Illustration Karin Sunvisson

Conference reports Narratives on privatization in Eastern Europe. Reflections after attending a conference

Privatizations in states with no actual market economy obviously become legislative matters. For instance, matters related to property rights may need to be re-regulated. The role of EU law in privatization was brought up at the conference. The law does not regulate privatizations, but contains a great deal on liberalization, which in turn affects privatization. Matters related to the alignment of legislation have made law more interesting for all of us who usually categorize legislation among the restrictions.

Published in the printed edition of Baltic Worlds BW 3 2011, p 16-18
Published on balticworlds.com on October 3, 2011

Social scientists use seminars and conferences as “test runs”, where narratives and incomplete theories are presented and tested through examination in light of the experiences and aggregate knowledge of other researchers. A test run provides inspiration and guidance for further work with studies and presented texts. Everything takes place in the encounter with other scholars. It is fruitful if the conference contributions lead to a discussion that takes both the author and other seminar participants further in their work. The editors asked Björn Rombach to attend the “Privatization and Liberalization” conference arranged by Södertörn University and the Stockholm Institute of Transition Economics (SITE) held June 16—17, 2011, and to share his reflections.

To privatize is to make private. Someone makes something more private and thus less public. When it comes to the arts and culture, being private is normally not desirable — if one wants to be appreciated by one’s critics, that is. Real and personal, yes, but not overly private. The public, on the other hand, is often driven by curiosity and thus drawn to private affairs — especially if they are already known to the public.

One question is whether excessively private cultural expressions have been privatized, or not made public. Why should everything be perceived from the outset as something private that needs to be made public? Private affairs may be as real as it gets, but have been privatized by the author, or dancer, as the case may be. It works the same way with operations, programs, or services that have been privatized. Some have previously been deprivatized and taken over by the state. Others have been started and run for a long time by the citizenry through the state.

If something that has been made public is regarded as too private, it comes up for discussion on the arts pages of the newspaper or in a blog somewhere as soon as the judgment is made. The question of what is actually private is also open to debate when it comes to organizations. Is a company owned by a neighboring state really private? And what about corporate groups that are as big as countries and buy the enterprises privatized by the state? Does the property become private? Individuals who want to make a difference now have a longer road to travel. On the one hand, this is a matter of definition. If by “private” we mean one thing and not the other, the questions are easy to answer. On the other hand, one can easily be amazed by how the private and the personal drift apart in this way.

A conference entitled “Privatization and Liberalization” at Södertörn University could have been given a broad approach. The limitation was put in place by indicating the focus on “Network Industries and Eastern Europe”. The collaboration with SITE at the Stockholm School of Economics also seemed to set limitations by contributing to the focus on narratives from the field and the practical lessons learned from them. Perhaps the limitations were a sign that the climate in both directions has become tougher in recent years.

The approach and focus during the two conference days in mid-June became very narrow — sometimes to the point of being private. That is not a criticism, however, and this is not a conference review. In the academic world, the answer to the question of what is narrow is in the eye of the beholder. It is easy to agree on depth, but that much harder to agree on breadth.

A lot of us have taken an interest in the privatization of activities previously performed by the public sector. In countries like Sweden, where large areas of operations were dominated by public works, privatizations have led to massive changes. Over the past twenty years or so in the research field, a great many narratives have been collected and a substantial body of theory has been developed. This knowledge is relatively unknown outside academia, which is due to the fact that the issue of privatization of public sector production was politicized early on. Whether privatization was good or bad was a given for the policymakers and the political opposition. Non-normative research was marginalized and theories were regarded as serving no useful purpose.

But the subject of this conference turned out to be privatization in countries that, to a great extent, formerly did not have market economies. The narratives were taken from Eastern Europe, mainly from the former Eastern Bloc, but Turkey was included as well. On the other hand, despite the limitation, quite a lot of material dealt with matters other than network industries.

Privatizations in states with no actual market economy obviously become legislative matters. For instance, matters related to property rights may need to be re-regulated. The role of EU law in privatization was brought up at the conference. The law does not regulate privatizations, but contains a great deal on liberalization, which in turn affects privatization. Matters related to the alignment of legislation have made law more interesting for all of us who usually categorize legislation among the restrictions.

The post-privatization role of the state is another interesting question. Here, the role was discussed in relation to privatized network industries, where the state always has a role to play, as regulator and examiner if nothing else. That the state is not marginalized here has more to do with the distinctive nature of the industry than with the fact that it was mainly state-owned before privatization. The wider question of the role of the state in areas that have been privatized was left for discussion during the break. Schools and health care providers were brought up as examples of areas where the role of the state changes — but does not end — after privatization.

Now that we nonetheless are concentrated on network industries, we can easily determine that there is a need for huge investments in Eastern Europe. Infrastructure is important. Investments in networks are normally paid for by the taxpayers, not the users. And willingness to pay can decline in times of greater austerity. Investments in networks do not create jobs on a large scale, which makes them less interesting in rhetorical terms.

Privatization in Turkey is an interesting case in itself. On the subject of historiography, it is to be hoped that Jonas Prager (New York University) and Bulent Acma (Anadolu University) will get back to us with an article in Baltic Worlds. Accounts were presented at the conference on state entrepreneurship, where state-owned enterprises engage in market-like conduct, and on privatization driven by red figures in the books of state-owned enterprises. The significance of who it is that buys these enterprises when they are privatized is an interesting question. The state-owned enterprise may be sold to a foreign or domestic company or it may be sold to or distributed among the citizens, with or without restrictions. The discussion became extremely heated when the Turkish Army’s purchase of companies came up. To the relief of all present, things cooled down again when the chairman noted that this was, after all, not a privatization.

Privatization processes and their effects showed palpable similarities from one state to the next. There were many parallels in narratives from Poland and Turkey, which differ in many respects. In this way, some parts of the narratives could be generalized. And that is as far as we got. With respect to the link to theory and the development of theory, the conference’s indications could perhaps have been clearer. There has to be more than simply narratives about privatization and network industries in Eastern Europe for researchers who are unmoved by such to manifest any interest. When everyone is dealing with the same problems, the limitations of the seminar become clear to outsiders, but almost impossible for the participating scholars to discern.

After the seminar day at Södertörn University, the character of the conference changed. We moved to SITE, the suits and ties multiplied, the technical problems became less obvious in connection with the presentations, business cards were distributed without asking, and the parallel sessions were exchanged for panel discussions in plenum. And yet everything was much the same. The narratives were again in focus at this half-day event. Theories would have felt out of place, and they were not brought up. It was perhaps surprising that more expert advisers were not invited to attend.

We heard narratives about CSC Telecom in Estonia, Latvia, and Lithuania. Looked at very close up, developments obviously differ even in these states, which are so often clumped together. And then there’s Kazakhstan. The difference compared to the previous day’s presentations was that the focus was now on corporate roles and strategies. We also heard about the role of regulation, but from the consultant perspective and the state perspective on this day of the seminar. The narratives were tinged with personal elements, and the lack of theory was not disturbing here, but expected. One might perhaps think the advertising elements unnecessary.

A second panel discussed electricity and energy, with electricity markets the main topic. There were many nods of recognition in response to Milko Kovachev’s (Worley Parsons) narrative from Bulgaria, where privatization was followed by sharp decreases in state subsidies — exactly as intended. The goal was to reduce government spending. But since privatization does not in and of itself result in lower production or distribution costs, the outcome was services that are more expensive. When citizens become consumers, this is the price they pay. This generates criticism, even though the tax levy for this particular service is reduced by a roughly equivalent degree. Privatization is not always the villain.

And so it was time for lunch, an Asian buffet shared with my friend Hans, who works at the address where the conference was held. After catching up about our respective families, he wanted to know what he had missed. How much can you cover by the time after-lunch coffee is served? That we had taken away several narratives about privatization in Eastern Europe, a hope that theory development will have made more progress the next time we meet, and thoughts about the difference between the private and the privatized. And there you have it. ≈

Björn Rombach