Non-Profits, Privatization & Capitalism


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As soon as we began to organize our workplace into a union, a non-profit drug and alcohol rehabilitation facility, the murky world of non-profits proved to be an obstacle. When first approached, many of our co-workers asked the same question, “would a union even work at a non-profit?” And to this we normally answered, “Why not?” 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 to 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 role that non-profits play in modern society, a book of essays about the subject – cleverly named The Revolution Will Not Be Funded: Beyond the Non-Profit Industrial Complex – was released by INCITE! Women of Color Against Violence. In its introduction, 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, provide services previously done by the state.

The rise of the private non-profit service sector is not a historical accident, but correlates perfectly with the attacks against state-run social services. Nor are the attacks against the state sector accidental, but a reflection of the sickness of capitalism. For the advocates of the free-market system, the dismantling of the state sector can’t happen fast enough. Ronald Reagan and his British 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 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 dramatically increased profits and swelled the tax base, while the recession in the early seventies had the opposite effect (the prolonged downturn of capitalism continues to this day). Although the postwar economy allowed for the funding of social services, it was the working-class who demanded it. Indeed,  the social services that any country offers is either directly or indirectly the result of the revolutionary upsurges of the post-WWII era. In reality, the “welfare state” was a concession to the working-class, and these concessions are now intolerable to the class that owns the corporations, banks, and puppet politicians.

The state sector is being viciously targeted – and not only in the U.S. – because it is one of the last places on earth that private investment has yet to conquer. International investors have already intruded upon every other nook and cranny of the globe. As the capitalist system’s growth crisis continues, investments generally yield a smaller rate of return, driving investors toward riskier investments in the hopes of getting a better return (see the housing crisis). They encourage military intervention in even the smallest countries to control markets (see Afghanistan, Iraq and now Kosovo). They also demand access to the public domain to seek profits.

Not only this, but budget priorities have been shifted to suit the interests of big-business. Money is siphoned away from providing services and infrastructure and toward building an even bigger war machine, multi-billion-dollar corporate “reconstruction” contracts to rebuild what was destroyed, subsidies to already-rich corporations, and bailing out banks and wealthy investors who’ve been burned making risky bets. The resulting lack of funds for public services gives the ruling class a sordid justification for privatizing everything, since there just isn’t enough money for public services 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 trade unions and workers’ parties, through mass struggle, were able to wrest from the capitalists key reforms such as free public education, affordable housing and health care.

Intimately connected 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. People who were once provided services were forced onto the street, cared for by non-profits on shoe-string budgets, or by private entities that cared little about service. Under the new model, state hospitals were transformed into “managed-care organizations”, public housing replaced by rental vouchers, 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, since another reason to privatize state institutions is the strong union density in the public sector. Union density has shrunk in the private sector, while remaining strong in state run institutions, although since 1992, employment in highly unionized state hospitals has fallen by 125,000.

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 toward political goals, such as defending public services against privatization. The ongoing privatizing process has had a direct, negative effect on organizing the public sector into unions, a trend that is seriously challenging the already poor health of the country’s 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 is made to believe that unions inside non-profits are unfeasible (this is what our workforce believed 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 materially and in peace of mind.

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 private corporations as the 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 real rationale behind privatization comes from the piggy banks of the super-rich. The “nonprofit” think tanks 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 struggles. In Latin America, privatization schemes helped create many of the factors which have resulted in a continent-wide revolutionary process. In the U.S., the fight to save Social Security and Medicare arouses even the most politically inactive layers, turning the already-difficult job of the privatization propagandist into a creative writer of fiction.

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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