Making the state sector more profitable

February 22, 2009

One area of reform proposed by post-neo-liberals such as Skilling and Weldon which has the potential to involve some serious upheaval is the state sector.

A problem for capitalism is that all kinds of activities - some standard industrial and commercial activities as well as ‘public good’ activities like health and education - require a significant state-owned sector within the economy.  In New Zealand, the state has been a major player since capitalism first arrived here in the nineteenth century.  Without the state, little of the infrastructure would have been built, for instance.  The inability of private capital alone to create a modern capitalist economy, complete with infrastructure (from banking to railways to mass communications), meant the state had to pick up the slack.  The state could do this because it had access to chunks of surplus-value through direct and indirect taxation, could borrow on a massive scale and did not need to make a quick and substantial profit.  The state could, in fact, produce goods and services outside the operation of the law of value - in other words, it could produce and provide goods and services without profit being built into the price; in fact often goods and services were produced and provided below cost.  Private capital could make use of these goods and services without paying a price which reflected their actual value.

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