Democracy Is the Answer to Privatization

The case against the neoliberal privatization of public institutions is based on the harmful effects it has on workers and citizens. But the case for public ownership needs more: the legitimacy of democratic governance.

The public services that NGOs have cobbled together are no substitute for truly public provisions under democratic control. (Chris McGrath / Getty Images)

In The Privatized State, Chiara Cordelli identifies what is wrong with delegating the tasks of public administration to the private sphere. For the political left, privatization is seen as harmful — strongly associated with neoliberalism and the privatization of essential goods and services. But, as Cordelli argues, the case against privatization is not so simple. In fact, consistent arguments against it are rare, and the case for public administration is not as straightforward as many might assume. Both the political left and right can be hostile to federal and centralized forms of state power. While libertarians and neoconservatives favor privatized goods and services over and against state provision, many left-wing ideologies, from anarchism to Trotskyism, are wary of how welfare states and state bureaucracies institutionalize rigid rules and procedures that are hostile to citizens.

Cordelli is motivated to investigate what all forms of privatization have in common. If there is a consistent case to be made for public administration, then it must identify common features among a variety of private institutions, from those that fully commodify service provision to more ambiguous cases like nongovernmental organizations, philanthropy, and mutual aid societies. Importantly, Cordelli interrogates the shortcomings of existing public administration as well. The book is not a blanket rejection of the anti-statist position. For instance, Cordelli takes great care to endorse many of the criticisms of bureaucracies that are shared across the political spectrum. These include inefficiency, the arbitrary discretion of bureaucrats, and their tendency to enforce conformity. But crucially, she concludes that these are problems that a public administration can rectify — whereas the same cannot be said of the privatized alternatives.

The Privatized State is of interest to the Left for two important reasons. First, it encourages a realistic assessment of the current social conditions in which left debates about the state now take place. Ideally, we could proceed to critically assess the inherited wisdom of socialist theorizing about the state. As existing capitalist states devolve their powers to private parties, whether firms or NGOs, the reevaluation of traditional criticisms of the state is a crucial task for thinking through strategic alternatives in struggles for reform. Second, Cordelli asks more pointed questions about the Left’s relationship to some organizations, like NGOs, than have generally been put forward. While recent efforts have been made to analyze the operating conditions and incentive structures of NGOs, normative analysis of how they work and how they constrain the Left strategically are now necessary. As leftists are not in agreement about whether such organizations are friends or foes, we should develop principles to help navigate relationships with them. Such relationships are to some extent unavoidable in today’s political terrain.

Cordelli begins by defining public functions and asking what political institutions are for. If only political institutions can legitimately perform public functions, how should we define them? Many liberals, for instance, think that political institutions and private modes of action are interchangeable means for pursuing justice. If one defines justice independently of the type of institutions that guarantee it (i.e., states, corporations, NGOs), then what matters are outcomes. On what grounds can the public services partisan claim that their strategy is superior? Traditionally, the political left argued that the difference could be found in how each strategy affects the relationship between groups of workers and their employers.

For example, capitalist societies tend to provide health care in one of two ways. Employers provide health care for their employees or the state provides it as a public good. Of course, many do neither. But for the sake of clarifying Cordelli’s question, let’s assume that there is some redistributive mechanism for providing health care. Assume that funding is adequate and the quality of health care services is equal. From the perspective of the individual receiving care, it may not matter much whether funding is provided by employers or by the state. At the point of service, the experience may be the same. If employers pay for health care, though, workers are more dependent on their employer than they were before. If the state provides it, workers are less dependent on their employer. They have more autonomy, are better equipped to contest managerial decisions, and have more capacity for other sorts of political activity without being subject to their bosses’ scrutiny. This concern is what has historically driven left-wing support for public health care.

Cordelli captures the qualitative difference that emerges in this example through the Kantian argument that political institutions are constitutive of justice rather than incidental to it. She writes that “it is only through these institutions that claims of justice can be defined and enforced in a way that respects both the fundamental status of persons as equal normative authorities and their independence, including their rational independence (independence in one’s ability to respond to reasons and independence in acting being closely intertwined).” In fact, the alternative is a regression to a state of nature, which, as Kant sees it, is a pre-civil situation where norms of justice are provisional and nonbinding. What is required to live in a civil state is legitimacy, which privatized forms of governance and resource distribution intrinsically lack. Indeed, for Cordelli, legitimacy is the crux of why privatized and public power are not interchangeable. No improvement in efficiency, distributive justice, or equality in a privatized state can compensate for the lack of it.

In other words, public health care produces moral reciprocity among citizens, and private health care the opposite. In the latter case, the employer has no obligation to extend health care coverage beyond the terms of employment and the employee has no right to demand it. In Cordelli’s Kantian schema, this arrangement is an instance of privatized and, therefore, illegitimate political power. The legitimate exercise of political power requires a democratic institution that defines, adjudicates, and enforces rights and duties “in a way that is fully consistent with a norm of mutual respect both for the equal normative authority of all and for individuals’ rational independence.” If your boss has the normative authority to deny you entitlements and make you more dependent on them by doing so, then you are, in a sense, in a state of nature where “right” (i.e., Recht, a German word that captures both justice and freedom in a single concept) does not rule. Instead, such a privatized social service is an instance of privatized political power, which cannot generate binding obligations to respect other people as moral equals.

For Kant, political legitimacy requires that individuals are not subject to any other individual’s particular will, while they nonetheless have reasons to treat democratic processes as authoritative. In other words, you cannot do what you want to me on your own whim, and I have good reasons to obey a rule of law that has been established by democratic means. Even if I’m a political minority, I will comply with political outcomes since they do not give other people the capacity to interfere in my life in an arbitrary way. This situation can only emerge through a democratic institution because no other kind of institution can be both nonarbitrary and authoritative. If an NGO provides social services, it sets the terms of engagement with the people who receive those services, unless the government regulates it or it becomes a micro-democracy that includes both providers and recipients. Because only a shared political process is authoritative (because shared), micro-democracy here is the only path to legitimacy.

But Cordelli is skeptical about whether such quasi-private alternatives to public power are enough or realistic. More realistic is meeting concerns about the ills of bureaucratized public power head-on. If privatized schemes don’t work empirically or normatively, public administration should not be rejected but rethought to work better. For instance, bureaucrats exercise discretion all the time, but they hide behind standardized rules to obfuscate that they have done so, which makes it extremely difficult for citizens to demand accountability for the decisions they make. Discrimination, for example, can happen, but bureaucrats can rationalize it with their rule-following — ergo lots of left-wing worries about statism. And there are few people who lack a story about a bureaucrat who just would not listen to the specificity of their problem and resolve it. This experience is highly alienating and can, in Cordelli’s criteria, deplete legitimacy.

How does Cordelli recommend increasing the legitimacy of public institutions? She proposes institutional arrangements like codetermination, recallability of officials, and randomly selected pools of civic jurors to determine eligibility criteria for welfare entitlements. She also suggests a robust civic education not only for the general public but also for would-be civil servants, who learn how to properly relate to the public once they are in office. These are political solutions to political problems, whereas alternatives that remove themselves from the public domain are not. These alternatives are what Kant would call “pre-political,” or failing in moral terms to qualify as civil society. Proponents of privatization posit that private entities are either more efficient, accountable to specific constituencies, or both — but privatization is really bureaucratic unilateralism by another name.

Ellen Meiksins Wood once wrote that the difference between political power in a capitalist and in a noncapitalist society is that capitalism institutionalizes a form of privatized political power within the production process.1 Though the economy and the state are never independent of one another and are co-constitutive in many respects, the way that capital exercises political power in production is dissimilar to the way propertied classes do so in other systems. How to breach the chasm between the two and reconfigure their institutional boundary in a manner that tips the balance of forces in favor of workers, the poor, and the disenfranchised?

One conclusion to draw from Cordelli’s argument is that this has to do more with governance than many in the socialist tradition have thought. It is surprising how little left-wing debate about the state has to do with governance. An illegitimate private state on Cordelli’s description is a condition that most on the Left want to avoid. Cordelli’s argument raises a serious question about how the Left should think about governance in the wake of the rise of the NGO-ization of service provision and social movements, social democracy’s decline, and the collapse of welfare states, or the lack thereof in many parts of the world. Instead of confronting these questions, many on the Left have retreated into “movementism,” or thinking about social movements as surrogate democracies independent of institutionalized forms of political power. Others want to strengthen existing states to repair the damage done in the neoliberal period.

These political differences have a long history on the Left. Anarchists argue that all states are rooted in violence, so they must be done away with. Communists have historically institutionalized the state in a robust way. Social democrats have used different state mechanisms to institutionalize the influence of the labor movement on politics. These strands of thinking tend toward mutual hostility, where each considers the other to have medium-term strategies that fatally undermine the project for social emancipation they seek. But Cordelli’s argument encourages us to ask a different question under today’s new and challenging condition: Are these old debates worth recycling? Are they focusing on the right thing, right now?

Perhaps they are not. The Marxist tradition has always considered the capitalist state to be illegitimate because it depends on the political will of the capitalist class to carry out its duties and precludes equal respect for citizens. Thus, Friedrich Engels said that the state would wither away. Vladimir Lenin said that whatever emerged from the ashes of proletarian revolution would not be a state anymore. Antonio Gramsci tried to analyze the relationship between the revolutionary party and the working class as seeking hegemony without institutionalizing bureaucracy. None of this world of thought is unequivocal in its approval of state power.

One way to interpret these various claims is that socialists either reject statecraft as such or wish to create all-powerful bureaucratic states. In either of these interpretations, states are only necessary in a class society to institutionalize law and order between the rulers and the ruled. But another interpretation could be that these theorists were interested in socialist governance beyond the state as constituted in capitalist society. Governance may be different than state-building and more akin to a system of legitimate public power. The difference is institutional. The alternative system of governance would need to break down the institutional boundary between the state and the economy to disband privatized power in the latter, in a way that meets the criteria for legitimacy. In this case, the state may no longer exist as we know it, but it would be a form of governance that can navigate the waters of a highly complex and interdependent economy.

Cordelli doesn’t go so far, but socialists should. Socialists should also take the occasion of reading Cordelli’s book to think hard about the network of alliances in which they find themselves in today. NGOs have brought civil society to the brink of crisis in their efforts to cobble together a system of public provision that states are unable or unwilling to coordinate. They now have their own interests, their own web of dependencies on both private and public funding, and they are not — regardless of their radical social justice rhetoric — a substitute for public power. They are also not a substitute for the democratic movement organization needed to widen its scope. The Left can no longer afford to be coy about how it envisions alternatives to private government in its neoliberal or “progressive” neoliberal forms, adhering to the rhetoric of these institutions rather than criticizing the substance of their politics. A regime of democratic governance can only be built on the basis of a shared normative horizon. This point is critical for the Left if it wants its political leadership to become authoritative in the eyes of ordinary people. In this institutional context, “social justice” is on a long march through the institutions, but freedom may be left behind. It is our responsibility to turn that ship around.

About the Author

Lillian Cicerchia is an assistant professor of political theory at the University of Amsterdam.