Just how valid is the idea that privatization of society’s services to its citizens ensures the highest quality of service to people in society?  Let’s critically analyze by understanding the precepts of the private economic enterprise. 

Our current economic system aligns with the following underlying precepts: 1) maximize one’s material self-interest; 2) pursue material growth without limit.  Accordingly, a private business enterprise seeks to maximize its material self-interest, and when formally connected to Wall Street it is compelled to do so quarter-to-quarter.  Or more simply, the business of business is profit.

Who Matters

The fundamental belief—that is the governing assumption—from which these propositions are derived, is that at base, human behavior is explainable through the pain-avoidance/pleasure-seeking self-interest dynamic evident in all animals.  As Adam Smith asserted, “every man . . . is much more deeply interested in whatever immediately concerns himself than in what concerns any other.” That is, the propensity for satisfying one’s material self-interest is most significant toward influencing (and explaining) an individual’s behavior.  The economic translation being: homo sapien is in reality homo economicus.  In other words, we are to think about our self and each other as selfish and economically driven.

Smith further explained, “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from the regard to their own interest.”  Moreover Smith introduced an almost mythical governing mechanism often referred to as the invisible hand that saw to it that all would be better off, when we allow self-interest to reign unfettered.  The underlying belief is that people are unknowingly—and quite mysteriously—led to improve the welfare of society when they act in their own self-interest.  In short, the concern for what’s in it for ‘me’ (somehow) miraculously best serves the collective ‘we’.

The unprecedented widening household income gap between the top 1% and the remaining 99% is clear evidence of the fallacy of this claim.  The only thing that can be said with certainty is the top 1% is seeing to it that their self-interests are being served.  Trickle-down doesn’t trickle and the rising tide can’t possibly lift all boats when there are two separate seas!

Clear Evidence

Basing an argument upon these erroneous assumptions leads to a logical fallacy that has people disregarding each other’s as well as one’s own humanity.  And as explained in It’s the econoMe stupid, grounding a system of economics on this fallacy can’t help but to negatively impact humankind.

All that is required is one counter example to disprove or invalidate a theory.  So, at the risk of being a bit redundant, I offer two examples as empirical evidence against the validity of the idea that private enterprise ensures the highest quality.

• The growth of agri-business along with the management-by-exception/crisis approach on the part of regulatory agencies has enabled profit maximization to diminish our ability to provide a safe food supply.
• The American automobile manufacturers pursuit of maximum quarter-to-quarter profit had them caring less about quality and more about the efficient production of a quantity of automobiles.

In organizations where the business of business is profit, products and services are a cost to the business of producing (maximum) profit.  Moreover the value of people in this system is purely instrumental in service to revenue for the enterprise.  These are contrary to the spirit of quality.

Justifying Belief

However, even though there is overwhelming empirical evidence to the contrary, there continues to be a faith-like belief that appealing to material self-interest inspires quality and serves the greater good.  Even though the theory and practice for producing quality has long been established, most choose not to learn maintaining that the theory of quality—which is inextricably connected to our humanness—is against what they believe.  But, we mustn’t forget belief often rests more on justification than fact.

If following the egoistic economic precepts won’t ensure quality, why would anyone argue that privatization of social services will ensure the highest quality? It must be that those advocating that privatization—placing everything in the invisible hands of private profit maximizing enterprise—is the universal solution to society’s problems, are doing so for self-serving reasons.  They have so committed to the doctrine of self-interest (especially their own) they can’t see beyond it!

Even the effectiveness of government has been adversely affected by this misleading belief.  Though government should be about serving our common interest, the generally accepted belief in the fallacious assumptions that underlie the egoistic economic system has led us to create a system in practice that places private/special interests above our common interests.  Even Smith’s words (recall, “every man . . . is much more deeply interested in whatever immediately concerns himself than in what concerns any other”) foretold what happens when life in society is guided by selfish concern: what’s in it for me trumps the needs of others (i.e. the collective ‘we’ of society).  This is clearly contrary to the fact that people exist as collective beings as well as individual beings.

The Choice

The longer that we continue to order life according to the precepts of egoistic economics the closer we move towards self-destruction.  The more we act out of selfish concern the more we do harm to our selves by not enabling the development of our humanness.

Being human is not a given at birth, as it is only through the process of living that an individual can become what they potentially are (at birth).  According to Erich Fromm, “man’s life is determined by the inescapable alternative between regression and progression, between return to animal existence and arrival at human existence.”  Because of this dialectical essence of human existence, we are faced with the choice of either progressively realizing our humanness or regressively reclaiming the uncomplicated and alluring self-serving pain avoidance and pleasure seeking habits of our animal nature.

So, associated with the dichotomous choice to privatize or not is whether to continue acting as if we are selfish and economically driven.  Erich Fromm said it best, “If we were consciously aware of what we really know about ourselves and others, we could not go on living as we do, accepting so many lies.”  There is no better time than now to change the way we bring order to life in society.