| Summary Private enterprise has three direct claimants on revenue -- workers, government and owners of capital. The available revenue is divided amongst the three claimants. The dominant claimant is the owners of capital who exercise a dictatorship over the production and distribution of goods and services. Public enterprise has two direct claimants on revenue -- workers and government. The available revenue is divided amongst the two claimants. Therein lies a radical difference in the economic structure of the socialized economy that points towards an alternative arrangement in society that consists of only two claimants on the revenue produced by the working class - workers and government -- and the elimination of owners of capital as a claimant of revenue within the basic sectors of the economy. This radical difference also requires a departure from the existing politics and system of governance towards new arrangements where the actual producers, the working class and middle strata, exercise control over the production of use-value and its distribution without the interference and control of owners of capital. The organization of public services, how they are delivered, and how the value they create or require is distributed and priced are political issues. Workers and their allies must recognize the political nature of all decisions surrounding economic affairs and become political themselves. Individual workers must be political to defend their rights and basic interests. From individual actions, they must unite with their fellow workers and allies in a collective political movement to defend the rights and interests of all and the general interests of society. *** For self-serving reasons, neoliberals deliberately confuse the economics of privatization. The Workers' Opposition should be armed with basic economic facts and theory to cut through the fog of disinformation. Public services and enterprises fall into two broad categories that often overlap. 1) Public services that are not sold to the public or sold for a nominal fee that is less than the price of production. These services are delivered free of charge or for a premium or nominal fee. The government gives these public services revenue so they can provide a service. The regressive anti-social tendency is gradually to increase the price charged for the service and to contract out work to private enterprise. The regressive trend is driven by the capital-centred view that all economic activity must involve owners of capital otherwise the economic activity is of no use to their class interests to become rich and powerful. The progressive tendency is to provide the service free using government revenue to pay employees of the state for all work without involving owners of capital, and as much as possible purchase all supplies, plant and machinery from public enterprises. The progressive trend is driven by the people-centred view that all economic activity must be organized in a social way without the destructive egotistical involvement of owners of capital so that the needs, rights and interests of the people, economy and society can be met. The most important services of this nature are public healthcare, public education, police and fire protection, the military, governments and infrastructure such as public highways, roads and parks. Other public services that mostly do not charge for the service include municipal services such as libraries, garbage collection, sewer systems, city maintenance and various entitlement programs for those who become unemployed or need social assistance. All these public services are now under neoliberal pressure either to be privatized or discontinued. 2) Public services that are sold to the public either close to or below their price of production. These public services are generally organized into large enterprises such as Canada Post, electricity and water producers and distributors, mass transit, liquor and beer stores and formerly national and regional rail, airline and steel companies. These public enterprises often generate considerable revenue from the sale of their commodities generating revenue for governments such as the provincial hydro enterprises, liquor stores and Canada Post. These public services also deliver a disguised form of enterprise profit to owners of capital in the form of cheaper commodities such as low business rates for electricity and cheaper delivery of business mail via Canada Post. Another source of private enterprise profit arises from public mass transit. The most powerful retail monopolies greatly profit from transportation costs that are below the price of production for workers and customers, which besides trains, buses and subways includes public roads, bridges and urban highway systems. Mass urban transit is essential for owners of capital to transport workers to their places of employment, customers to stores, and to open up new areas for real estate development. Owners of capital, hidden from direct accounting, profit from the added-value created by workers that provide these public services and commodities, including the education of the next generation of workers and maintaining their health. A working class agenda includes the demand that monopolies must return to the economy the benefits they receive from these public services. This cannot be done through privatization. It can only be done by the government holding monopolies to account and the people forcing governments to uphold public right not monopoly right. Privatization of public services does encounter opposition from owners of capital that profit indirectly from cheap commodities such as electricity, others that sell commodities to the public enterprises at guaranteed prices or those who own public enterprise debt. The most vocal supporters of privatization are those owners of capital that want to profit directly from the enterprise profit of a privatized service. To push their narrow interests these particular owners of capital say they will provide "choice" and break the "monopoly" control of government and workers over the service. This line is simply to open the door for another layer of owners of capital to take revenue from the economy. Public Enterprise and the Available Revenue A public enterprise providing services or commodities has a certain amount of revenue available to it for the year. This revenue is realized through sale of a commodity or is provided by governments from the public treasury. A public enterprise could be involved in any business within the socialized economy such as mail delivery, producing steel, cars, building homes or improving infrastructure. For sake of simplicity, let us put aside the amount spent on plant and machinery. Those costs of production must be paid whether an enterprise is public or private. Let us also put aside the accumulated debt of a public or private company. The claim on revenue by owners of debt is similar for both public and private enterprises. The issue of replacing for-profit private financing with public financing of the economy by not-for-profit public financial enterprises is a subject for another discussion. Under the present arrangements, owners of debt such as the big banks receive their debt service charges whether the borrower is a public or private enterprise. Let us deal with the money necessary to run a public enterprise apart from payments for plant, machinery and debt because those categories apply similarly to a public or private enterprise. Public Services or Enterprises -- Two Main Claimants Public services or enterprises have two principal claimants on the revenue provided by government or received from selling a produced commodity. Those two claimants are workers and governments. Workers are considered as all those employed in the company. The extravagant salaries of executive managers of public enterprises, their positioning in opposition to the rights and dignity of productive workers, and the corrupt practices of stealing revenue by those in authority are separate issues a Workers' Opposition must address. Workers' claims on revenue consist of wages, benefits and pensions. Government claims mainly come from individual taxation on the amount claimed by workers (income tax, sales tax, property tax, user fees) although certain public enterprises such as electricity suppliers and Canada Post give rise to enterprise profit that is returned to the public enterprise itself and to the public treasury. Governments provide the revenue for those public services that do not generate any or enough of their own revenue to function. Some of this revenue is returned to the government in taxes claimed from the wages, benefits and pensions of workers. It is important to note also that claims of the two principal claimants on the revenue of public services (government and workers plus the recipients of the service) are usually put back into the economy, while claims of owners of capital of privatized services are often taken out of the economy and consumed or invested elsewhere. Privatized Service or Enterprise -- Three Main Claimants A privatized service or enterprise has three main claimants -- workers, government and owners of capital. Owners of capital are the additional claimant on the revenue provided by government or received when a commodity is sold. If the total revenue available to be claimed remains the same when a service is privatized then the claims of workers and government on the privatized public service have to be reduced to compensate for the additional amount now claimed by owners of capital. A privatized service that does not generate enough or any revenue from sales or user fees still receives some or all of its revenue from government. When a public service becomes a private enterprise dependent solely on sales of a product, revenue comes from individuals buying the product rather than from government. The received revenue is then divided up amongst the three claimants -- workers, government and owners of capital. The additional claimant (owners of capital) reduces the revenue available to workers and government. Also, the change in the source of revenue from government to individuals is another regressive trend strengthening class divisions and putting downward pressure on society. Private Enterprise to Public Enterprise Changing a privately owned service or enterprise into a public service or public enterprise also changes the distribution of the available revenue. Transforming a private service or enterprise into a public one, eliminates the claim of owners of capital for enterprise profit. The elimination of private enterprise profit increases the amount of revenue available to be claimed by workers and government. Turning private suppliers, such as pharmaceutical monopolies, into public enterprises is a particular challenge in the healthcare, education, infrastructure and other sectors where much of the drain on public revenue comes from private suppliers of necessary plant, machinery and material. To transform the basic sectors of the economy from top to bottom into fully integrated public services is an important aspect of the working class agenda. Note also that the amount of additional revenue that becomes available when a private service or enterprise is transformed into a public service or enterprise is tempered by the amount government pays to the owners of capital for taking over a service or enterprise. The purchase price must be accounted as a claim on annual revenue until it is fully returned to the public treasury. Once paid in full, the claim of owners of capital from selling their private enterprise to the government disappears from the accounts. The key aspect to grasp is that workers transforming the bounty of Mother Nature into use-value through modern means of production are the source of all revenue. This revenue is the source for government funding of public services that do not generate their own revenue. How revenue is distributed within the economy depends on the relations of production and the relative power of the contending social classes. The more public services and public enterprise are extended throughout the basic sectors of the economy, the more revenue is available for the working class and middle strata and for governments to invest in social programs and better public services. Divergent Economic Aims The aim of the owners of capital that seize contracts of privatized public services or take over public enterprises is to increase their claim for revenue as much and as fast as possible. The aim is not to produce or provide a service for the people but to increase their claim on available revenue. This necessarily decreases the amount of revenue that the working class, middle strata and governments can claim. The aim of the working class and its allies is to mobilize the resources of the country to serve the people and its socialized economy and to fulfill its progressive agenda to humanize the social and natural environment. This agenda when enacted necessarily decreases the amount of revenue that owners of capital can claim. The aims and claims of the working class and owners of capital are diametrically opposed. This clash of aims and wills is unavoidable in a society divided between two main social classes -- the working class and owners of capital. The progressive trend that serves the working class, middle strata and society generally involves a gradual extension of public services and public enterprises into all the basic sectors of the economy. Pushing this trend forward boosts the economic and political power of the working class and middle strata and advances the cause of public right over monopoly right. This progressive trend does not happen spontaneously but depends on an organized conscious Workers' Opposition holding high its social responsibilities and persisting in moving the economy and society forward to the new. |