Public services, public goods


The road to social good ...
New policy guidelines in public services

Today, as corporations expand into new areas, globalisation is taking a new direction. This is not only geographical expansion; corporations are now delving into areas of society previously outside their reach, areas which have traditionally been considered as public services and the public sphere. They are increasing their influence and control over environmental protection, education, culture, public amenities, the health service… The move of public goods into private hands – privatisation - is supported by highly influential international economic organisations, such as the World Bank, the European Union, and especially the World Trade Organisation (WTO).

Of particular concern is the WTO’s ‘General Agreement on Trade in Services (GATS)’, an international trade agreement which threatens public services, national assets and hence, society as a whole. Generally speaking, in the Eastern-European region, the public is relatively unaware of the existence of the WTO and GATS. Governments in the region are far less transparent and accountable than they should be. The Hungarian government, for example, made far-reaching promises to privatisation as part of its GATS commitments, without any public consultation whatsoever. The whole energy sector has already been sold, a major part of the water supply system has been privatised, and there are new initiatives to privatise the health care system and higher education – the latter two areas generating a tremendous level of public opposition. In Hungary these threats are not just looming – they are a harsh reality. Neoliberal globalisation is not only effecting how equitable opportunities are redistributed between social classes and generations, but as it deepens its influence, local democracy, sovereignty and the survival of rural life are all coming under threat.

Providing access to public services for Sustainable Development

Guaranteeing access to basic public goods and services is a basic condition for ensuring sustainable human development; moreover this is key to achieving many of the UN Millennium Development Goals i.e. halving the number of those without access to fresh water, providing access to universal basic education, and reducing child mortality by two thirds. To achieve these goals, politicians and businessmen often advocate participation of private capital, claiming that there are not sufficient state funds available. Private capital will, they say, improve the water supply system, upgrade the health care system and provide much awaited improvements in the educational system…

This claim, however, disregards some fundamental considerations…

Privatisation generally goes hand in hand with deregulisation – the state removes the guidelines and legislation that regulates the sector. However, providing public services as public goods means the market for these is seriously flawed, and an extensive institutional background is needed to secure expected improvements in efficiency: competition policy, consumer protection and regulatory frameworks. Thus the privatisation of public services should not be seen as a process from which the state basically withdraws, but rather the contrary, it involves creating a serious institutional infrastructure. Neoliberal reformers often disregard this need, and therefore often no improvement in efficiency follows.

Private investors contribute only in a very limited way to counterbalancing the lack of state funds for improvements in public services. Investors, quite reasonably, want their money back, in addition they want to gain profit from such investments. In other words, private investors are only able to ensure extra capital if savings from improved cost-efficiency eventually outweigh increased administrative costs and also yield profit. If public services are seen as underfinanced these days, and the income they generate is not sufficient to ensure cost-efficient operation, then how would the same public services be capable of yielding additional profit for private investors? There are two basic answers; either by raising prices (which will be paid either by the state or the customers), or by reducing either the scope or the quality of the services. In both cases the underprivileged, those with little spending power, are worst effected. They can neither pay for the higher costs of the services, nor have they the cash to seek a better quality of service when left with poor quality provision.

Regulation, cost-efficiency and additional financial resources are not the most important considerations. The fact is, public services function as corner stones for guaranteeing social and enviromental justice. Generally, public services are considered as fundamental in securing basic human rights, and these rights - the right to fresh water, to health care and to education - are protected in international agreements. However, this is more than just words – these services have to be provided not only promised. By not guaranteeing access to these, governments in effect deny access to public services, violating basic human rights, and threatening basic social values, such as social justice and solidarity. Public services, by definition, are meant to be provided for the public, and naturally this is indispensable for those with a low income. People with cars are not dependent on public transport, people with private health insurance policies will not be too upset about proposed health care privatisation and the eventual rise in costs.

Public services are the foundation of human rights, social solidarity and the basis for a quality life.


In some instances, privatisation and markets can play a role, but definitely in a more restricted way, in fewer sectors and to a lesser extent than neoliberal ideologists advocate. Awakening to such realisations, experts, movements, politicians and citizens are looking for and implementing new alternatives. New forms of participatory planning are becoming increasingly important all over the world. Towns and cities in Latin America, India and Europe are successfully experimenting with participatory budgets. An increasing number of local goverments, convinced of the importance of environmental protection and social security, are passing local regulations (creating GATS-free and GMO-free zones), thus over-ruling international regulations promoting ‘free’ global trade. From managing local sewage and waste to creating alternative energy supply systems, there is a new approach to public works based on local resources and participation, replacing previous money-hungry, resource heavy, unsustainable public works. These are important, ground-breaking initiatives, whereby local governments that have been weakened from above, can gain impetus from below, strengthening themselves, advancing democratisation in the society, contributing to sustainability.