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The Fascist Origin and Essence of Privatization

By       Message Eric Zuesse     Permalink
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From Privatized Parking-- meter
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Conservatives support privatizing schools, prisons, hospitals, and other social services. The privatization-mania is also increasingly occurring in higher education, as conservatives in Congress push measures to raise the percentage of colleges that are owned by for-profit corporations, and to decrease the percentage that are either public or nonprofit. 

The argument given for such privatization is that corporations are more efficient because they are "the free market" way of serving people's needs. However, progressives argue to the contrary, that in these parts of the economy, where "profits" for the public are hard if not impossible to measure, government does a better and less-inefficient job than corporations do. And, now, even a conservative state's governor seems to have switched to the latter conclusion.

On 3 January 2014, the AP reported an instance in which the Republican Governor of one of the three most-Republican states in the U.S., Idaho, is doing a 180-degree turn, and he announced  that "the corrections department will take over operation of the largest privately-run prison in the state," from  Corrections Corporation of America. The AP's Rebecca Boone, in Boise, reported, that, whereas "In 2008, he floated legislation to change state laws to allow private companies to build and operate prisons in Idaho," he now is taking over operation of this CCA prison, because of "mismanagement and other problems at the facility." Only a few months before, on September 16th, that same reporter had headlined "CCA in contempt for prison understaffing," and she quoted the federal judge's order, which said that, "For CCA staff to lie on so basic a point -- whether an officer is actually at a post -- leaves the Court with serious concerns about compliance in other respects, such as whether every violent incident is reported." The judge found that CCA was lying because they wanted more of their income from the state to go toward boosting their bottom line for stockholders, and less of it to go toward feeding the prisoners and protecting them from each other. The judge's order said, "If a prospective fine leads to $2.4 million in penalties, CCA has no one to blame but itself." CCA had been caught by the judge in persistently lying to the state while shortchanging prisoners on the prison's obligation to provide basic services to inmates. The tension between private profits versus public services was clear in this case. CCA had incentive to cheat inmates in order to raise profits, and now a federal judge was fining CCA for doing precisely that.

Similarly, countries such as France, Sweden, UK, and the OECD generally, where health care is entirely or largely provided by the government, have better health-care outcomes and far lower healthcare costs, on a per-person basis, than does the U.S., where the profit motive in medical care is far more encouraged.

However, many Americans prefer the privatization of government services, because they believe that such a movement toward "shrinking big government" is in the direction of greater freedom, and is the only ethical direction, a direction in favor of greater democracy, in accord with the U.S. Constitution. Though the U.S. Constitution is by no means a free-market document, and concerns political issues instead of economic ones, there is a strong belief, especially among conservatives, that it is primarily about economics. There is consequently a myth about privatization.

The Myth About Privatization: Privatization was introduced by two democracies, the USA and UK, in the 1980s, not by prior fascist regimes.

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The Truth About Privatization: Privatization was, in fact, a big aim of the elite fascists, right from the very start of fascism. 

Explanation of the Reality:  Aristocrats control the private wealth. Privatization means that they get to control also what was previously public. Privatization moreover provides corrupt politicians (their politicians) an opportunity to pay off their contributors (themselves) by offering them an inside track on public-asset sales. So, it's not surprising that privatization is the way of fascist countries.

Documentation of the Reality: In September 2009, the European University Institute issued their RSCAS_2009_46.pdf, titled "From Public to Private: Privatization in 1920's Fascist Italy," (subsequently retitled "The First Privatization: Selling SOEs" in the 2011 Cambridge Journal of Economics) by Germa Bel, who said in her summary: "Privatization was an important policy in Italy in 1922-1925. The Fascist government was alone in transferring State ownership and services to private firms in the 1920s; no other country in the world would engage in such a policy until Nazi Germany did so between 1934 and 1937." Then, in the February 2010  Economic History Review, she headlined a study specifically about the German case, "Against the Mainstream: Nazi Privatization in 1930s Germany." Here, she reported that, though "privatizations in [fascist] Chile [under Pinochet] and the UK, which began to be implemented in the 1970s and 1980s, are usually considered the first privatization policies in modern history, ... none of the contemporary economic analyses of privatization takes into account an important, earlier case: the privatization policy implemented by the National Socialist (Nazi) Party in Germany. ... Although modern economic literature usually fails to notice it, the Nazi government in 1930s Germany implemented a large-scale privatization policy." Furthermore, "Germany was alone in developing a policy of privatization in the mid-1930s," since Italy had finished its privatizations by then. 

The purposes of these privatizations, in both cases, were chiefly "receipts from selling" the assets to finance rearmament, and also "the desire to increase support from" the major aristocrats (such as, in Germany, the armaments-making firms of the Thyssens, the Krupps, and the Flicks), who received sweet deals on these assets. 

Much later, of course, Russia under Boris Yeltsin also privatized, while that nation switched from being communist, to becoming fascist. (Yeltsin was no fascist himself; he wasn't intelligent enough to be anything, ideologically. He was just confused, mistaken.) China later did the same thing, when it, too, switched from being communist to being fascist.

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Connection to Privatization in the U.S: To continue with prisons as the case: Huffington Post, on 22 October 2013, headlined a major investigative news report "Private Prison Empire Rises Despite Startling Record of Juvenile Abuse," and reporter Chris Kirkham found rampant political paybacks in the privatizations of juvenile prisons. As a typical example of the consequences: Florida's "sweeping privatization of its juvenile incarceration system has produced some of the worst re-offending rates in the nation. More than 40 percent of youth offenders sent to one of Florida's juvenile prisons wind up arrested and convicted of another crime within a year of their release, according to state data. In New York state, where historically no youth offenders have been held in private institutions, 25 percent are convicted again within that timeframe." Those children in Florida are experiencing the brunt of fascism. But so are taxpayers. 


Investigative historian Eric Zuesse is the author, most recently, of They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST'S VENTRILOQUISTS: The Event that Created Christianity.


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