Nick
G.
South Australia’s Labor government is set to push ahead
with a trial of Social Impact Bonds (SIBs).
SIBs allow big money investors to profit by financing volunteer and
charity organisations to deliver public services.
SA Health Minister Jack Snelling said on radio recently
that the government was pushing ahead with a trial of SIBs and had issued
tenders for non-profit organisations (NFPs) to design programs that they would
run.
NSW already has two SIBs with a focus on out-of-home
care. WA is keen to contract a SIB
focussing on recidivism (reoffending by released prisoners). SA has identified four possible areas:
out-of-home care, recidivism, hospital transfers from residential care
facilities, and homelessness. It has
called for suggestions for “other potential focus areas”.
Neo-liberalism:
stagnant core and peripheral innovation
In the 1970s the world was awash with capital seeking
investment opportunities. Finance
capital held by banks, insurance companies, trust funds and mega-rich
individuals increasingly opted for speculative investment away from the
industrially productive sector of the economy.
Neo-liberalism emerged with a vengeance to dismantle
barriers restricting the free flow of capital and utilised successive advances
in technology to speed up and internationalise speculative forays.
Privatisation swept the globe as governments seeking
business-friendly credentials competed to divest themselves of social functions
and state-owned assets.
Action in support of this agenda led to an equal and
opposite reaction as anti-globalisation movements and protests grew and
developed. Concepts of public good were
advanced to try and halt the neo-liberal onslaught and an unstable stalemate
settled on the economic core mediated in part by parliamentary elections in
which privatisation featured as an issue.
The neo-liberal privatisation agenda provided some real
investment opportunities for finance capital, but not nearly enough to soak up
the vast amounts of over-produced capital values that now exceeded by many
times the value of global GDP. With
people’s opposition making further privatisation electorally risky, governments
around the world turned to measures they could sell as “partnerships”. The so-called Public Private Partnership (PPP)
model created opportunities for private finance capital to build, design,
operate or manage government infrastructure.
The PPP model allowed governments like Labor in South Australia to
falsely claim to be “strongly opposed to privatisation. Partnering arrangements
are not privatisation….”
The PPP model was an example of innovation in a limited and
peripheral area of the economy, an area where traditional funding arrangements
meant that governments themselves borrowed the money for public infrastructure
projects. With the neo-liberal agenda
having few other items of business than outright intensification of
exploitation through reductions in real wages and attacks on rights at work,
such innovations at the periphery enabled “other business” to serve as a means
of opening areas for investment.
SIBs:
A new financial product for the mega-rich
It was as an item of “other business” that SIBs emerged
in 2010. PPPs had been exposed as just
another form of privatisation and were on the nose in Australia, Canada, the US
and the UK so another attempt at fooling the public was needed.
As Snelling put it, “There are lots of very wealthy
people around the world who have these philanthropic trusts that are looking
for investments”.
Private philanthropists, “social” capitalists, NGOs and
charities came together to provide a more politically acceptable model for the
privatisation of public services.
Under the SIB arrangement a government offers a contract
for the delivery of specified outcomes in an area of social policy; a charity
or “social enterprise” raises capital from private investors for the delivery
of the service; the government pays on the basis of results and these payments
return a profit of around 7.5% to the investors through the contracting
charity.
This innovative model sees organisations with a “social
conscience” serving as the conduit for the investment of private capital in an
area that has traditionally been a public service.
It is peripheral in a double sense: the investment area is away from the core of
capitalism (manufacturing, mining, banking etc) and is imposed on sections of
the population who are marginalised, powerless and an underclass. If the SIB fails to deliver the required
results, the investors lose their money, but those in the periphery of society
lose what little dignity and self-esteem they may have begun with.
SIBs appeal to Labor governments in particular because
they simultaneously boost their credentials as “business-friendly” while hoodwinking
their traditional electoral base that this is “not outsourcing”. Snelling sees the state Labor government of
which he is a senior minister as “increasingly acting as a facilitator of
public services rather than as a provider”.
DIBs:
financial mechanisms for the Third World
Development Impact Bonds take the SIBs model from the
social periphery of a developed capitalist nation and put them into the global
periphery of the so-called developing world.
The UK-based Centre for Global Development has partnered
with UK-based Social Finance to explore Development Impact Bonds (DIBs) as a
new development financing mechanism. Building on the SIB model, DIBs provide
upfront funding for development programs in poor nations by private investors,
who are remunerated by donors or host-country governments—and earn a return—if
evidence shows that programs achieve pre-agreed outcomes. The stated aim is to
improve the quality and efficiency of public services in developing countries,
but with involvement by the Rockefeller Foundation, the Bill and Melinda Gates
Foundation and the World Bank, the imperative is one of philanthrocapitalism
not one of liberation or emancipation from imperialist exploitation.
Capital
seeks its own reproduction and a way out of crisis
Private capital has a finite circuit for the realisation
of its own reproduction. The drive to
seek out investment opportunities that balance risk with reward is embedded in
its genes. The productive core of capitalism is depleted as capital is drawn to
fancy financial products that operate in the casino of global speculation. The system tries to arrest that depletion
with innovations at the periphery like PPPs and SIBs or by finding new ways of
drawing resources from the finite environment (eg fracking and deep sea
mining).
The system is in crisis, but the crisis develops unevenly
depending in part on the efficacy of innovations and on the use of new
technologies or the exploitation of new resources.
Further Reading:
Social investment bonds -
a new way to privatise public services (http://vanguard-cpaml.blogspot.com.au/2013/10/social-investment-bonds-new-way-to.html )
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