An editorial in the Financial Times (21 January) summed up well the Government's new plan for the collapsed bank Northern Rock.
"The plan is this. Northern Rock will issue billions of pounds in new bonds... and repay its debt to the Bank of England. Private investors will [take over the bank]. And to make it work the bonds - all £30 billion or so - will carry a government guarantee...
"The package amounts to a subsidy [from the Government to the Northern Rock shareholders and its putative buyers] and it may be worth billions of pounds...
"[But] the political attractions are obvious. The Government would avoid nationalisation, which would have an uncomfortable left-wing sound to it..."
It's a vignette of post-1980 capitalism. Everything is privatised. The market is Heaven. But there is a priest sedulously fleecing the flock to maintain the welfare of the Gods who inhabit this Heaven. Namely, the Government.
Vast areas of the economy are officially regulated and subsidised. But the Government regulation serves mostly to guarantee the profits of the private operators and contractors.
It is neither free market, nor public ownership serving public interests, but the State as guarantor for capital. Marx once wrote that the State was an "executive... committee for managing the affairs of the whole bourgeoisie". It is now also an insurance society for the bourgeoisie.
Take another example: the railways. The railways were privatised in 1994. The Tory election manifesto of 1992 had declared: "Competition and private ownership are the most powerful engines of economic efficiency, innovation and choice... Companies which looked inwards to Whitehall are now listening to their customers and shareholders.
"We will end British Rail's monopoly. We will sell certain rail services and franchise others".
13 years on, there is no flowering of "efficiency, innovation and choice" on the railways. Railworkers' jobs and conditions have been cut, services are poor, fares are often exorbitant. But the Government subsidy to passenger railways now runs at nearly £5 billion (2005/6), or 51% of their total revenue. For British Rail in the late 1980s the subsidy was 25% of revenue.
Christian Wolmar, an expert on rail privatisation, says that even those figures do not say it all. They do not "show the right position because Network Rail's borrowing is not included. That has been increasing at about £2 billion per year and will clearly never be paid back".
To be sure, the contractors and franchisees compete, and sometimes companies lose franchises. Sometimes franchise-holders go bust, as Railtrack did in 2002. But the Government made sure that Railtrack bosses and shareholders got a good pay-off.
If the private contractors do well, they pocket the profits, and the Government tells us that, for the market to work, winners must be allowed to win. If they run into trouble, then, as with Northern Rock, the Government will help out the big shareholders.
Lawyers, accountants, consultants and so on make huge profits from the processes of franchising and contracting-out, without any risks at all.
Another example is the Private Finance Initiative, under which new schools and hospitals are built with finance from private-sector companies, which then pocket a yearly "repayment" for 30 years or more.
This is nothing like the "free market" of the economic textbooks, since the "market demand" and the repayments are effectively guaranteed by the Government. Yet, as of 2006, the PFI contractors were set to pocket £150 billion for outlays of £43 billion.
As extras, the PFI contractors can impose huge charges for small repair and renewal jobs. And, on the side, accountants, lawyers, and consultants enrich themselves.
From a world in which many basic industries and services were run directly by the state - actually according to the overall interests of the national capitalist class, but at least notionally with some public accountability - we have moved to one where those industries and services are controlled by an oligopoly of competing giant multinationals. Each Government's role is redefined as making its national economic arena advantageous for the operation of those multinationals.
What is wrong about it is not the multinationality, but the profiteering and the debasement of government. Northern Rock is yet another example.
