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Privatization and the Welfare State

Privatization and the Welfare State

by Sheila B. Kamerman

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Looking at the theory and practice of privatization in its broadest manifestations, the contributors to this volume scrutinize the combination of public and private initiatives that makes up the present U.S. social sector. As they discuss privatization both in production and delivery of services and in financing, they reveal complexities that have been ignored in


Looking at the theory and practice of privatization in its broadest manifestations, the contributors to this volume scrutinize the combination of public and private initiatives that makes up the present U.S. social sector. As they discuss privatization both in production and delivery of services and in financing, they reveal complexities that have been ignored in recent ideological arguments. This book, while warning about political misuse of privatization, offers an unusually rigorous definition and theory of the concept and presents a number of case studies that show how public and private sectors variously cooperate, compete, or complement one another in social programs--and how various systems have accommodated to the privatization rhetoric that has come to the fore under the Reagan administration.The contributors are Marc Bendick, Jr., Evelyn Z. Brodkin, Arnold Gurin, Alfred J. Kahn, Sheila B. Kamerman, Michael O'Higgins, Martin Rein Richard Rose, Paul Starr, Mitchell Sviridoff, and Dennis Young.

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Princeton University Press
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Studies from the Project on the Federal Social Role Series
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9.10(w) x 6.00(h) x 0.70(d)

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Privatization and the Welfare State

By Sheila B. Kamerman, Alfred J. Kahn


Copyright © 1989 Princeton University Press
All rights reserved.
ISBN: 978-0-691-07811-3


The Meaning of Privatization


Privatization is a fuzzy concept that evokes sharp political reactions. It covers a great range of ideas and policies, varying from the eminently reasonable to the wildly impractical. Yet however varied and at times unclear in its meaning, privatization has unambiguous political origins and objectives. It emerges from the countermovement against the growth of government in the West and represents the most serious conservative effort of our time to formulate a positive alternative. Privatization proposals do not aim merely to return services to their original location in the private sphere. Some proposals seek to create new kinds of market relations and promise results comparable or superior to conventional public programs. Hence it is a mistake to define and dismiss the movement as simply a replay of traditional opposition to state intervention and expenditure. The current wave of privatization initiatives open up a new chapter in the conflict over the public/private balance.

This paper attempts to clarify the meaning of privatization as an idea, as theory and rhetoric, and as a political practice. In the process I hope to explain why I generally oppose privatization, even though I favor some specific proposals that privatization covers. But apart from this political judgment, I take privatization seriously as a policy movement and as a process that shows every sign of reconstituting major institutional domains of contemporary society.

Privatization as an Idea

In the ideological world we inhabit, contesting interests and parties use "public" and "private" not only to describe but also to celebrate and condemn. Any serious inquiry into the meaning of privatization must begin, therefore, by unloading the complex freight that the public/private distinction carries. In this section I analyze, first, the general uses of the public/private distinction and, second, the recent political application of the concept of privatization.

The Public / Private Distinction and the Concept of Privatization

The terms public and private are fundamental to the language of our law, politics, and social life, but they are the source of continual frustration. Many things seem to be public and private at the same time in varying degrees or in different ways. As a result, we quarrel endlessly about whether some act or institution is really one or the other. We qualify the categories: this group is quasi-public, that one is semi-private. In desperation, some theorists announce that the distinction is outdated or so ideologically loaded that it ought to be discarded, or that it is a distinction without a difference (Klare, 1982; Kennedy, 1982; Freeman and Mensch, 1988). Yet the terms can hardly be banished, nor ought they be (Starr, 1988a). To speak intelligently about modern societies and politics without using the words "public" and "private" would be as great an achievement as writing a novel without the word "the." However, neither is necessarily the sort of achievement that other theorists or novelists would care to imitate.

The frustration with these ubiquitous categories partly arises because public and private are paired to describe a number of related oppositions in our thought. At the core of many uses are the two ideas that public is to private as open is to closed and as the whole is to the part. In the first sense, of public being open, we speak of a public place, a public conference, public behavior, making something public, or publishing an article. The private counterparts, from homes to diaries, are private in that access is restricted and visibility reduced. The concepts of publicity and privacy stand in opposition to each other along this dimension of accessibility. Public is to private as the transparent is to the opaque, as the announced is to the concealed. Similarly, a man's public life is to his private life as the outer is to the inner realm.

On the other hand, when we speak of public opinion, public health, or the public interest, we mean the opinion, health, or interest of the whole of the people as opposed to that of a part, whether a class or an individual. Public in this sense often means "common," not necessarily governmental. The public-spirited or public-minded citizen is one concerned about the community as a whole. But in the modern world the concepts of governmental and public have become so closely linked that in some contexts they are interchangeable. The state acts for the whole of a society in international relations and makes rules binding on the whole internally. Public thus often means official. In this sense a "public act" is one that carries official status, even if it is secret and therefore not public in the sense of being openly visible. Indeed, "private" originally signified, according to the Oxford English Dictionary, "not holding public office or official position." As Albert Hirschman (1982) points out, this is a meaning that survives in the army "private," that is, the "ordinary soldier without any rank or position." Now, of course, private is contrasted with public to characterize what lies beyond the state's boundaries, such as the market or the family.

These different contrasts between public and private lead to some apparent conflicts in defining what lies on each side of the boundary. One such conflict concerns the location of the market. To an economist, the marketplace is the quintessentially private. But to a sociologist or anthropologist concerned with culture, the marketplace is the quintessentially public — a sphere open to utter strangers who nonetheless are able to understand the same rules and gestures needed in what may be a highly ritualized process of exchange. While economists use the public/private distinction interchangeably with the contrast between state and market, analysts of culture — particularly those concerned with the roles and relations of men and women — take the public sphere to include the market as well as politics and contrast them both with the private domain of the family. In this sense, the public/private distinction is sometimes taken to mark out the contested boundaries of the male and female worlds — a usage that takes us back to the notion of the private as being more closed, more shielded from contact and view, than the open encounters of public life (Elshtain, 1981; Rosaldo, 1974; Imray and Middleton, 1983).

From these varying uses of the categories come several contrasting conceptions of the public sphere. The public sphere may be conceived as the open and visible — the sphere of public life, public theater, the public marketplace, public sociability. It may also be conceived as that which applies to the whole people or, as we say, the general public or the public at large, in which case the public may consist of an aggregate or a mass who have no direct contact or social relation — the very opposite of a sphere of sociability. Or the public sphere may be conceived specifically as the domain circumscribed by the state, although exactly where to draw the state's boundaries may be difficult indeed.

The general meanings of privatization, then, correspond to withdrawals from any of these variously conceived public spheres. Historians and sociologists write about the withdrawal of affective interest and involvement from the sphere of public sociability. For example, in their work on the development of the modern family, Michael Young and Peter Willmott (1973), argue that as the modern household became equipped with larger homes, private cars, televisions, and other resources, more time and capital came to be invested in the private interior of the family and less in public taverns, squares, and streets. Similarly, Richard Sennett (1977) suggests that since the eighteenth century modern society has seen a decline of public culture and sociability, a deadening of public life and public space, a privatization of emotion. Such arguments shade into a second meaning of privatization: a shift of individual involvements from the whole to the part — that is, from public action to private concerns — the kind of privatization that Hirschman (1982, pp. 121 — 130) describes as one swing in a public/private cycle of individual action. In this sort of public-to-private transition, the swing is not from sociability to intimacy but from civic concern to the pursuit of self-interest.

Privatization can also signify another kind of withdrawal from the whole to the part: an appropriation by an individual or a particular group of some good formerly available to the entire public community. Like the withdrawal of involvement, privatization in the sense of private appropriation may well alter the distribution of welfare.

From these meanings it is but a short step to the sense of privatization as a withdrawal from the state, not of individual involvements, but of assets, functions, indeed entire institutions. Public policy is concerned with privatization at this level. But the two forms, the privatization of individual involvements and the privatization of social functions and assets, are certainly related, at least by ideological kinship. A confidence that pursuit of private gain serves the larger social order leads to approval for both self-interested behavior and private enterprise.

Thus far I have been talking about privatization as if both spheres, public and private, were already constituted. But in a longer perspective, their constitution and separation represent complementary processes. Much historical experience corresponds to Simmel's paradoxical dictum that "what is public becomes ever more public, and what is private becomes ever more private" (Simmel, 1950, p. 337). This is true specifically of the histories of the state and the family. The difference between patrimonial domination and modern bureaucracies, as Weber describes the two, is precisely that in the patrimonial state public and private roles were mixed and in the modern state are more clearly distinguished (Weber, 1968). The modern state distinguishes offices and persons. The office is public, and its files, rules, and finances are distinct from the personal possessions and character of individuals. As public administration and finance were separated from the household and personal wealth of the ruler, the modern state became, in effect, more public; the person and family of the ruler, more private (Braun, 1975; Webber and Wildavsky, 1986, pp. 148–151). That the domestic sphere has generally become more private is one of the classic themes of modern sociology and the history of the family (Ariès, 1962).

The rise of the liberal state specifically entailed a sharpening of the public/ private distinction: on the one hand, the privatizing of religious and moral belief and practice and of economic activity formerly regulated by the state; on the other, a commitment to public law and public political discussion. Classical liberalism is often represented as a purely privatizing ideology, but liberals were committed to suppressing markets in votes, offices, and tax collection, not to mention human beings. Strengthening the public character of the state is a continuity in liberal thought from its classical to contemporary phases. Moreover, as Stephen Holmes (1984) argues, the liberal effort to privatize otherwise rancorous religious differences promoted a civilized public order. In this way, some kinds of privatization are not the enemy of the public realm but its necessary support.

In liberal democratic thought, public and private are central terms in the language of claims making. In particular, they provide a deeply resonant vocabulary for the making of claims against the state. These are of two kinds. First, the concept of a public government implies an elaborate structure of rules limiting the exercise of state power. Those who wield power are to be held publicly accountable — that is, answerable to the citizens — for their performance. Government decisions and deliberations must be public in the sense of being publicly reported and open to general participation. In short, the citizens of a liberal state are understood to have a right to expect their government to be public not only in its ends but also in its processes. Second, when the members of a liberal society think of their homes, businesses, churches, and myriad other forms of association as lying in a private sphere, they are claiming limits to the power of that democratic state. The limits are not absolute — private property rights, for example, are not an insuperable barrier to public control or regulation — but when crossing from public to private the presumptions shift away from the state and any state intervention must meet more stringent tests of the public interest.

Public and private in liberal thought have become pervasive dualities — or, perhaps better said, polarities — associated with the state in one direction, the individual in the other. Intermediate entities such as corporations have typically been divided between the two categories. Until the nineteenth century in the United States, there was no clear legal distinction between public and private corporations. Initially, cities were not sharply distinguished in the law from business enterprises. But in the mid 1800s cities became classified as agencies of the state, whereas business corporations came to be treated as individuals. As public agencies, cities were allowed only such powers as states delegated to them; as Active individuals, private corporations came to enjoy rights protected by the Constitution (Frug, 1980). This bifurcation between powers and rights lies at the foundation of the contemporary legal distinction between the public and private sectors.

Behind the legal categories, of course, the boundaries are blurred. On the one hand, private interests reach into the conduct of the state and its agencies; on the other, the state reaches across the public/private boundary to regulate private contracts and the conduct of private corporations and other associations. Through tax preferences and credit guarantees, the state shapes private economy and society. But the degree of penetration varies, and the public/private system of classification is used to express these variations. So, for example, among private corporations, we distinguish those that are privately held from those that are publicly traded and subject to the regulations of the Securities and Exchange Commission. The latter are often called public corporations, by which we actually mean public private corporations. Among those public private corporations are some subject to more extensive regulation, such as the utilities, which are especially public, public private corporations. And since the utilities, in turn, have some lines of business defined as public and others as private, the public/private boundary runs within them as well as around them.

It is as if, on finding two boxes labeled public and private, we were to open the private box and find two more boxes labeled public and private, which we would do again — and again — opening ever smaller boxes until we reached the individuals far inside, whom we then split into respective offices and persons. Moreover, if the boxes have been assembled by reasonably competent lawyers, they may be extremely intricate and some will have misleading labels. But this complexity and the legal manipulation of the categories do not invalidate their usefulness or underlying meaning. To speak of a public corporation in the private sector ought really to be no more confusing than saying that North Carolina is in the South. Public and private give us relative locations.

A further source of frustration with the public/private distinction is that the terms do not have consistent meanings from one institutional sphere to another. In the United States, the difference between public and private schools is not the same as the difference between public and private broadcasting. An American public school is public, not only in that it is state-owned and financed, but also because it is open to all children of eligible age in its area. Private schools can reject applicants, but public school systems are denied that option. Public is to private not only as state is to nonstate but as open is to closed. In television broadcasting, however, the viewing public has open access to commercial as well as public channels. The difference lies in financing and programing. The public channels receive government support and do not choose programing to maximize audience ratings, though in fact even public broadcasting now competes for private corporate sponsorship and some public stations are legally organized as private nonprofit corporations. To make matters still more complicated, the differences between public and private institutions do not follow parallel lines in other countries. To take broadcasting again, public television or radio in the United States is more dependent on private financing, less subject to control by political authorities, and less the symbolic voice of the state than the state-owned networks of other Western nations, not to mention the Soviet bloc and Third World.


Excerpted from Privatization and the Welfare State by Sheila B. Kamerman, Alfred J. Kahn. Copyright © 1989 Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS.
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