The Ethics of Privatisation
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Durham E-Theses The ethics of privatisation Yeats, Charles How to cite: Yeats, Charles (1998) The ethics of privatisation, Durham theses, Durham University. Available at Durham E-Theses Online: http://etheses.dur.ac.uk/5052/ Use policy The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that: • a full bibliographic reference is made to the original source • a link is made to the metadata record in Durham E-Theses • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders. Please consult the full Durham E-Theses policy for further details. Academic Support Oce, Durham University, University Oce, Old Elvet, Durham DH1 3HP e-mail: [email protected] Tel: +44 0191 334 6107 http://etheses.dur.ac.uk THE ETHICS OF PRIVATISATION by Charles Yeats Abstract The main aim of the thesis is to provide an ethical evaluation of privatisation. We begin by sketching a history of privatisation in order to give an initial impression of how it has dramatically re-drawn the economic borders of the state in Britain and in many other countries across the world. We also show how privatisation has come to challenge the post-war Christian consensus which was supportive of the mixed economy. We men explain why we find a qualified Aristotelian-Thomist tradition offers us the best moral resource for our enquiry. To this end we set out Alasdair Maclntyre's project which seeks to respond to the interminable disagreement in ethics and to reinstate the classical and medieval tradition of the virtues. Then, while engaging with some of his interlocutors, we show why we are in basic agreement with the three main coordinates of his method: human wisdom, the Christian revelation, and rival moral traditions. Next, as the basis for our evaluation, we assemble as many diverse perspectives as the scope of this study allows by pursuing three main lines of enquiry. The first explores the political, economic and moral justification for the nationalisation programme of 1945-51, in order to identify the principal arguments used at the time for and against public ownership. The second explores the experience of public ownership from 1951-79, in order to test the negative case for privatisation which claims mat the nationalised industries failed and therefore there was no practical alternative to privatisatioa The third explores the abandonment of public ownership from 1979 in order to explore the positive case for privatisation in economic liberalism. Having indicated why we are not persuaded by either of these cases for privatisation, as the final part of our evaluation we look at privatisation from the perspective of a broad Christian vision of the common good In the light of this moral tradition, we argue that privatisation fails our two basic tests of social justice, freedom and social equality. On the understanding that in the context of the modern global market it is no longer practicable to restore public ownership, we end by outlining, as a postscript, a new project which looks to build on the strengths of both nationalisation and privatisation while avoiding their weaknesses. THE ETHICS OF PRIVATISATION Charles Yeats 1998 The copyright of this thesis rests with the author. No quotation from it should be published without the written consent of the author an information derived from it should be acknowledged. A Thesis Submitted in Fulfilment of the Requirements for the Degree of Doctor of Philosophy in the University of Durham the Department of Theology September 1998 2 h AUG 1999 Declaration I confirm that no part of the material offered has previously been submitted by me for a degree in this or any other university. Signed €-0 / *» Date Copyright The copyright of this thesis rests with the author. No quotation from it should be published without bis prior written consent and information derived from it should be acknowledged. TABLE OF CONTENTS Acknowledgement iii PARTI: INTRODUCTION AND METHOD 1 Chapterl. "A Major World Revolution" 2 A Brief History of Privatisation 4 The Impact of Privatisation on Christian Social Ethics 7 Outline of Enquiry 16 Literature Survey 18 Chapter 2. Ethics as a Patchwork Quilt 22 Alasdair Maclntyre's Project 24 Human Wisdom 39 The Christian Revelation 50 Rival Ethical Traditions 59 PARTE: A NARRATIVE HISTORY OF NATIONALISATION 64 Chapter 3. The Nationalisation Programme (1945-1951) 65 The Politics of Nationalisation 67 The Economics of Nationalisation 70 The Christian Ethics of Nationalisation 79 An Evaluation 104 i Chapter 4. The Experience of Nationalisation (195M979) 106 The Start-up in the Fifties 109 The Heyday of the Sixties 111 The Turbulent Seventies 28 The Lessons of Experience 150 Chapter 5. The Abandonment of Nationalisation (1979-1989) 156 Harold Wilson 1S9 Edward Heath 161 The Rise of Economic Liberalism 166 The Economic Liberal Case Examined 190 PART m: THE ETHICS OF PRIVATISATION 204 Chapter 6. Privatisation and the Common Good 205 The Common Good 205 The Christian Understanding of Property 212 Social Order 219 Social Justice 225 Postscript A New Project 237 The Renewal of Civil Society 238 The Re-distribution of wealth 239 The Stakeholder Corporation 240 Global and Regional Governance 242 BIBLIOGRAPHY 245 ii ACKNOWLEDGEMENT I am grateful to University College, Durham, for giving me the opportunity for this study. My Supervisor, Dr. Alan Suggate has been painstaking in bis reading and correction of my text and has been invaluable in the advice he has given. I am also grateful to my wife, Alison, and my children, Katie and James, for their patience and support. iii PARTI INTRODUCTION AND METHOD 2 Chapter 1 A MAJOR WORLD REVOLUTION' Not a had record for something we were constantly told was "just not on". (Margaret Thatcher)1 From the Bolshevik revolution of 1917 until the collapse of Soviet communism in 1989, the world was witness to a great social experiment It sought to turn society on its head by forcing the state to serve the interests of the working class. A crucial part of the experiment was nationalisation: the taking into public ownership of economic enterprise. This was the means of wresting economic power from the former rulers and of consolidating the political power of the new. So radical was the experiment that it led to a state of continuous but undeclared war between East and West: the Cold War. In post-war Britain another experiment with similar objectives was tried. It was less radical man communism, drawing its inspiration mainly from nineteenth century romanticism, the Fabian idea of incremental social change, democratic socialism, and Christianity. Nevertheless, it too entailed an ambitious programme of nationalisation. A great list of major industries were taken into public ownership on the public corporation model. The result was a mixed economy, a hybrid of state socialism and capitalism. This compromise avoided the glaring moral failures of both communism and fascism by holding on to a commitment to parliamentary democracy. It also enabled the British working class movement to sustain their political challenge for over three decades and to improve working conditions in the nationalised industries. The early successes of these social experiments caught the imagination of the developing countries. In those struggling to emancipate themselves from colonialism or the legacy of colonialism, nationalisation came to be widely espoused by the liberation movements as a means of ending control of their economies by foreigners. It was also widely adopted as a means of promoting development through the public corporation. Indeed so popular was the public corporation, with its impressive social and moral purpose, mat John Redwood described it as one 'Thatcher, M. The Downing Street Years (Harper Collins: London, 1993), p 687 'A Major World Revolution' 3 'of the most remarkable intellectual exports of all funs' .2 By the 1970s, however, the world had moved on. The great socialist experiments were everywhere deeply in trouble as, ins response to economic decline, an emphasis on wealth creation took over from that of distributive justice. Then, in 1983, Britain's first big privatisation, that of British Telecom, was to prove a startling success. It provided a means for the impecunious state to lay its hands on a new source of "ready cash". If also provided governments beleaguered by militant trade unions the hope that they could buy off the workers by offering them the bribe of popular capitalism: a shareholder democracy. Soon Margaret Thatcher's political, economic and social revolution was to be emulated and envied throughout the world And it was not long before the great Berlin Wall was to com© tumbling down in 1989, bringing with if the full revelation of the economic failure of public ownership in the former Soviet Union. In this radically new world privatisation, understood as an ideology which provides a justification of the sale of public enterprises on wider grounds than the selective and mainly microeconomic approach called denationalisation, has swept everything before it3 If has launched what Redwood has called 'a major world revolution , and any politician who has resisted has been thrust aside.4 In what follows, in order to give a fuller impression of the scale of this revolution, we shall begin by describing how privatisation has not only dramatically redrawn the economic boundaries of the British state, but has also commanded the support of all three main political parties, and how from Britain, privatisation has been exported to the rest of the world We shall then review the confused state of Christian social ethics in the wake of 2 Redwood, J.