I Own, You Own, We Own: In the Wake of the Changing Politics of the Middle East and North Africa Region Has Come the Call for Reform. Some Analysts Argue That Privatisation of State Assets Is the Only Way Forward. Richard Seymour Looks at How That Theory Pans Out

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WHEN A POLITICAL SYSTEM FAILS, alternatives are readily embraced. Capitalists had very little convincing to do when communism collapsed. Twenty years on, however, with the banking collapse, global recession and the chaos within the Eurozone, the argument for mass privatisation is less easy to win.

A number of states in the MENA region have recently made the difficult transition from one-party, authoritarian rule towards multi-party democracy. The dogma in the United States and Europe is that greater political freedom, and the liberalisation and privatisation of the economy go together. Indeed, the passing of state assets into private hands is considered, by those who push for it, as essential for political freedom to be maintained.

The example of Eastern Europe's progress from communism to liberal democracies is invoked by free marketeers as a template for what they say needs to happen in Tunisia, Egypt and Libya after their successful popular uprisings.

Critics, however, cite the same example when they caution against the selling off of state-owned companies.

Humans are very good at recognising their mistakes and then making them all over again anyway. But the governments of the region are presented now with an opportunity, should they wish to take it, to make their decisions based on 30 years of data.

Neo-liberalists in the West are keen to shape the economies of North Africa along their own ideological lines. Thomas Mirow, president of the European Bank for Reconstruction and Development (EBRD), wrote that the organisation will be working hard to 'remedy' the fact that the state is a dominating force in economies there, just as they succeeded in doing in the former communist world.

"Our philosophy, as an institution, is simple," noted Mirow. "By concentrating on building up the private sector and free market economies, we also build up the number of people who feel they have an important stake in their country's future."

Privatisation of state assets in the former communist world failed to produce a neo-liberal utopia, however.

Millions of people became unemployed when companies were sold off, output plummeted and corruption became the new oil of industry.

Mirow accepts this, but blames the too-great pace of liberalisation and not the idea itself. He remains convinced that private enterprise works better than state-run companies.

Western-style liberalisation of the economy in Chile did nothing to make the people who lived under the tyranny of Pinochet more free. Meanwhile, Norway, criticised for mostly avoiding privatisation in favour of state ownership, is an enviable democracy with a standard of living other advanced societies aspire to. So, the process of privatisation is not the 'catch all' panacea it is claimed to be.

A study by sociologists at Harvard and Cambridge universities, published in American Sociological Review, claims the ideology of mass privatisation is flawed and leads directly to corruption and economic failure, which many former communist states are still struggling to recover from. …