Faux Private Interests, Part III: Sean Gabb on ASI-Style "Privatization"

An old gem from Free Life Commentary:

To be fair, the Adam Smith Institute has never been in the same business as the Libertarian Alliance or the Institute of Economic Affairs. It does not propagate ideas independent of who is in power, and wait for some political interest to take them up. Instead, it sells market solutions to statist problems. A typical Libertarian Alliance pamphlet on privatisation, for example, will explore the abstract justifications for getting government out of a certain area, and will describe the general benefits of doing so. An Adam Smith Institute report, on the other hand, will look at the technical questions of how to privatise - at what the shape of the new private activity ought to be, at what special interests need to be conciliated, and so forth. And the report will often only sketch out the details of a proposal that will be fully explained in direct consultancy with a company or ministry....

My objection is not to what Dr Pirie is doing at the moment or what he is about to do. Rather, it is to the whole strategy of the Adam Smith Institute as developed since the early 1980s. It may be that Dr Pirie believes in limited government under the rule of law.... But I have to doubt whether his overall effect on British politics has been to do other than help entrench statism far more securely than it ever was in the past.

The old statism was at least mitigated by incompetence. The people in charge of it were paid too little to feel really important; and much of their energy was absorbed in disputes with stupid or malevolent union leaders. They presided over a system that was never very strong, and that failed to weather the storms of the 1970s.

As reconstructed in the 1980s - partly by the Adam Smith Institute - the new statism is different. It looks like private enterprise. It makes a profit. Those in charge of it are paid vast salaries, and smugly believe they are worth every penny....

But for all its external appearance, the reality is statism. And because it makes a profit, it is more stable than the old. It is also more pervasive. Look at these privatised companies, with their boards full of retired politicians, their cosy relationships with the regulators, their quick and easy ways to get whatever privileges they want....

As with National Socialism in Germany, the new statism is leading to the abolition of the distinction between public and private. Security companies, for example, are being awarded contracts to ferry defendants between prison and court, and in some cases to build and operate prisons. This has been sold to us on the - perfectly correct - grounds that it ensures better value for money. But it also involves grants of state powers of coercion to private organisations. All over the country, private companies are being given powers of surveillance and control greater than the Police used to possess.

....There has been no diminution in the economic power of the State, only a change in its mode of operation....

Yes, I have written for the Adam Smith Institute. I hold many of its people in high regard. I have enjoyed many of its Christmas gatherings - though no more after this appears on the Internet, I suspect! But it has done nothing on the whole to promote liberty in the past 21 years. Every one of the panegyrics on Hayek that I find in its Catalogue is more than balanced by advocacies of the kind of market reform that simply strengthens the hand of the statist enemy. Dr Pirie may pride himself on the number of solutions he has provided. In truth, he is part of the problem.

Once again, this sort of thing is why I don't welcome "privatization" and "deregulation" as a "step in the right direction," just because it increases the amount of activity that's carried out in the nominally "private" sector. When it takes place within an overall statist framework, it just makes state capitalism more efficient and stable; although the nominal public sector may control a smaller percentage of GDP, the system as a whole becomes even more statist and exploitative. As Brad Spangler noted in my previous post's blockquote, increasing the ratio of quasi-private bagmen to the state gunman just makes robbery more efficient. The nominally private corporations that profit from the ASI's "privatized" version of political capitalism, like the big industrialists who conspired with Papen and Hindenburg to put Hitler in power, are part of the state.