From social contract to private contracts: The privatisation of health, education and basic infrastructure

The privatisation of basic public services has become a dominant issue in policy discourse in industrialised as well as developing countries. Over the last few years, policies affecting water, electricity, health and education in some countries have generated as much political controversy and social mobilization as taxation, land reform or even trade. What makes basic services so special? Market-oriented service provision policies have been subject to an unprecedented level of public scrutiny. From the perspective of diverse civil society movements, the issue of basic services cuts across a wide range of issue areas, such as: accountability and transparency of international governance institutions, human rights, poverty reduction, democratization, national sovereignty, gender equality, debt reduction and cancellation, and environmental protection. Policy-oriented NGOs that advocate for a particular cause are now putting public services on their agenda. For example, a number of citizen organisations with experience in monitoring the Bretton Woods institutions have taken a sudden interest in the General Agreement on Trade in Services, a WTO agreement that could «lock in» privatisation (making it practically irreversible) and undermine the ability of governments to regulate or even finance public services. There is also a special economic dimension to some basic services. In the case of water and electricity, distribution tends to be a natural monopoly. Physical reliance on a single water pipe network (and often a single water source) or a common power grid leaves little room for competition. The monopolistic dimension of basic infrastructure makes a highly competent, wellfunded and politically autonomous government regulator essential for privatisation. Yet in the poorest countries where private provision is promised to bring the greatest benefit, these institutional preconditions are almost always missing. In the absence of effective regulation, private monopolies can charge whatever they wish and can largely ignore customer preferences, thus making a mockery of claims about the benefits of competition. On one hand, the Bretton Woods institutions and their major shareholder governments tout the benefits of privatising the public sector. A discussion draft of the World Bank’s 2004 World Development Report, whose theme is services for the poor, states that neither growth nor public spending increases will improve services enough to reach the Millennium Development Goals (MDGs). It then argues that achieving the MDGs requires a rejection of the current government provision model of service delivery and the adoption of reforms that largely bypass the state, including private concessions and sub-contracting. On the other hand, civil society organisations across the global North and South are increasingly resisting the adoption of policies that put basic services into private hands. Some privatisation measures have led to spontaneous citizen mobilization that threatened the survival of national governments. Given the relevance of basic service provision to reducing poverty and its growing visibility, the authors of the 2003 Social Watch country reports were asked to give special attention to the issue. Their findings are the subject of this essay. From social contract to private contracts: The privatisation of health, education and basic infrastructure