Book Review – The Privatization Putsch by Author Herschel Hardin

October 30, 2002

Book Review – The Privatization Putsch by Author Herschel Hardin

The late 1970s and 1980s saw privatization-frenzy among some western industrialized nations, most notably Britain and the United States. Canada”?never immune to ideological influences imported from our parent overseas and big brother to the south”?quickly jumped on the privatization bandwagon. Chanting the mantra “private enterprise is good, public enterprise is bad”, proponents of governmental divestiture of public holdings set out to convince Canadian governments and the Canadian public to transfer ownership of millions (now billions) of dollars worth of assets collectively owned by all Canadians to private individuals and corporations. Unfortunately, in many cases they have succeeded and the push for privatization continues to the present day.

In the midst of the nascent privatization din in Canada, Herschel Hardin produced a work that cut through the misinformation and deliberate manipulation of public opinion to disclose the truth about the history of Canadian public enterprise, its value to Canadians, and the depth of loss to all of us (except those few private individuals who profit from the demise of public enterprise) when publicly owned enterprise is transferred to the private sector. Hardin’s work is entitled The Privatization Putsch and it was published in 1989 by the Institute for Research on Public Policy. Unfortunately, the book has been out of print for some time and is not easily acquired. The Athabasca University library has a copy that can be borrowed (HD 3850.H262 1989) by students and some other university and college libraries possess copies for loan as well. I managed to acquire a used copy for myself, after about a week of searching the Internet, through I am disappointed that the Privatization Putsch has gone out of print, as the issues that Hardin explores are as poignant today as they were in 1989. This is particularly true in regions under neo-conservative/neo-liberal rule, which are experiencing a renewed privatization putsch, such as in British Columbia. Anyone who desires an insight into the topic of private versus public enterprise should undertake to procure and read Hardin’s book.

Hardin begins his work by examining the privatization debate, which is really no meaningful debate at all. The vast majority of the proponents of privatization begin with the assumption that private enterprise is superior in all ways to public enterprise and that transfer of publicly owned assets to the private sector is the right thing to do as a matter of common sense. Thus, many pushers of the doctrine deliver “how to” commentaries, rather than participating in meaningful examinations of the benefits of shared public ownership. This is not surprising for two reasons: first, those pushing privatization generally belong to the same relatively small group that will profit from its adoption at the expense of the majority of society; and, second, a close examination of public enterprise discloses that privatization makes no economic, political, or social sense. Since Britain (under Thatcher) is generally seen as the first western industrial nation to lead the privatization charge (although the genesis of the privatization doctrine had its actual locus in the United States), Hardin examines the history of British public/private enterprise in some detail. Underscored, is the surprising frequency of private enterprise failures that were bought by the British government as “hospitalization” cases and under public ownership, turned around to become profitable. These same profitable public enterprises were subsequently turned back over to the private sector at a fraction of their market values during Thatcher’s privatization frenzy.

Hardin goes on to compare public enterprise in Europe with that of the rest of the western world; the difference between real and counterfeit “shareholder’s democracy” (the latter touted as democratic private-sector ownership by espousers of the privatization doctrine); the ways that propaganda is utilized in the right-wing controlled mass media to deceive the public into support of privatization; the huge parasitic bureaucracy that has bloated due to the privatization of public enterprises including merchant bankers, stock brokers, and investment dealers, among many others. With his examination of the wider international/domestic political and social context within which privatization occurs complete, Hardin gives the reader a look through an intra-national and provincial Canadian lens. He examines numerous well-known Canadian privatization failures, both social and economic and provides real illustrations of how so-called “aggressive accounting” can make a struggling public enterprise appear to become instantly profitable after privatization (although the privatization of CN Rail took place after the publication of the Privatization Putsch, it is a case in point wherein the federal government forgave a crushing debt just prior to turning the carrier over to the private sector). He examines the history of public enterprise in Canadian economic history and points out the many instances of public enterprise success in areas where the private sector either failed economically or refused to invest in the first place; and he looks at the political functions that governments can undertake using public enterprises as tools to initiate public policy, which are impossible to affect through privately owned firms.

I wish that Herschel Hardin would update and republish the Privatization Putsch, as the truisms regarding public enterprise that he uncovers are as valid today as when the book was first published”?and equally important for the public to comprehend. In any case, the Privatization Putsch is vital reading for anyone desirous of the truth behind an issue that is still a frequent topic of social, economic and political pundits from all points on the political spectrum.

Wayne E. Benedict is a Locomotive Engineer at BC Rail and President of the Canadian Union of Transportation Employees Local 1. He is working toward his Bachelor of Administration in Industrial Relations and Human Resources at Athabasca University.