Comment: Arming yourself with economics

'There can be no return to public provision.'
'There can be no return to public provision.'

Understanding just a few key terms can empower you to challenge the cuts.

By Linda Kaucher

For those resisting the loss of their local library, increased student fees or the destabilisation of local health provision, understanding the terminology of those working for corporate profit-making can be informative and empowering.

'Liberalisation', 'public procurement' and 'trade' underpin what is in fact a completely coherent UK policy-making framework. Just don't expect it to be for general welfare.


'Liberalisation' is fundamental to the neo-liberal trajectory. While 'liberalisation' is bandied about by politicians and media staff, always as unquestionably beneficial, I've found that it is actually not well understood, even by top journalists.

While liberalising trade-in-goods means reducing border tariffs, liberalising services - more relevant to us - means opening investment opportunities, whether in the private or public sector, to transnational investors. Just that. 

The UK liberalises everything. So when public services are privatised, either through sell-offs such as. water, or through privatised contracting as in the NHS, the investment opportunities are opened to transnational investors.

And in the private sphere, investment opportunities are also always liberalised. Although the holy grail of foreign direct investment is supposedly the reason for UK 'openness', there is actually very little new investment into the UK. It is almost all in the form of mergers and acquisitions of existing companies, opened to transnational investors.

The deeper implications of liberalisation come when trade commitments are made. Again, these are non-events in the UK, not even reported by the BBC office in Brussels. But they are very significant for our society and economy.

As a country commits what it has liberalised to trade agreements, it commits to keeping that service open to transnational investment, effectively forever. 

If the liberalisation is the result of a public service privatisation then, as the liberalisation becomes effectively irreversible, so also does the privatisation underpinning it. For example, once a shift to private provision in an area of the NHS is committed to a trade agreement, there can be no return to public provision even if the privatisation/liberalisation proves not to work.

It would be useful for campaigners resisting NHS changes to be aware of this dimension.

Inherent in services trade commitments is a country's loss of power to control the number of transnational companies that enter that service market or the number of services they offer. Thus trade in services liberalisation increases the power of transnational corporations while reducing the power of governments to regulate them. This is not an incidental side effect of the trade agenda. It is the reason for it. Liberalisation is the vehicle and trade agreements the legalised means of enforcement.

The deepest significance of the irreversibility of trade agreements is that no future government can reverse this handing of power to corporations. Thus neoliberalism is set in stone.
For corporations, this is 'investor security'. For us it's a permanent loss of democracy. 

Another key concept is 'public procurement'. Public procurement is the spending of public money, our money. It includes spending on public services, but much more. It also includes all levels of government - local government too. While difficult to calculate, one estimate is that it is 40% of global spending. This is why transnational investors want access to it.
There are EU directives for member states to liberalise their public spending within the EU, and, at the level of international trade, a range of strategies to coerce other countries to liberalise theirs. 

Interestingly, while the UK government is so keen to liberalise its public procurement, as with the awarding of the contract for Thameslink trains to German firm Siemens rather than UK-produced Bombardier (German state-owned Deutches Bahn Schenker already runs 80% of UK rail freight) other member states are not so willing. 

Within the EU, only 13% of public procurement is spent with overseas contractors - really just the UK. While Britain, the flagship for US-style liberalisation, slavishly follows the EU directive that UK-based financial service firms would have had a big hand in devising, other member states continue to spend their citizens' money with their domestic companies, employing their own workers. 

This means that people in the UK lose out twice over. Their taxes are spent with overseas firms who can then bring in their own workers causing UK workers to lose jobs. This is happening on a broad scale in engineering construction work on UK power stations.

Public procurement liberalisation is foisted on the public via strategies of decentralising (e.g. NHS) 'bundling' or 'unbundling', and a big dose of 'spin', in fact whatever it takes to break down resistance and push this through while keeping the deeper implications hidden. Royal Mail, for instance, has been 'unbundled', with some parts privatised.

The term 'public procurement' is not used much in the UK. It is encompassing and encourages an overview. Fragmented public perception is more convenient. But the term is well-used in contexts where states are pressured to allow transnational capital access to their spending.

In the private sector, the hard-core liberalisation policies of successive UK governments have led to widespread foreign ownership of what were UK companies. People of all political persuasions have a gut reaction against this and it can be logically opposed too. For instance, if a transnational firm has assets in a sector here and in its home-base, as with Tata in the steel industry, corporate decision-making may involve 'internal' competition issues and limiting supply for price maintenance. This makes the UK operation and its relatively higher paid workers very vulnerable.

While the media continues to propagate the idea that 'trade' is mostly 'goods', 'trade-in-services' is now actually the main area of trade. As it includes banking, other financial services, investment, telecommunication, as well as workers being moved across borders, it underpins trade-in-goods. The World Trade Organisation's (WTO) service categories are very comprehensive: business, communications, construction and related engineering, distribution, educational, environmental, financial, health related and social, tourism and travel related, recreational, cultural and sporting, transport – and 'other', all targeted for 'service liberalisation'. 

An understanding of the terms explained, 'liberalisation', 'public procurement', or 'trade', makes it easier to recognise how UK government policies are devised to advance the transnational corporate agenda.

The plan for higher education was obvious, to maximise the take from students, especially overseas students paying higher fees, while liberalising the market to allow transnational companies to offer lower cost degrees, for which, because of the price hike, there will be a market.

Universities are part of 'financial services', benefiting from the weight of financial service lobbying e.g. for regulations that allow foreign students to stay and work and not be pursued for overstaying. These are all good selling points in the overseas student market. 

In this way, the UK higher education market is both expanded and liberalised while UK students and their families are just manipulated mush.

Understanding the terms I've discussed here is a first step towards resisting them.

Linda Kaucher is a researcher on international trade. With Masters degrees in Journalism and in Human Geography, from Australia and the London School of Economics, and a broad background as an educator, she campaigns to take the lid off trade secrecy. She has written articles for the Morning Star and submissions to government consultations. She was invited by the EU Trade Commission to make a presentation to its civil society dialogue on services trade. Click here to read it.

The opinions in politics.co.uk's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

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