Nonprofits, Privatization and Capitalism

Shamus Cooke
To help explain the gargantuan role that non-profits play in modern society, a book of essays about the subject — cleverly named The Revolution Will Not be Funded– was released by INCITE! Women of Color Against Violence. In its introduction chapter, the book explains how non-profits have evolved into organizations that divert political movements into […]

As soon as we begun organizing our workplace into a union—a drug and alcohol rehab centerthe murky non-profit world proved to be an obstacle. When first approached, many of our coworkers asked the same question, “would a union even work at a non-profit”? And to this we normally answered, “why not?” – Although a better answer might have been, “Why do non-profit workers believe they should have less rights or pay than other workers?” And with this question you’ve opened a Pandora’s Box that leads down a series of questions and answers that reveal a lot about how modern society functions, especially the relationship between workers’ standard of living, non-profits, and the present state of the capitalist system itself.

To help explain the gargantuan role that non-profits play in modern society, a book of essays about the subjectcleverly named The Revolution Will Not be Funded-was released by INCITE! Women of Color Against Violence. In its introduction chapter, the book explains how non-profits have evolved into organizations that divert political movements into dead ends, shape public opinion, and most relevant to this article, perform services previously done by the state.

The rise of the private non-profit service sector is not a historic accident, but correlates perfectly with the downfall of state-run social services. Nor is the destruction of the state sector accidental, but a necessary phase that showcases the sickness of our economic system, capitalism. For the best advocates of the free-market system, the dismantling of the state sector can’t happen fast enough. Regan and his English counterpart, Margaret Thatcher, were the ones–fully endorsed by the capitalist class–to first implement the measures that have, to this day, cleared the way for the private sector to further encroach on public terrain.

But even this must be viewed in a larger historical context. The state sector ballooned after WWII and began to shrink after about 1973: capitalism’s post war expansion put more money into government agencies pockets, while the recession in the early seventies had the opposite affect (the prolonged downturn of capitalism continues to this day). While the post war economy allowed for the funding of social services, it was the working-class who demanded it. Indeed, most of the social services that any country offers is either directly or indirectly the results of the revolutionary-minded upsurges of the post WWII era. In reality, the ‘welfare state’ was a concession to the working-class, and these concessions are now intolerable according to the class who own the corporations, banks, and puppet politicians.

The reason that state-ran social services are considered “outdated” is because of the poor state of the capitalist system in general–not just in the US, but internationally. This explains the constant attacks on the public sector in EVERY capitalist country, with the attacks becoming more vicious and desperate with each passing day. State sectors are the targets because they are some of the last places on earth that private investment has yet to be allowed. International investors have already intruded upon every other nook and cranny of the globe, hitting a ceiling in the process. In turn, investments generally yield smaller and smaller profits, driving investors towards riskier investments to get the same return (see the housing crisis); it also forces them to support military operations and “regime changes” in even the smallest countries to control markets and raw materials (see Afghanistan and Iraq); and demands that they are allowed entrance into the public domain to seek profits.

Not only this, but tax money in general must be directed to suit the interests of big-business– away from providing services and infrastructure and towards building an even bigger war machine; multi-billion corporate “reconstruction” contracts to rebuild what was destroyed; subsidies to already-rich corporations; and baling out banks and rich American investors who’ve got burned making risky bets. The result is less public funds in general, which gives the ruling class a sordid justification for privatizing everything, since there just isn’t enough money to go around anymore.

The process of investors forcing themselves into the public sphere is known as “deregulation” or “privatization”, and ultimately seeks to transform capitalism back into the days of Dickens, before labor unions and other working-class organizations were able to establish themselves to give at least some protection from the horrors produced by a system based on profit.

Intimately bound with the process of privatization is the non-profit social service sector, which sprang into existence out of necessity in the eighties after state-run institutions were shut-down. In effect, state institutions were outsourced to those who promised to do the same job for a fraction of the price; sometimes the job was not to be done at all. The people who were once provided services were either forced onto the street, cared for by non-profits on shoe-string budgets, or private entities that cared little about service. Under the new model, state hospitals were transformed into “managed-care organizations” , public housing replaced by renting vouchers, public schools into “charter” schools, orphanages into foster-home providers, and Head Start programs into more vouchers (privatizers have a well known fetish for vouchers). The result was a complex continuum of service providers that ranged from private non-profit to explicitly private for-profit.

This process has had a direct effect on workers’ standard of living. Another important reason why the state sector was targeted for privatization was it strong union density. In the private sector the percentage of unionized workers has declined drastically— thanks to abhorrent anti-union legislation— while remaining strong wherever there was state ran institutions. Because of their shared identity as state workers and the usually centralized organizational structure of state institutions, the ability to organize in the public domain is much easier. The planned decentralization that resulted made forming unions much more difficult (since 1992, employment in highly unionized state hospitals has fallen by 125,000.)

It must be understood that organized workers are always a threat to big business: not only are they considered a dangerous example for the working class as a whole, but they are also able to organize members towards political goals, such as defending public services against privatization and beyond. The ongoing privatizing process has had a direct, negative effect on the ability to organize a higher percentage of the public sector into unions, a trend that is seriously challenging the already poor health of the countries unions, while driving the wages of workers down everywhere.

The result has not been pretty. Non-profit service providers have a ready-made ideology to offer their workers who demand higher pay: “since we are a non-profit, we have no money, so everybody makes very little”. The paradox here is that non-profits function mainly off state funding; the same funding that pays unionized state workers much more. The reason that the non-profit world is able to function more “efficiently” – which means workers work harder for less money— is because the workforce is unorganized and decentralized, and is taught that unions inside non-profits are unfeasible (this is what our workforce was taught before we successfully unionized).

And while the average non-profit service worker makes very little indeed, the bosses make out quite nicely. The non-profit management structure is based on the corporate model, and with this model comes a classical belief system: those at the top should make much more than those at the bottom. Business schools have picked up on this and now offer curricula so that aspiring middle-class professionals can live comfortably, both in material possessions and in peace of mind.

But the non-profit world of service providing may end up being a mere transitory period of capitalism. Already there is an increase of non-profit, for-profit partnerships, with the idea becoming especially popular in hospitals. Prisons are now privately owned; so are immigrant detention centers. Where government was once a provider of public services, the dangerous trend now is to “arrange” services, with corporations becoming a major beneficiary. Once public toll roads have now been privatized, while water treatment facilities, bridges, airports, and other publicly valued assets are set to be sold or leased to make profits for corporations.

The ideological umbrella that this transformation takes place under can be reduced to a simple assumption: that the private realm is more “cost efficient” than the public. This lie benefits only the rich while harming the rest of us. While some “efficiency” can be gained from paying workers less, giving them no benefits, and working them harder, the savings is not passed on to the general public, but to the owners of corporate stock. In no other way is privatization more cost efficient.

The rationale behind the mass privatization frenzy sweeping the nation comes not from objective truth, but the piggybanks of the super-rich. The “nonprofit” think-tanks of the employer-class spend their huge bankrolls conjuring up new ways to trick the public into accepting their privatization schemes. This money is considered well spent when the high stakes are considered: the capitalist system has entered a period of crisis and privatization is one of the few ways left to partially sedate a terminally ill system.

But the process is taking longer than the ruling class can bear, due to the intense conflict it creates with the working class on an international level. In Europe, the large public service sector makes for an especially explosive conflict, as workers continually protest and fight to keep the concessions they won in previous epochs. They understand the benefits of having free health-care, education, and better working conditions. In Latin America, privatization schemes helped create a continent-wide atmosphere of revolution. In the US, the fight to save Social Security and Medicare arouses even the most politically inactive person, turning the already-difficult job of the privatization propagandist into a creative writer of fiction.

The nationalized institutions of the European countries are widely accepted as great advances for the working-class, but they do not constitute socialism. What they do show, on a micro-level, is the vast potential of a truly socialist economy. Within a capitalistic framework, however, these profitless institutions in fact put a brake on the profit-driven economy, and are thus subject to every type of sabotage and undermining from the employer class.

The battle lines are thus being readied. The struggle to defeat the broad privatization measures the world over cannot be done on a case by case basis, but must be part of a general strategy that offers workers a solution to the increasingly intolerable situation they are being forced into. Either the capitalists will destroy the public sector for their private gain, or the workers must finish what they began in previous generations: for the defense and expansion of public services, and from there to the nationalization of the key sectors of the economy under democratic workers’ control. The tremendous wealth and technology that surrounds us can be used for socially useful purposes instead of the private profits of a few. The task of the working class is simply to take control over the wealth we ourselves have created.

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Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action. He can be reached at portland@workerscompass.org