtain a significant level of public funds
out of the welfare budget. Indeed there has been a massive shift of public funds between the
private and public sectors in Australia in recent decades, with the Productivity Commission
estimating that budget handouts to industry in the form of business welfare is now greater
than $AUS14b, an increase of 15% in the past five years (Marris, 2002). While it may not be
necessary to support Samsons (1994:79,90) concept of privatisation as an hegemonic
project - with its underlying notion of a class conspiracy or at least ruling class co-operative
activity - such cases of privatisation lend support to Taylor Goobys (1997:184) view that the
pursuit and implementation of privatisation policies have enabled the ruling class to
articulate its interests more effectively.
The example of the CES shows that a combined network and class approach throws new light
on the theory of privatisation. OConnor (1993) has previously argued that state expenditure
on services and infrastructure is essential to lower production and reproduction costs and to
ensure the expansion of private industry. Moreover, OConnor argued that one of the
problems of late capitalism is the tendency for state expenditure on the social expenses ofproduction to increase beyond the states financial capacity, thus increasing the risk of a
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legitimation crisis. Although the capacity of privatisation to reduce state expenditure is
difficult to ascertain (in part because of the claim that data is commercially sensitive, cf:
Wright, 1998; Taylor, 1998; Kelly, 2000) and is certainly much disputed (cf: Collyer, 1996;
Collyer and White, 1997, 2001), nevertheless it can be concluded that privatisation operates at
two levels. At one level privatisation is ideological. Privatisation is used by the state to make
it appear as if there is a sharing of social expenditure between the private and public sectors.
At the level of practice and structure, privatisation is not just a fashionable policy trend, but
a unique development in late capitalism which enables capital to secure new sources of funds,
expand business opportunities into areas previously prohibited to private capital (such as
welfare services), and to expand the commodification process.
Conclusion
This paper has traversed much territory and it is time to meld its many strands. We have seen
how the policy process of privatisation has been inadequately characterised within a
functionalist framework, leading to a distortion of policy as if it were an inevitable response
to societal and economic pre-requisites; within a pluralist framework, where the policy
process is fundamentally political but is theorised, problematically, as arising from individual
motivations and accidental groupings; within an ideational framework, where policy is
reduced to fashion and untethered to material life; and within orthodox Marxism, where
policy is merely derivative of structure. Against these conceptions, this paper has argued that
the policy process is fundamentally social, historically contingent, and structured by relations
of power - as is found in all other areas of social life.
As noted at the start of this paper, policies of privatisation have become commonplace in
almost all countries over the past few decades. This policy trend, which began in the capitalist
countries and was largely driven by their agendas, is best explicated in terms of policy
networks. Such networks are embedded within structures of power relations, where networks
operate within a framework of institutions and a capitalist global market system. The paperhas shown how particular groupings of policy actors form networks that monopolise the
policy process and shape the rules and processes for inclusion and exclusion. A combination
of network and class analysis was used to explain the privatisation boom (the recent
intensification of privatisation and other pro-market policies), not as a policy fashion but as
a structural process within which actors agitate for the removal of all government restrictions,
for the creation of new opportunities and for further privatisation. Thus the process of
privatisation itself assists with the building of new, powerful alliances demanding greater
reform, and thus drives further privatisation. In this way we can understand policy change,
not as an outcome of logical structural imperatives, nor as an adhoc, discursive process, but as
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a social process undertaken by social actors and in accordance with a capitalist social
structure.
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