The Dilemma of Privatized Public Services: Philosophical Frames in Understanding Failure and Managing Partnership Terminations

Abstract

This paper uses social theory to explicate the competing perspectives on the on-going and, increasing, privatization of public services in the U.K. It suggests that if business ignores these perspectives then political imperatives will come into play that will inevitably turn privatization initiatives commercially sour. Contrary to political rhetoric, public/private partnerships (PPPs) constitute a more strategic form and process of out-sourcing, demanding that wherever public funding flows, private “rent-seeking” opportunities be created for the private sector. Seen in these terms, managerial elites will need to understand and anticipate conditions under which the state would seek to terminate lucrative partnering arrangements in the public interest. Political–administrative dialogue on partnerships can involve an unresponsive discourse or a dialogue of the deaf, both constituting a threat to business through the imposition of undefined community service obligations or hostile and unprofitable terminations by the state. Performance required of PPPs goes beyond market success and requires co-optation of strategic stakeholders, raising significant issues about corporate governance directions. Business leaders will need to develop communicative rationalities that build pluralized decision structures and implementation capacities. The paper concludes by outlining design features of more effective regulatory regimes to avoid hostile and unprofitable terminations of increasingly contested PPPs. The conclusion is less sanguine about the ability, or even the wish, of governments to do so.