Privatisation and Deregulation

Privatisation and Deregulation Ashok Rudra T N SRINIVASAN is surprised that I should dispute that "economic analysis has much to say on what activities should be in the public sector" and then he goes on to give a long discourse on how neo-classical welfare economics "makes a case for public intervention" under certain situations. All through his arti- cle he talks about public intervention, nowhere a word about public ownership of the means of production. So, it is my turn to be surprised. Surely, the two are not the same. If one treats the two as if they are the same, one is making an assumption that public intervention can make private enterprises behave as if they were publicly owned. This assumption is explicit in the following proposition of Srinivasan, "the state has the option of taxing the profits of a private sector enterprise and investing the revenues if it was the case that such profits, if left untaxed, would not be used for socially desirable purposes" Srinivasan can write this as he works in a neo-classical framework which contains no theory of the slate. Neo-classical theorisation about public intervention is based on the assumption that the state is exogenous to the economic system. That assumption goes against all lessons of history of any country in any period. By contrast, Marxian political economy gives due importance to the problematic of the way the state functions in any given society I do not, however, expect Srinivasan to communicate with me on the plane of Marxian political economy, just as Srinivasan. I am sure, would not expect me to communicate with him on the plane of neoclassical welfare economics. Despite this difference in our paradigms, we should be able to agree on historical evidence. Can Srinivasan cite any instance of any state acting contrary to the long-term, objective interests of the principal property-owning classes of a society, whether landlords or capitalists? It is of course a gross simplification to suggest that in a class-divided society the state acts as representative of the principal property-owning class or classes: the relation between the state and the different classes is highly complex. We need not go into those complexities now. We would only emphasise that the nature of public intervention cannot be independent of the nature of ownership of the means of production. The Marxian Theory of the state is as important for the social sciences as the Heisenberg Principle is for modem physics, inasmuch as they bear upon the mutual dependence of the experimenter and the experiment, the intervening agency and the intervention.