Privatization, Vulnerability, and Social Responsibility: A Comparative Perspective 9781472489074, 9781472489043

Table of contents :
1. Introduction

I. Analyzing Privatization

2. Three Faces of Privatization

3. Big Government Against Social Responsibility: A Vulnerability Critique of Privatization’s Public Priorities

4. Rethinking Responsibility in Private Law

5. In the Land of Choice: Privatized Reality and Contractual Vulnerability

II. Privatization and Corporatization

6. Entrepreneurial Subjectivity, the Privatization of Risk, and the Ethics of Vulnerability

7. Privatizing Hoodia: Patent Ownership, Benefit Sharing, and Indigenous Knowledge in Southern Africa

8. Credit Counselling in Canada: An Empirical Examination

9. Privatizing and Corporatizing the University: A U.S. and UK Comparison

III. Privatization of Public Services

10. Freedom of Choice over Equality as Objective for the Swedish Welfare State? The Latest Debate on Choice in Education

11. Privatization in the Human Services: Impact on the Front Lines and the Ground Floor

12. Still a responsive state?

13. E-government for the distribution of public services in Sweden: Privatization, Vulnerability and Social Responsibility reshaped

14. What does privatization mean for women in Uganda?

IV. Privatization of the Coercive Power of the State

15. The Human Right to Dignity and Commodification of Prisoners: Considering Worldwide Challenges to Prison Privatization

16. Gendered Aspects of Privatizing Force in Counterinsurgent Warfare

17. Harmed selves harming others – A vulnerability approach to the criminal justice system

Citation preview

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PRIVATIZATION, VULNERABILITY, AND SOCIAL RESPONSIBILITY

This book explores from a cross-cultural perspective how privatization and globalization impact contemporary feminist and social justice approaches to public responsibility. Feminist legal theorists have long problematized divisions between the private and the political, an issue with growing importance in a time when the welfare state is under threat in many parts of the world and private markets and corporations transcend national boundaries. Because vulnerability analysis emphasizes our interdependency within social institutions and the need for public responsibility for our shared vulnerability, it can highlight how neoliberal policies commodify human necessities, channeling unprofitable social relationships, such as caretaking, away from public responsibility and into the individual private family. This book uses comparative analyses to examine how these dynamics manifest across different legal cultures. By highlighting similarities and differences in legal responses to vulnerability, this book provides important insights and arguments against the privatization of social need and for a more responsive state. Martha Albertson Fineman is Robert W. Woodruff Professor of Law at Emory University. A leading authority on family law and feminist jurisprudence, Fineman is the founding director of the Feminism and Legal Theory Project, an interdisciplinary scholarly project she began at the University of Wisconsin in 1984. Since 2007, she also directs Emory’s Vulnerability and the Human Condition Initiative, an interdisciplinary project housed in the Laney Graduate School. Her scholarly work focuses on various aspects of the legal regulation of intimacy and on the social, cultural, and legal implications of human dependency and vulnerability. Ulrika Andersson is Associate Professor of Criminal Law at the Faculty of Law, Lund University, working as a teacher and researcher in criminal law and criminal procedural law. Her main research focuses broadly on questions concerning law and power. She is particularly interested in issues of sexuality and gender, in addition to power relations in regard to class and ethnicity. Titti Mattsson is Professor of Public Law, working as a researcher and teacher in social welfare law, medical law and family law at the Faculty of Law, Lund University. Her research broadly concerns age and the law (child law, elder law) and often focuses on the use of age as a simplifier in the regulation of the social welfare state. Together with Andersson, she is co-director of the research environment Law and Vulnerabilities at Lund University.

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Gender in Law, Culture, and Society Series Editor: Martha Albertson Fineman Emory University School of Law, USA

Gender in Law, Culture, and Society will address key issues and theoretical debates related to gender, culture, and the law. Its titles will advance understanding of the ways in which a society’s cultural and legal approaches to gender intersect, clash, and are reconciled or remain in tension. The series will further examine connections between gender and economic and political systems, as well as various other cultural and societal influences on gender construction and presentation, including social and legal consequences that men and women uniquely or differently encounter. Intended for a scholarly readership as well as for courses, its titles will be a mix of singleauthored volumes and collections of original essays that will be both pragmatic and theoretical. It will draw from the perspectives of critical and feminist legal theory, as well as other schools of jurisprudence. Interdisciplinary, and international in scope, the series will offer a range of voices speaking to significant questions arising from the study of law in relation to gender, including the very nature of law itself. Other titles in the series In Search of Common Ground on Abortion From Culture War to Reproductive Justice Robin West, Justin Murray and Meredith Esser ISBN 978-1-4724-2045-9 Sister Wives, Surrogates and Sex Workers Outlaws by Choice? Angela Campbell ISBN 9781409435211 Vulnerability Reflections on a New Ethical Foundation for Law and Politics Edited by Martha Albertson Fineman and Anna Grear ISBN 9781472421623 Exploring Masculinities Feminist Legal Theory Reflections Edited by Martha Albertson Fineman and Michael Thomson ISBN 9781472415110

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PRIVATIZATION, VULNERABILITY, AND SOCIAL RESPONSIBILITY A comparative perspective

Edited by Martha Albertson Fineman, Ulrika Andersson, and Titti Mattsson

First edition published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017

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Routledge is an imprint of the Taylor & Francis Group, an informa business © 2017 selection and editorial matter, Martha Albertson Fineman, Ulrika Andersson, and Titti Mattsson; individual chapters, the contributors The right of Martha Albertson Fineman, Ulrika Andersson, and Titti Mattsson to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Names: Fineman, Martha, editor. | Andersson, Ulrika, editor. | Mattsson, Titti, 1964– editor. Title: Privatization, vulnerability, and social responsibility : a comparative perspective / by Martha Albertson Fineman, Ulrika Andersson, and Titti Mattsson. Description: First edition. | Abingdon, Oxon ; New York, NY : Routledge, 2017. | Series: Gender in law, culture, and society | Includes bibliographical references. Identifiers: LCCN 2016022826 | ISBN 9781472489043 (hbk) | ISBN 9781472489074 (pbk) | ISBN 9781315387543 (ebk) Subjects: LCSH: Privatization—Social aspects. | Public-private sector cooperation—Social aspects. | Public welfare. | Social service. | Women—Social conditions. Classification: LCC HD3850 .P7496 2017 | DDC 338.9/25—dc23 LC record available at https://lccn.loc.gov/2016022826 ISBN: 978-1-472-48904-3 (hbk) ISBN: 978-1-472-48907-4 (pbk) ISBN: 978-1-315-38754-3 (ebk) Typeset in Bembo by Apex CoVantage, LLC

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CONTENTS

1 Introduction Martha Albertson Fineman

1

PART I

Analyzing privatization 2 Three faces of privatization Kathy Abrams 3 Big government against social responsibility: A vulnerability critique of privatization’s public priorities Martha T. McCluskey 4 Rethinking responsibility in private law Ronit Donyets-Kedar 5 In the land of choice: Privatized reality and contractual vulnerability Hila Keren

7 9

24

34

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PART II

Privatization and corporatization 6 Entrepreneurial subjectivity, the privatization of risk, and the ethics of vulnerability Erinn Cunniff Gilson

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87

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7 Privatizing Hoodia: Patent ownership, benefit-sharing, and indigenous knowledge in Southern Africa Laura A. Foster

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8 Credit counselling in Canada: An empirical examination Stephanie Ben-Ishai and Saul Schwartz 9 Privatizing and corporatizing the university: A US and UK comparison Risa L. Lieberwitz

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PART III

Privatization of public services

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10 Freedom of choice over equality as objective for the Swedish welfare state? The latest debate on choice in education Mirjam Katzin

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11 Privatization in the human services: The impact on the front lines and the ground floor Mimi Abramovitz and Jennifer Zelnick

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12 Still a responsive state? Marketization and inequalities in Swedish aged care Helene Brodin

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13 E-government for the distribution of public services in Sweden: Privatization, vulnerability and social responsibility reshaped Titti Mattsson 14 What does privatization mean for women in Uganda? Harriet Diana Musoke

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PART IV

Privatization of the coercive power of the state 15 The human right to dignity and commodification of prisoners: Considering worldwide challenges to prison privatization William Paul Simmons and Leonard Hammer

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16 Gendered aspects of privatizing force in counterinsurgent warfare Tracey Leigh Dowdeswell

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17 Harmed selves harming others – a vulnerability approach to the criminal justice system Ulrika Andersson

290

Bibliography Index

301 339

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INTRODUCTION Martha Albertson Fineman1

This collection brings together authors struggling with the implications and effects of privatization. They are from a variety of countries and using vulnerability theory they consider privatization and its effects in their distinct legal and political cultures. Their contributions remind us that privatization is neither straightforward as a concept nor in practice as its proponents suggest it is. Privatization can be broadly defined as an active “withdrawal of the state from many areas of social life” (Harvey, 2005). However, this withdrawal can take many forms. The state may shift responsibility for social goods and services onto individuals or families, or it may actively engage the market in providing those goods or services. Engagement of the market takes many forms, from deregulation to provision of “choice” through vouchers and competition among providers to contracting out full areas of government responsibility (Blomqvist, 2004). State decisions to defund public goods or services often result in shifting responsibility onto private actors and also can be considered a form of privatization (Starr, 1988).

I. Privatization Privatization has played a role in the delivery of government services for much longer than is commonly acknowledged. In his 1962 piece, “Capitalism, Freedom, and Democracy”, Milton Friedman developed the modern privatization discourse, offering it as the viable antidote to self-serving bureaucrats and monopolizing government initiatives (Henig, 1990). Friedman argues that the welfare state functions in a manner similar to a private firm and that it is susceptible to corruption when it exists in isolation from competition and beyond accountability. Friedman

1 Robert W. Woodruff Professor of Law, Emory University School of Law.

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theorizes that competition, diversification, and individual choice would best promote public interest and should replace government structures. Friedman’s vision of privatization and the neoliberal ideology that it represents were entrenched as a political bulwark against social welfare programmes in conservative political ideology during the reign of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom. Privatization became accepted as providing the “solutions” for the problems of government programmes, which were perceived to be bloated, inefficient, or ineffective. In both countries, the prospect of redistributing the state’s power to the market garnered widespread public support. The shift was found especially appealing by a body politic largely dissatisfied with the interventionist mandate of the welfare state. Costly programmes implemented during a more social welfare oriented era proved politically unsustainable and proponents found themselves battling the image of the beleaguered taxpayer and responding to allegations that programmes to ameliorate social inequality fostered a culture of dependency (Henig, 1990). Today, privatization rhetoric continues to grip American and British discussions of public welfare policy, and the logic and methods of privatization have migrated to alter the policy discussions and initiatives of even the most rooted social welfare cultures. But the terms of these debates are changing somewhat. Historically focused primarily on the intersection of the economic and the political, critiques of privatization questioned whether private agents can or will effectively deliver public goods, either because they were not ultimately publicly accountable or because private, rather than public motivations and values would surely shape their actions. Such critiques raise important empirical questions and focus our attention on specific forms of public goods and the actions of particular public and private agents. Privatization debates have recently expanded to include less quantifiable concerns about inequality, public responsibility, and social justice. Using a vulnerability lens, however, adds another dimension to the privatization debates by questioning the coherence of conceptualizing a divide between the public and the private realms to begin with. This allows a more focused discussion on the nature and extent of state responsibility for societal and individual functioning, success, and prosperity. Whether or not the typical arguments for or against privatization are rooted in fiscal necessity, profit maximization, or the pursuit of public interest and the elusive notion of justice, what is at issue is ultimately the question of what is the appropriate balance of responsibility between the state, the market and other societal institutions, and the individual for social and individual wellbeing. Vulnerability theory treats “privatization” as just another form of expressing state responsibility for the collective welfare of society, including its institutions and individuals. The fact that the state chooses some institutions, mechanisms, or actors conveniently labelled “private” (here meaning non-governmental) in meeting its responsibilities should not substantially alter the substance of that responsibility even if it substitutes the means to ensure it. It is important to remember that no societal institution, however it is ultimately deemed, is naturally and inevitably a public or private entity. Societal institutions

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and the spaces they occupy are constructed over time and within a changing social, economic, and legal culture that gives them collective meanings, defining limitations and expectations. As such, societal institutions, public and private, are the product of social actions and arrangements and reflect shared visions and aspirations. While conflicting ideas and ideals are inevitably part of this process, resulting compromises and accommodations are ultimately incorporated in the coercive mechanisms of law and legal institutions, which apply to everyone in society. As the examples that fill this book remind us, withdrawal from direct provision of public goods and services neither makes government neutral nor absent from the relevant policy areas. The government may prescribe requirements or restrictions, may retain oversight over an area, or may continue to provide some level of funding, even though that funding may be directed to entities other than the proclaimed intended beneficiaries of a good or service. The question presented in considering the role of the state under a privatized regime is not whether the government should be involved in service provision, but in what kind of role it will have (see Abrams, this volume, Chapter 2).

II. Vulnerability theory Vulnerability theory challenges the dominant conception of the universal legal subject as an autonomous, independent and fully-functioning adult. Rather than building our systems of law and justice upon this static figment of the liberal imagination, vulnerability theory argues for a socially and materially dynamic vulnerable legal subject, based on a richer account of how actual peoples’ lives are shaped by an inherent and constant state of vulnerability across the life-course. Human beings are embodied creatures who are inexorably embedded in social relationships and institutions. There should be political and legal implications for the fact that we live within a fragile materiality that renders us constantly susceptible to change, both positive and negative, in our bodily and our social circumstances. Sometimes bodily vulnerability is realized in the form of dependency on others for care, cooperation, or assistance. Sometimes it is realized in our dependency on social arrangements, such as the family or the market and economy. But, whether realized or latent, vulnerability is universal and constant – an essential and inexorable aspect of the human condition. Importantly, the primary emphasis of vulnerability theory is not our human vulnerability, although the theory begins there. When vulnerability is understood as a universal constant, the task then becomes to explore the strategies by which we can mitigate this vulnerability. Therefore, human beings are not rendered more or less vulnerable because of certain characteristics or at various stages in our lives, but we do experience the world with differing levels of resilience. The inequality of resilience is at the heart of vulnerability theory because it turns attention to society and social institutions. No one is born resilient. Rather, resilience is produced within and through institutions and relationships that confer

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privilege and power. Those institutions and relationships, whether deemed public or private, are at least partially defined and reinforced by law. This insight about the social production of resilience allows us to argue for a more responsive state. The state is responsive when it recognizes the universality and constancy of vulnerability, as well as the need for providing mechanisms for building resilience. It is responsive when it acts to monitor and adjust institutions and relationships when they do not function in a just manner. At a minimum, the role of law in structuring societal relationships and institutions means that the state should bear responsibility to ensure that they are justly structured and fairly functioning. An appreciation of the role of social institutions and relationships in producing resilience is central to vulnerability theory’s project of building an ethical framework for confronting neoliberalism with its emphasis on individual autonomy and personal responsibility. Incorporating the inevitability of change into the political project of conceiving the legal subject creates a complex subjectivity to guide the way we define individual and state responsibilities. It provides the basis to question and critique current allocations of responsibility for individual and societal wellbeing across the individual and the state and its institutions. The liberal legal subject projects a world defined by individual, not societal, responsibility and state intervention and regulation are perceived as violations of liberty and autonomy. Social arrangements and institutions with significant effects on everyone’s lives, such as the family, are deemed “private”, and their operation and functioning relegated to ideologies of meritocracy and the free market. In contrast to the liberal vision, vulnerability theory recognizes the many ways in which societal relationships and institutions are shaped, reinforced, and modified in and through law, and argues that the state is always actively involved in the allocation, preservation, or maintenance of privilege and disadvantage. To a great extent, it is a political decision whether any social arrangement or relationship is ultimately viewed as arising from and resonating within either the public (collective) or the private (individual) domain. Realizing our reliance on institutions throughout our lives also requires that we recognize that as human creations, institutions are also, although differently, vulnerable. They can be corrupted and captured, as well as decline and eventually pass away. They can cause harm and create situations that exacerbate or exploit human vulnerability. However, institutions, especially those that are monitored effectively and fairly, can also mediate, compensate for, and mitigate vulnerability.

III. The collection The contributions collected here interrogate privatization and its practical implications through the lens of vulnerability theory. The first section, “Analyzing privatization”, provides theoretical perspectives on vulnerability and privatization. The second section, “Privatization and corporatization”, considers how ideas about privatization interact with ideas about the market and the role of corporations in

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society. The third and fourth sections examine specific instances of privatization of government services, highlighting the legal, ethical, and practical problems privatization creates. Specifically, the third section, “Privatization of public services”, looks at privatization in education, elder care, healthcare, and human services more generally, and the fourth section, “Privatization of the coercive power of the state”, explores the use of privatization in criminal justice and warfare. Finally, the afterward considers a creative alternative to privatization that could help achieve economic goals while still building the resilience of communities.

Acknowledgements We are deeply grateful to all of the talented scholars who have contributed their outstanding work to this volume. Their individual pieces on the privatization puzzle bring a diversity of national backgrounds and perspectives to bear on the issue, giving this collection a depth and richness that would be impossible from one author alone. We would also like to acknowledge and thank our wonderful team at Emory University: Kirsten Widner, project management and copy editing, Rachel Ezrol, editorial support, and Brenda Huffman, formatting and administrative support.

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PART I

Analyzing privatization

The first section of the book presents theoretical perspectives on privatization and vulnerability. The authors identify the complex motivations that underlie privatization efforts and the subtle mechanisms through which it can undermine human resilience. They illustrate the problems and contradictions inherent in privatization with compelling examples as they examine the adequacy of current legal frameworks for responding to these problems. Kathy Abrams’s piece, “Three faces of privatization”, examines three motivations for privatization: institutional, fiscal, and moral. Abrams argues that a key feature that unites these diverse contexts of privatization is a failure to grasp certain kinds of need as inherent in the human condition. She explains how vulnerability theory could reframe both the need for services and the circumstances under which privatization might be appropriate. Martha T. McCluskey’s piece, “Big government against social responsibility: A vulnerability critique of privatization’s public priorities”, argues that privatization works not just by outsourcing government functions to private entities, but also by embedding private authority and private interests into public institutions. McCluskey makes the case that this second form of privatization reinforces and exacerbates human vulnerability by prioritizing public protection for capital development over human development. She advocates a shift in the goal of state policy from an abstract concept of economic growth to a more concrete, dynamic and contextual analysis of the conditions of embodied human wellbeing. She makes the case that prioritizing state support for direct human development can be a vital route to economic power. Ronit Donyets-Kedar’s piece, “Rethinking responsibility in private law”, examines two trends, the growth of corporate power and multi-national corporations and the decline in the state’s provision of social goods, and how these trends undermine the public’s ability to shape the common good. Donyets-Kedar

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Analyzing privatization

argues that current legal doctrine, particularly the public–private divide, is ill suited to the new status quo created by these trends. She proposes that in a “postprivatization” world, where an increasing number of individuals are exposed to private law arrangements, a new, more robust concept of responsibility in private law is required – specifically, one in which enhanced responsibility is assigned based on the substantive influence of certain conduct on shaping the public sphere. Hila Keren’s piece, “In the land of choice: Privatized reality and contractual vulnerability”, argues that privatization imposes contractual relationships on all members of society, exposing vulnerable subjects to grave risks. Keren focuses on vulnerability to stress as inevitable and universal, but also exacerbated or enhanced by social and economic factors. She observes that people often find themselves consenting to contracts under stress, and explores the role of the state in protecting victims of contractual exploitation.

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THREE FACES OF PRIVATIZATION Kathy Abrams1

I. Introduction This chapter will examine three of the many faces of privatization in the American legal and political system. My goal is to highlight the range of initiatives that come within this rubric; but my focus will be different than many accounts attempt. My emphasis will not be on where and how privatization is accomplished (i.e., what is privatized, through what processes, with what kinds of means ultimately being used for the provision of goods or services), though I will advert to these issues in my discussion. Instead, I will interrogate these instances of privatization with regard to three other features that are less often discussed. First, I will consider the motivations for the shift in the provision of goods or services. Although this typological scheme will inevitably oversimplify, I will highlight three kinds of motivations for privatization. The first, which underlies the classical understanding of privatization, I will call “institutional”: state actors determine that particular services can be better or more cheaply provided by the market, or by some form of public–private partnership. This motivation usually entails a judgment that enabling recipients of a particular service to select from among a range of institutional options will result in greater satisfaction, or improvement of the service through competition, or both. Institutional privatization is often connected with a second motivation, which I will call “fiscal”: budgetary constraints make it necessary or prudent for the state to reduce or withdraw from the provision of certain services, or to outsource them to private (either for-profit or nonprofit) providers who for reasons of expertise, economies of scale, or freedom from certain kinds of regulation, provide them more cheaply. Finally, there is a form of privatization that I will identify as “moral”: in this case state 1 University of California Berkeley School of Law.

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actors decide to reduce or withdraw from the provision of a particular service because they have reached the conclusion that the service is morally problematic, or that it has encouraged in its beneficiaries forms of judgment or behaviour that are morally problematic. The goal in these forms of privatization is not simply to withdraw from the provision of the service, but to do so in a way that incentivizes the morally preferred form of choice or behaviour, or to support institutions that can provide appropriate forms of moral guidance. In deploying this range of categories, I depart from the way that some scholars of privatization would use the term. Paul Starr’s classic article on privatization, for example, excluded from its definition state decisions to defund, rather than alter the institutional structure for the provision of, goods and services (Starr, 1988). And many scholars of privatization view the term as designating the movement of service provision (or ownership of assets) from the public to the market sector, as opposed to the broader view, often associated with feminism, which emphasizes “outsourcing” of particular tasks from the public or market sector to the private family (Cossman, 2005; Fineman, 2004). I see value, however, in juxtaposing the conception of “moral privatization” to its more familiar “institutional” and “fiscal” counterparts. While each of these terms or processes reflects a withdrawal of the state from the provision of services, they reflect strikingly different assumptions about the human beings who are their focus, a feature which seems useful to bring into view. Moreover, vulnerability analysis, which asks how societies can best recognize and address the inevitable, pervasive condition of human vulnerability, suggests the importance of examining forms of privatization that place responsibility for dependency on the family or on the individual, as well as on the market. Second, I will explore the view of the human subject of privatization that is assumed by the privatizing state. The paradigmatic subject who is referenced in forms of “institutional” privatization discourse is the autonomous subject in the “republic of choice” (Williams, 1991): the individual or family, exercising the substantially unencumbered choice among vehicles for obtaining a particular good or service that privatization allows. The subject of purer “fiscal” privatization (although privatization, as this inquiry will suggest, is rarely purely fiscal) is a variant of this autonomous chooser: resourceful, self-reliant, and able to respond successfully to a diminution of governmental support. Where privatization is animated by a moralizing impulse, however, assumptions about the subject change markedly. This subject may be characterized as a manipulative chooser, whose opportunistic decisions serve to extract undeserved benefits from the government; or she may be described as a flawed and incapable chooser, who fails fully to apprehend the trajectory of her decisions or is easily swayed by others. Finally, I will investigate the role of the state in relation to the subject of privatization, as it moves away from direct provision or funding of services. This role, as I will argue, can sometimes be paradoxical. In each of my examples, the state continues to engage with (former) recipients of a particular public good or service; in some of them, the state may remain as present in the lives of recipients as it was

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before privatization occurred. State involvement may persist when the state’s goal is to facilitate choice among institutional providers: it may retain the power to supervise the conditions of competition, or to establish the metric by which recipients exercise their choice. But state involvement is particularly likely to persist when the state is engaging in “moral” privatization: the state must retain a robust supervisory role in order to incentivize or discipline the behaviour of opportunistic choosers, or to guide flawed or uncertain choosers toward morally preferred forms of behaviour. Thus the question facing analysts of privatization may be not whether the state should be involved in service provision, but in what kind of role. I will examine these dimensions of privatization through three examples. The first is the field of public education, where students and their families have experienced both “privatization by attrition” and a privatization through the explicit governmental creation of a regime of “school choice”. The second is the field of welfare reform, where federal governmental retrenchment in the field of public assistance and imposition of regulatory controls on the provision of assistance by states has resulted in the privatizing of costs of public assistance both onto nonprofit (and religious) providers, and onto individual families, including both mothers and non-custodial fathers. In the third area, reproductive health, the patterns of privatization result both from the gradual withdrawal by the federal judiciary of the legal infrastructure supporting reproductive choice, and from state decisions that reflect a lack of support for reproductive health services. These examples point to two conclusions, which I will elaborate below. First, the rhetorical emphasis on the “choice” of recipients that pervades privatization discourse often becomes a vehicle for shielding the non-neutral assumptions that state decision-makers make about, and the varying stances and policies they employ toward, different categories of state beneficiaries. State efforts to withdraw from the provision of services to socially subordinated groups demand particular attention. And second, because privatization, in its varied iterations, may fail to grasp the way that certain needs inhere in the human condition, vulnerability theory may provide a vehicle for questioning both the direction of these efforts and the premises about the human subjects of privatization they reflect.

II. Three faces of privatization A. Educational privatization and “school choice” The example of K-12 education most clearly reflects the assumption that privatization facilitates consumer choice. However, privatization in the educational context is complex, with a number of different patterns through which the state has withdrawn from, or shifted responsibility for the provision of, educational services. Perhaps the simplest, and most pervasive pattern is “privatization by attrition” – the contraction or diminution of educational services provided by the state (Starr, 1988). This fiscally-grounded form of privatization may occur, for example, when cash-strapped districts reduce offerings in art, music, or athletics, returning these

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functions to the market and placing the cost of providing them on individual families. But privatization also occurs through the explicit choices of school districts to transfer to other institutional actors aspects of control over the provision of education services. One common example of such privatization is the provision of school choice within public school districts: the school district shifts part of the authority for student assignment to parents, who may send their children to neighbourhood schools or select another public school within a district or county (Fuller, Elmore, and Orfield, 1996). Increasingly familiar, and more controversial, are forms of privatization in which school districts transfer various tasks associated with the administration or functioning of schools to private entities, sometimes referred to as educational management organizations (or EMOs) (Kozol, 2007). These efforts reflect an “institutional” motivation for privatizing educational services. These may be public–private partnerships, which have occurred primarily in inner city schools, where EMOs contribute to per pupil costs at a given school or schools, in exchange for a role on a board that oversees the operation of those schools. In a related though larger scale approach, cities have contracted out the management of groups of struggling schools in a district to EMOs such as Edison or National Heritage Academies. The funding of these schools remains public, but the management has been transferred to private entities. No Child Left Behind, as Jonathan Kozol observes, has tended to hasten this transfer of control: it requires that any school that fails to show yearly improvement for more than two years in a row offer its students either a transfer to a more successful school in the same district or supplemental educational services (Kozol, 2007). School districts often contract with EMOs, including those that specialize in test preparation, to provide these supplemental services to students. These moves toward privatization have sometimes occurred largely below the radar of the general public and even the affected communities. While they may introduce the values or norms of the market through their emphasis on management and performance, they are defended, rhetorically, as saving struggling schools rather than as facilitating market choice. In more ambitious, and often more visible, privatization programmes, the solution to declines in educational quality is achieved not by shifting management of particular schools, but by permitting parents to choose the institutional vehicle – which may range from public to charter to parochial or private – from which children obtain their publicly-funded education. The more circumscribed version, which has been adopted in many municipalities, is to authorize the creation of charter schools. Charter schools are independently-run schools within the public school system that can be organized by individuals or groups, authorized by school districts, state boards of education or colleges and universities, and administered by EMOs or Community-Based Organizations (CMOs) (Finnigan et al., 2004). These creators contract with authorizers to meet certain guidelines, and they are freed from certain regulatory constraints, such as teacher certification requirements. Parents can choose whether to send their children to the school in their immediate geographical area or to apply to a charter school. (As public

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institutions, charter schools select their students by lotteries or other random selection processes.) A more expansive version of choice-related privatization is a voucher system, where the state provides parents with funding that can be used to attend private and parochial as well as public schools. Such programmes have been piloted in a few municipal school districts, with vouchers often directed to low income students (Witte, 1996). Students may use vouchers to pay for education at private and parochial institutions, but they are not assured admission, nor does selection (necessarily) occur through random processes. The question whether private and/ or parochial schools exercise their powers of choice in such a way as to exclude struggling or disruptive students, or those who will be more costly to educate, is the subject of ongoing controversy (Kozol, 2007). The justification for both charter schools and voucher programmes sounds primarily in the liberal discourse of market choice, placing them within the “institutional” category of privatization (Friedman, 1962; Friedman Foundation, ca. 2015; Fuller et al., 1996; Henig, 1996). The argument is that an expanded range of possible school choices, whether within a public/charter system or across the full range of schools supported by vouchers, will permit parents to select the schools that they see as most likely to be successful in educating their children. Equally importantly, the prospect of having to compete for families’ public education dollars will incentivize all schools to undertake innovation and, more generally, the strongest possible efforts to deliver quality education. To identify this discourse of choice is not, of course, to validate it. Osamudia James has demonstrated that the choices often presented to poorer families and families of colour are sufficiently constrained that the notion of “choice” itself should be interrogated and that the creation of “choice” can become a vehicle for blaming those relegated to unacceptable choices for being the authors of their own disadvantage (James, 2014). Empirical investigations of school choice also suggest that the propensity to choose actively, rather than succumbing to inertia or relying on unexamined assumptions about the value of particular kinds of schools, is correlated with comparatively higher incomes, levels of maternal education, parental involvement with schoolwork, and particular kinds of cultural capital, within as well as across socio-economic or racial groups (Henig, 1996; Wells, 1996). This means that plans premised on and justified by the operation of choice may actually engage the decision-making of a relatively small group of comparatively privileged parents (Elmore and Fuller, 1996). Yet however unevenly the discourse of choice fits the concrete circumstances of its ostensible beneficiaries, this rhetoric reflects the assumptions of its proponents that families are capable choosers who can weigh competing options and decide on the form of education that will best serve the needs of their children. Notwithstanding the shifts in institutional responsibility that they envision, many variants of educational privatization will leave the state integrally involved in the lives of the students, parents, and teachers. The state or its school districts determine the terms on which vouchers will be disbursed; they authorize and

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supervise the charters that determine the direction and viability of charter schools. And through the hybrid federal/state regime of No Child Left Behind for all public and charter schools, they perpetuate a regime of accountability through high stakes testing that will structure the curriculum and classroom experience in public, public/private partnership or charter schools (Finnigan et al., 2004). The school performance scores that emerge from this testing provide one key metric on which parental choice will be exercised. Moreover, if school districts facilitating choice aim to promote active choosing among all parents, or to design programmes that are coherent and distinct enough to attract a range of families, they will need to become more elaborately involved both in outreach and in institutional design (Elmore and Fuller, 1996). The state may transfer significant responsibilities for education, yet it seems likely to retain a palpable and multifaceted relation with the subjects of privatization.

B. Welfare reform The second example, the area of welfare reform, reflects forms of privatization distinct from those that characterize school choice. Here too the state seeks to reduce its footprint – particularly its fiscal footprint – in an area where its primary control is regarded by decision-makers as having produced unsatisfactory outcomes. Many who supported the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRA) sought to reduce government expenditures on welfare from the high point that they had reached during the late 1970s and early 1980s (Department of Health and Human Services, 2008; Office of Child Support Enforcement, 1996). And here too, institutional concerns are present, albeit in distinct forms. Some supporters of welfare reform believed that greater responsibilities should be assumed by religious institutions and other organizations of civil society: George H. W. Bush’s now-famous reference to the “thousand points of light” is perhaps the most familiar example (Bush, 1989). Others believed that welfare programmes were best designed and administered by the states, with the federal government providing broad guidelines, research and assessment and budget surveillance (Harris, 1997). Yet, what enabled the PRA to curtail means-tested cash-based public assistance, cutting the percentage of those in poverty served from 68% to 27% between 1996 and 2012 (Edelman, 2012), was a foundation of moral concerns. Supporters were animated by a concern with the “culture of dependency” that emerged under decades of the Aid to Families with Dependent Children Programme (AFDC), with the growth in what they viewed as anomalous family forms, such as single-parent families consisting of children born to young women out of wedlock, and with the putative exploitation of federal assistance by women who relied on it to raise multiple children, rather than return to the workforce (Mink, 1998; Smith, 2007). These moral concerns have structured the federal government’s efforts to withdraw from the systematic support of families living in poverty (Mink, 1998). The block grants to states provided under the programme – designated significantly

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as Temporary Assistance to Needy Families (TANF) – are conditioned on the implementation of work requirements and time limits (Schott, 2011). In any state receiving TANF funds, half of recipients are required to work at least 30 hours per week (20 hours for single parents of young children); and any given recipient, to remain eligible, must find work within two years. In addition, no family that contains adults is eligible to receive more than five years of TANF support, whether consecutive or not (with extensions available for only 20% of families in any given state’s caseload). States are also required to establish child support enforcement programmes, aimed at securing support from non-custodial parents, in conformity with stringent federal requirements (Office of Child Support Enforcement, 1996). Beyond these requirements, TANF funds can be expended in any way that serve the PRA’s four goals: assisting needy families for the particular benefit of children; ending dependence of needy families on government benefits by promoting “job preparation, work, and marriage”; “preventing and reducing out of wedlock births”; and supporting “the formation and maintenance of two parent families” (Schott, 2011). It is noteworthy that three of the Act’s four goals address not the needs of poor families, but the federal government’s concerns with welfare dependence and family structure (Mink, 1998). The means through which the state and federal governments achieve these goals reflect a view of recipients that contrasts starkly with the view reflected in school choice. In the language of legislative debates, in the goals of the statute, and in the programmes it supports, recipients of public assistance are characterized not as autonomous decision-makers whose choices should be facilitated, but as deeply problematic choosers, whose flawed and even culpable choices must be sanctioned and redirected. Recipients must turn to public assistance, this discourse suggests, because they have made a series of suspect and irresponsible choices: the decision to have children without adequate financial resources to support them; or the decision to create a family outside the structure of the normative two-parent, marital family form (Smith, 2007). Longerterm reliance on public assistance suggests not simply flawed, but opportunistic or manipulative choice: a decision to depend on the government to provide for one’s children, rather than achieving independence through work or seeking what the state regards as legitimate dependence through marriage to a man (Mink, 1998). Nominally speaking, the PRA incentivizes a move from welfare dependence to workforce participation through work requirements and time limits. It directs recipients toward childrearing within a two-parent structure through child support requirements, and toward the formation of normative marital families through programmes aimed at abstinence education, and marriage-promotion. Yet, as feminist critics have argued, the structure of incentivization is exceptionally harsh, and the programmatic encouragement strikingly shallow: these features of PRA stand to influence the choices only of those particularly well-prepared for work or particularly disposed toward the traditional form of the nuclear family (Smith, 2007). For everyone else, both the federal requirements and the programmatic initiatives adopted by states serve to isolate and stigmatize recipients

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as incorrigibles, while signalling to the rest of the polity the forms of family life that are (and are not) valued (Smith, 2007). Work requirements make clear that parenting by women of colour living in poverty is not valued, and that unsatisfying, low-wage work with little prospect of advancement is the best that they can expect (Roberts, 1994). Time limits signal deep suspicion of their human needs, and willful neglect of the kind of structural disadvantage that can make it difficult to find and persevere in market employment (Edelman, 2012; Precin, 2011). These requirements not only penalize many recipients; clothed in a moralizing public discourse, they perpetuate a race-inflected tendency to stigmatize welfare recipients (Gillens, 1999). Programmatic support for childrearing within two-parent, marital, nuclear families performs these stigmatizing functions as well: programmes that incentivize single, pregnant TANF recipients to give up their babies for adoption, for example, make clear how unfit to parent the government understands them to be (Smith, 2007). But these features of PRA produce other effects as well. They keep the state entangled in the lives of recipients in ways that entail judgment and surveillance, without providing substantive assistance. A young mother who must cooperate with the state in securing child support from a non-custodial father in order to receive TANF funds receives less support from the state (an explicit goal of child support enforcement), at the price of more intrusive state contact. Abstinence education and marriage-promotion programmes keep recipients subject to both institutional involvement and institutional judgment, yet offer no material support. Because abstinence education may be offered through the public schools and marriage promotion programmes may be open to members of the general public, they also commit TANF funds to initiatives that serve constituencies beyond recipients of public assistance. Programmes aimed at supporting the normative, marital family finally permit states to channel funds to religious nonprofits which frequently administer such programmes, and to circulate forceful normative views about non-marital sexuality and appropriate family forms. A review of the allocation of TANF funds in 2005 found both increased funding to faith-based providers and substantial failures on the part of TANF funding agencies to communicate protections for the religious freedom of the client or the ability of the client to access alternative service providers (Jacobson, Marsh, and Winston, 2005). Ultimately the profile of the fiscal cum moral privatization of welfare reform contrasts sharply with the institutional privatization of the educational field. Although a rhetoric of choice circulates in welfare debates, it operates in distinct ways. Wielded with little sensitivity to the structural constraints under which recipients’ decisions are made, the ideological construct of choice functions primarily as a vehicle for curtailing state support without conspicuous concern about who picks up the slack, and for justifying state condemnation of familial decisions that it views as normatively inappropriate. Correspondingly, the liberal rhetoric of incentivization justifies rules that work not so much to direct choices as to impose punitive, stigmatizing forms of denial. Support for the choices of welfare recipients

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comes less in the form of structural or logistical support (Precin, 2011) than in the form of “counselling” and normative exhortation. In this form of privatization, the state radically contracts material and structural support for families living in poverty, and extends, nominally in its place, programmes of incentivization, education, and counselling that perform and invite normative judgment about the structure of family life (Mink, 1998; Smith, 2007).

C. Women’s reproductive health In the third area, women’s reproductive health, a struggle over privatization is currently taking place. This is a more contentious use of the term: for reasons of both form and motivation, not all analysts would characterize it as an example of privatization. I contend, however, that this example is worth including in the privatization frame. The area of women’s reproductive health amplifies some of the patterns we saw in the privatization of dependency connected with welfare reform, and also produces some distinctive variants.

a. Federal legal infrastructure supporting abortion One key facet of women’s reproductive health has been the choice whether to continue or terminate a pregnancy. Here privatization has been achieved through an atypical state vehicle: the federal courts. The Supreme Court has ordained and overseen the gradual withdrawal of the legal infrastructure that has protected reproductive choice. In a series of cases from Roe v Wade, to Planned Parenthood v Casey, to Gonzales v Carhart, the Court has altered, loosened, or discarded the doctrinal protections that enabled women to access assistance in terminating unwanted pregnancies. Withdrawal of these legal protections for choice has had the effect of privatizing onto women (and their families or partners) the responsibility for navigating the consequences of an unplanned and unwanted pregnancy. This withdrawal of the infrastructure of reproductive choice is best understood as moral. Abortion is not a fiscal issue, as neither states nor the federal government provide funding for abortions (Harris v McRae, 1980; Maher v Roe, 1977); and while some opponents of abortion voice an institutional preference for greater state control, the institutional vehicle for regulation or service provision is not the predominant concern. The federal withdrawal of support is based on growing moral qualms about the choice of abortion: in its impact on the fetus (or “unborn child”), on a society that aims to manifest respect for life, and more recently, on the wellbeing of the woman who undergoes it (Gonzales v Carhart, 2007; Planned Parenthood v Casey, 1992). This curtailment of federal legal protection for reproductive choice is not, however, associated with a withdrawal of government actors from the lives of women. While the costs of addressing unplanned or unwanted pregnancies are increasingly privatized onto women and their families, in the sense that they have access to fewer alternatives for responding to them, women contemplating reproductive

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choice face increasingly intrusive regulatory intervention by the states. State laws burden abortion with procedural requirements and enlist care providers in elaborate governmental scripts, providing “right to know” warnings about the development and biological status of the fetus or the short- and long-term risks to the woman of undergoing the procedure (State of Texas, 2003), or discussing the results of mandatory ultrasound examinations (Guttemacher Institute, 2014). Perhaps the most striking feature of this privatization is that it affects these restrictions and creates these peculiar public/private collaborations not because government actors aim to facilitate women’s choice, but because they mistrust it. The assumptions of autonomy and decision-making capacity that often underlie institutional privatization regimes, and that informed early abortion decisions, have been eroded: the subject of privatization envisioned by the Court is changing. Yet the autonomous, decision-making subject has not been replaced by the opportunistic, manipulative chooser envisioned by supporters of welfare reform. Instead, the subject of state abortion regulation is conceived as a flawed and incapable chooser. She struggles to understand the implications of her circumstances and choices, she is easily swayed by pressure from others, and she requires guidance to help her uncover the natural maternal urges that connect her with her unborn child (Gonzales, 2007; Report of the South Dakota Task to Study Abortion, 2005; Siegel, 2007). This guidance may be found in a range of contexts: in state-mandated warnings from abortion-providers, in certain kinds of nuclear families, in religious institutions, or in “crisis” pregnancy centers. Though the presumed subject is an incompetent, rather than a culpable, chooser, the state response resembles in some respects its role in the field of welfare. Women receive less concrete or material support for addressing their life challenges, but an increased burden of moral guidance.

b. State funding of women’s reproductive health providers This legal and governmental shift from choice to guidance implicates the second strand of the privatization in this area: state withdrawal from the larger field of women’s reproductive health. Here the vehicle for privatization is not the federal judicial disestablishment of legal infrastructure, but the state legislative withdrawal of funding for family planning and women’s health providers. Although the Court’s abortion funding decisions have meant government is not required to subsidize abortions, both state and federal governments have supported family planning providers, which also assisted women in other matters related to reproductive health. This funding has been challenged unsuccessfully at the federal level, where a House Republican effort to defund Planned Parenthood and eliminate Title X funding more generally was thwarted by Senate Democrats and by President Obama (Bendavid and Hook, 2011). At the state level, however, a conspicuous shift in the pattern of state funding has occurred. Here we see an emerging pattern of states defunding both Planned Parenthood and other reproductive health clinics that provide comprehensive women’s healthcare services. This move is taking place in an environment where such clinics may provide primary and

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preventive healthcare for indigent women, or supply birth control at a fraction of the cost at which it is available on the market. In the context of this withdrawal of funding, the responsibility for addressing women’s reproductive health needs is shifted (or privatized) from the state onto the woman and her family: she is forced to address her reproductive or healthcare needs without subsidy or assistance or to leave them unaddressed. This withdrawal of state funding for women’s reproductive health may also be coupled with financial support for other, less comprehensive options: “pregnancy crisis centres” where women are counselled to continue their pregnancies. These moves have often been undertaken in, and justified explicitly by, the context of state fiscal austerity. But the defunding of centres which, among other functions, provide or refer to abortion services, and the support of centres which counsel women to keep all pregnancies suggest a powerful moral impetus. They reflect a parallel effort to situate women within a familial and institutional context that will provide support for a prioritization of their maternal role. One example, which may be illustrative of emerging state patterns, is the defunding of reproductive health services in Texas. In the 2012–13 budget, the Texas legislature slashed $73.6 million from the amount that the Department of State Health Services had budgeted for family planning programmes (Tan, 2011a). There is little doubt that imperatives of financial austerity played a role in the state retrenchment: this was a budget replete with deep cuts to human services. But two factors also suggest a moral impetus. First, the state re-prioritized the providers who are eligible to receive its funding, placing Planned Parenthood – which had previously received the second-largest allotment – at the bottom of the list (Garcia-Ditta, 2011; Tan, 2011b). Second, this cutback was paired with a modest increase in funding to Texas Pregnancy Care Network, a nonprofit which supports a range of Crisis Pregnancy Centres (or CPCs), the vast majority of which have Christian affiliations. CPCs provide counselling, and many provide sonograms, to pregnant women, with the goal of persuading them not to seek an abortion (Tan, 2011a). According to investigative reporting by the Texas Independent, these providers sometimes “blur the line between counselling and proselytizing”, and fail to separate religious and educational materials (Tuma, 2011). At some CPCs, volunteers are instructed to invoke God when clients request an abortion (“tell [the clients] to trust God, he’s got a bigger plan”) (Tuma, 2011). CPCs do not provide the contraception, health screenings, or gynecological exams that are available at most women’s health clinics. The state’s newest funding priorities are paired with recent legislation supported by Governor Rick Perry that bans abortion after 20 weeks and requires all women seeking abortions to obtain ultrasounds 24–72 hours before the procedure (Fernandez, 2013; Guttemacher Institute, 2014). The legislation also requires that abortion providers show the woman the sonogram image, describe that image, and play the fetal heartbeat (Guttemacher Institute, 2014; Smith, 2011). This combination of state withdrawal and state intrusion bears many of the hallmarks of moral privatization. The state is increasingly ambivalent about the support of one

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kind of reproductive health service – which begins with abortion and extends to birth control – which it finds morally problematic. When it seeks to disentangle the state from these morally compromising activities, it shifts the responsibility for addressing – and increasingly for preventing – unwanted pregnancies onto individual women. Indigent women must pay more for birth control, which was available at subsidized prices through family planning clinics; they may also have to forego the reproductive and other primary preventive care that was available in the clinics that are now being defunded. All women experience diminished access to birth control and abortion. But Texas has not wholly departed the reproductive field. Through its new abortion legislation and its funding of the Texas Pregnancy Care Network, the state supports a range of providers ready to help women through choices they are viewed as ill-equipped to make, and resituates them within a two-parent, gender-bifurcated, pro-natalist vision of family, which can support them in embracing their maternal role.

III. Interrogating privatization Although these three contexts of privatization vary widely, there are also certain continuities among them. I will highlight two, by way of conclusion. First, despite the rhetorical emphasis on the “choice” of service recipients, it is rare in these settings of privatization for state actors to demonstrate real empirical interest in the contexts in which choice occurs, or the constraints they impose on recipients’ decision-making. Instead, choice becomes a vehicle for shielding the non-neutral assumptions that state decision-makers make about, and the varying stances they employ toward, different categories of state beneficiaries. Programmes that deliver services primarily to women, to people of colour, or to families living in poverty, are more likely to take a moralizing view of the activities or behaviours supported by the goods or services and are less likely to view these subjects as competent choosers. Even in the area of educational privatization, where state actors tend to assume, and sometimes work to foster, competent and non-manipulative choice, the assumption of competency waivers, and the spectre of blame for “bad” choices among inadequate alternatives encroaches, when the subjects are poorer families of colour. These differential, hierarchizing judgments about choice matter, for a number of reasons. First, they point to a need to look more carefully at the ostensibly neutral, neoliberal justifications for privatization (Shah, 2010). Institutional assumptions about private service provision, or fiscal commitments to a reduced governmental footprint or a posture of austerity, are inevitably intertwined with judgments about the value of particular kinds of services or benefits, and the character of their presumed beneficiaries. When these judgments track and fuel dominant, stereotyped views this should be a red flag for decision-makers, media, and members of the public. Second, when problems with public services are interpreted as arising from the poor choices or moral failings of beneficiaries, government actors are more likely

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to privatize the costs of meeting the human needs involved onto beneficiaries and their families, than to carefully investigate new forms of service provision or public–private partnerships. They are also more likely to substitute moral guidance or regulation and surveillance for material support. These patterns in state withdrawal from service provision merit more attention than they have thus far received. Privatizing the costs of meeting needs onto individuals and families (rather than privatizing the provision of services onto market actors) inheres in virtually all forms of privatization: whether it is the cutting of arts classes in public schools (which leaves parents with the cost of providing for lessons or after-school programming) or the defunding of women’s health clinics (which leaves women questioning whether they can pay for unsubsidized birth control or pap smears). Yet this pattern of priviatization can be neglected in the public–private comparisons and discussions of incentivization. Other patterns, such as the substitution of moral guidance for material support, may be specific to those forms of privatization that involve subordinated groups. But they are equally deserving of enhanced attention. Programmes aimed at supporting choice are not, in and of themselves, a problem. When connected with a nuanced, empirically grounded understanding of the factors that can constrain choice, they may be a necessary part of equipping recipients to address their needs amidst an increasingly complex array of service providers. But when counselling or guidance takes on a moral emphasis that employs ungrounded assumptions about beneficiaries, when it substitutes for the provision of material assistance, or becomes decoupled from the goals of service provision (as in abstinence or marriage education) or animated by goals that constrain rather than support choice (as in the example of “crisis pregnancy” centres), such programmes risk becoming more of an impediment than a benefit to their recipients. Third, when the invocation of “choice” functions substantially as a vehicle for imposing differential judgments of responsibility on ostensible choosers, government actors lose an opportunity to focus the attention of the public, and the engines of empirical inquiry, on the contexts and conditions that affect the operation of choice and how more supportive conditions might be cultivated by government and private actors. Such investigation is hardly unknown: some of the research cited in this chapter – such as the identification of factors that are associated with active choice by the parents of public school children – falls into this category. But this kind of inquiry should be foregrounded and connected to the discourse through which leaders communicate with the public about choices made. Instead of judging choices associated with unmet needs to be atypical or even culpable, state actors and mainstream media might attend more carefully to a range of factors that can bear on choice in varied contexts: restriction of the range of choices, limited access to knowledge about choices, and lack of infrastructural support for particular choices or for the ability or inclination to exercise choices in an active way. Fourth, a simplified, rhetorical focus on choice may distance decision-makers from the painful forms of need that human vulnerability and structural inequalities

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create. Many state actors live at some remove not only from the young woman contemplating an unwanted pregnancy or needing access to subsidized birth control, or the single mother wondering who will care for her children if she returns to work, but from the family deciding among untenable options in a beleaguered public school system. Their experience of their own needs is so thoroughly buffered by those (often subordinate) others on whom they rely – the tutor or after-school teacher, the spouse or provider who cares for their children, the highquality, healthcare that is offered at subsidized cost by their employer – that they can feel autonomous without fully appreciating their dependence (Fineman, 2004). A simplified rhetoric of choice, which permits state actors to hold responsible for unmet needs those who do not enjoy such seamless reliance, further insulates state actors from the lives and needs of those they govern. This emphasis allows them to focus on the choice – erroneous or sound, exploitative or innocent, incompetent or knowing – rather than on the lived reality that government services are intended to address. This last difficulty points to my second, and final, observation. One feature that unites these diverse contexts of privatization is a failure to grasp certain kinds of need as inherent in the human condition. Perhaps it is not surprising that when the state is seeking to withdraw from the provision of a service, it does not underscore the pervasive or paradigmatic character of human precarity or the inevitability of our dependence on others. Yet it is striking that the subjects, as characterized by state actors in these forms of privatization, are either not needy, or exploit a contrived need as a form of manipulation, or experience need because they are morally flawed and/or cognitively incompetent beings. If state actors were to start instead with a view of subjectivity that recognized the kind of basic physical, emotional, and interpersonal needs that Martha Fineman describes as characteristic of human vulnerability, they might reach different conclusions about the relationships between individuals, groups, and the state. If the question, as I suggest above, is not “should the state be involved” but “through what kind of roles should the state act on individuals and groups”, then how might the roles we envision for the state differ, if we started from a vulnerability assumption? The vulnerability thesis emphasizes that we are embodied beings, subject to inevitable dependency on others at both ends of our life span, and to “destructive external forces and internal disintegration” at unpredictable intervals in between” (Fineman, 2008, p. 12). “Bodily needs and the messy dependency they carry” (Fineman, 2008, p. 12) are not the exclusive domain of mothers on public assistance or women confronting the prospect of an unwanted pregnancy. They are the condition in which all of us live from day to day. Human needs are inevitable and the ability to meet them autonomously (or through ostensible choice among restricted governmental services) is the exception rather than the rule; moreover such “autonomy” often relies, as I suggest above, on forms of interpersonal dependence that are invisible not only to the public, but often to those who enjoy them (Fineman, 2004). These insights might ground an orientation toward the state provision of services that is different from that underlying any of the emerging logics of

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privatization. An understanding of vulnerability would focus decision-makers’ attention on the bodily and material constraints under which we all live, and under which any inevitably constrained choice occurs. It could also highlight the ways that social and structural inequalities shape both these needs and mainstream views of those who experience them. More broadly, the insights of vulnerability theory would call into question the presumed exceptionality of state support for human needs, which underlies many neoliberal efforts at privatization. State actors who recognize the vulnerability implicit in the human condition should contemplate withdrawal from the provision of services only where the institutional advantages of alternative arrangements are supported by careful research rather than facile judgments about the effects of choice in incentivizing institutions. Under vulnerability theory, judgments of financial exigency that have also supported privatization would be made against a background assumption that states must respond to unmet human needs and offer programmatic supports for adaptation and coping that foster resilience (Fineman, 2008, p. 13). In any context of prospective retrenchment, state actors would aim to fully understand and to support, rather than to correct or discipline, the decision-making of beneficiaries, who would be assumed to be managing inevitable needs, rather than manipulating the government or falling victim to their own moral or cognitive failings. And partnerships with private market actors or nonprofits would be aimed not at maximizing choices or incentivizing performance but at identifying arrangements that could serve, with attention to comparative institutional advantage and at sustainable cost, needs that are neither treated as exceptional nor presumed to be passing or short-term. Governmental actors would see state support for the inevitable needs and dependencies of human subjects not as a problem to be remedied, but as the first step toward a system of governance that responds more fully to the human condition.

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BIG GOVERNMENT AGAINST SOCIAL RESPONSIBILITY A vulnerability critique of privatization’s public priorities Martha T. McCluskey1

I. Turning the public interest into private wealth On the surface, neoliberal privatization appears to challenge “big government”. In fact, recent privatization efforts have often aimed to expand government by incorporating new private sector powers as core public functions. Privatization consists not only of the outsourcing of government services and regulatory authority to private businesses or to non-governmental organizations. Another method of privatization is the inverse: embedding private authority and private interests into public institutions. Privatization aims not simply to change the institutional location and form of government, but also to change ideas about the public interest and social responsibility.

Who counts as the public? The lens of human vulnerability and resilience helps illuminate and challenge privatization as a project of re-orienting rather than reducing government. Vulnerability theory grounds law in the idea that the human condition universally involves vulnerability and interdependence. The fact of embodied existence means that human capability and achievement is thoroughly constituted and continually shaped by social institutions and collective action, including law. Feminist legal theory has criticized the public–private division as a powerful, and malleable, tool for enforcing gender inequality. For example, the family historically has been constructed as too private for public protection against violence yet too public to support diverse forms of consensual intimacy (Fineman, 1995;

1 Professor and William J. Magavern Faculty Scholar, SUNY Buffalo Law School, State University of New York.

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Fineman and Mykitiuk, 1994). The lens of human vulnerability points deeper beneath this surface division between “public” and “private” institutions to investigate the public privileges and penalties that reinforce power on both sides of that elusive line. This perspective especially questions how the public–private divide can work to discount or obscure human dependency by positioning it as an idiosyncratic and individualized personal condition. The premise of the vulnerable subject establishes the concerns of embodied human dependency and interdependency as core public issues, not peripheral problems of special populations. When we imagine the “public” for whom government operates, this premise directs us to imagine a collection of persons whose life opportunities are likely to be profoundly (though diversely) affected by the contingent sociolegal conditions governing bearing and raising children, caring for sick, aging, or injured bodies and minds, and responding to human bodily needs for food, community, sanitation, and security from physical, mental and environmental harm. Privatization policies tend to build on the contrary classic liberal assumption that government functions first and foremost as a collection of autonomous agents who normally and naturally provide for most of their personal bodily needs through voluntary choices reflecting individualized tastes and talents. Twentieth century social movements helped broaden this liberal ideal to support extensive public investment in education, healthcare, welfare benefits, social security, income support, and infrastructure, reasoning that these support systems helped foster and maintain individual independence. That expansive view of liberal freedom similarly has justified extensive government regulation to correct barriers to independence, or even to balance autonomy with other goals like equality and stability. Against this expansive liberal vision, neoliberalism amplifies the logic of autonomy to assert that any of those “social” goals is likely to be better achieved by instead focusing public policy on producing a bigger societal “pie” of aggregate economic resources. In this theory, if government concentrates on protecting and rewarding the gains of private economic “winners”, it will encourage superior talent and effort in pursuing economic gain, thereby maximizing overall gain. Neoliberal logic further explains that enhanced support for private winners also best protects those most vulnerable to economic loss. In this theory, those most dependent on others are more likely to get a bigger share of the public pie when the winners have more to spare.

Privileging protection for capital development Neoliberalism hones this logic into a message that privatization of government social programmes and regulatory schemes advances social wellbeing through the dual imperatives of growth and austerity. First, neoliberalism promises that shifting government power to private business will bring efficiency gains – a bigger overall economic pie – by enhancing market incentives for innovation,

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flexibility, rationalization, competition and waste reduction. Second, neoliberalism explains that shifting public resources toward private capital interests is part of a rational, necessary adjustment to the natural limits of the economic pie given new constraints of global economic competition. Recent austerity measures to restrain government social programmes represent the logical and perverse conclusion of a neoliberal message that the state must focus on directing public resources to private unequal “economic” gain first and foremost in order to improve general public welfare. In an example of this updated neoliberal theory, in the book Solomon’s Knot: How Law Can End the Poverty of Nations (2012), law and economics scholars Robert Cooter and Hans-Bernd Schafer argue that liberalizing markets is not enough to achieve prosperity. Instead, they emphasize the importance of active, responsive government, and they acknowledge the problem of global poverty as a central challenge for law. Yet their vision of public responsibility for alleviating poverty is detached from the welfare state ideals of twentieth century social and democratic movements. Cooter and Schafer’s analysis is not focused on the most fundamental obstacle to global prosperity being (for example) problems like low wages, inadequate social services and infrastructure, racial or religious persecution, debt servitude, toxic environments, denial of labour rights, undemocratic governments, and unchecked private violence. Instead, in their view, the primary barrier to global prosperity is the financial risk faced by capital owners whose profits depend on lending money to private “innovators”, combined with the risk faced by idea-generating entrepreneurs who depend on borrowing external capital to turn their “ideas” into commercial profit (p. 27). Cooter and Schafer argue that governments should focus on developing strong public protections against this reciprocal investor–innovator vulnerability, through extensive institutionalized legal support encompassing (for example) contracts, property, corporate governance, antitrust, and international trade. They present the interdependence of the innovator–investor relationship as the basis for understanding economic growth as a collective, cooperative project requiring government support and regulation. Yet this collective, law-centred vision serves to update and amplify rather than to question privatization, because it is based on the assumed superiority of generating and producing private economic capital over directly generating, caring for and supporting human bodies. They argue that the joint stock, limited liability corporation merits special legal support (p. 135), compared to collective organizations of governments, families, unions, civic organizations, or cooperatives, because the corporation’s impersonal focus on producing and securing profit, removed from social goals or subjective values, has superior power to reward gain-producing innovation (p. 79). Cooter and Schafer argue that by inducing and protecting unequal gains for private investors and innovators, even at the expense of workers or dependent “takers”, governments will best induce the abstract economic growth they trust will trickle down to the impoverished global masses. They acknowledge that

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some public investment in social programmes like education, safety regulation, and healthcare will enhance growth, and may be necessary to buy popular support for generous rewards to capital owners. Yet they embrace a “wealth overtaking theorem” (p. 51) holding that social equality goals must generally accommodate and yield to the goal of economic growth, which they claim depends above all on enhancing legal protections for capital owners or innovators. In their vision, strong state protection for unequal private gain ultimately drives the mysterious bursts of economic growth that best alleviates the hardships of the global poor.

Human vulnerability and public power Vulnerability theory helps illuminate the problematic premises of this reasoning, in which protection for the particular vulnerability of private financial capital – the risks of generating it and profiting from its accumulation – becomes the primary form of social responsibility. Cooter and Schafer’s analysis presents the insecurities facing investors and innovators as a dilemma distinctly amenable to deliberate legal solution through carefully constructed institutions and rules. With the right legal support, they assure us that entrepreneurial risk-taking through for-profit corporations will bring productive growth with power to protect more vulnerable human others – generating the jobs and taxes needed to help feed, shelter, and school impoverished children. In contrast, the costs borne by economically vulnerable workers, consumers, children, and elders appear to be fixed and natural, beyond the reach of law, in their analysis. They take as a murky background fact that vastly unequal economic hardship and personal risk accompanies much of the global human experience of securing food and shelter, raising children, nursing, manufacturing, teaching, cleaning, organizing labour, advocating human rights, or simply staying alive. In their account, these costs are not policy problems to be solved with direct legal protections and structures comparable to the measures they advocate for entrepreneurs and financiers. For example, they fall back on the neoliberal precept that workers are vulnerable to low wages not because many lack legal or political rights, such as the meaningful right to unionize or to vote and advocate for different economic policies, but because their jobs inevitably depend on attracting global capital with competitive financial returns. In this logic, better wages must await growth through global competition for capital and innovation (pp. 43–46), with government focused not on directly enhancing wages but instead on protecting investors’ returns. Vulnerability analysis can challenge this picture by presenting the specific conditions of human dependency as thoroughly political and social. The universality of embodied human vulnerability does not mean that humans naturally should submit to impersonal markets, non-human capital, or artificial corporate persons seemingly free from human frailties. Instead, the embodied human condition means that law normally, pervasively, yet selectively builds resilience against dependency, so that real differences in economic risk and reward inevitably reflect not natural differences in power and capability but contestable policy choices.

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The fact that global competition leaves many workers vulnerable to losing their jobs and government social benefits, while encouraging extraordinarily unequal capital gains that prove resistant to regulation and taxation, is not the result of impartial ranking of natural value by omniscient markets. Instead workers’ particular vulnerability is produced by contingent political and legal systems infused with contestable privileges and penalties, such as laws protecting global capital mobility while punishing global labour migration, or legal institutions supporting economic development through multi-national corporations rather than through worker ownership or democratic governance of business and technology, and international laws firmly protecting the corporate form of capital organization but not workers’ human rights to union organizing. By sharpening our focus on embodied humans as the subject of government, the vulnerability lens further reveals the dependence of human development on unequal and concentrated capital gains as an ideological assumption – a narrative – divorced from empirical analysis and specific questions of context. In neoliberal ideology, growth through unequal private economic gain appears to be the best answer to the overall public good because the ideology simply assumes other “social” goals or measures do not count as overall societal wellbeing. Cooter and Schafer admit that their analysis emphasizes an economic concept of gain, Gross Domestic Product (GDP), that does not measure human happiness, or even meaningful economic growth distinct from unsustainable bubbles, speculation, fraud and plunder, or catastrophic environmental destruction (2012, p. 12). Yet they proceed to assume that GDP is what matters, rather than other arguably more direct measures of human wellbeing – income equality, democracy, unionization rates, wages, life expectancy, employment rates, educational attainment, employment, environmental quality – by suggesting that more wealth gives people (or nations?) more power to choose whatever else they want. That sleight of hand simply erases the problem of whose power will control that wealth, whether that wealth represents real assets or the destruction of assets, and how that wealth produces and distributes new vulnerabilities. By instead insisting on directly identifying the public wellbeing with embodied, living beings, vulnerability theory cuts through the circular reasoning in which non-human capital gain becomes the ideal proxy for human welfare, especially when gain is legally insulated from direct accountability for the costs to most vulnerable bodies. Social goals like equality and fairness cannot be readily separated from and subordinated to economic growth, but rather are part of generating and sustaining meaningful economic gain. Contrary to Cooter and Schafer’s theoretical logic, for example, economist Mariana Mazzucato presents historical evidence showing that the innovation and entrepreneurship vital to meaningful societal economic gain is better understood as a collective process typically led by government and dependent on a complex “ecosystem” of multiple stakeholders and structures (2013, p. 186), not dependent on a few especially talented or lucky private individuals. She criticizes legal rules concentrating economic protection and rewards for innovation on individualized

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private owners and entrepreneurs as likely to induce efforts to undermine rather than create economic value (p. 187). Support for “reverse privatization” ironically may be fuelled by increasing concerns that policies relying on unequal reward to private capital are more likely to lead to economic crisis and austerity rather than to meaningful growth. In the face of increased economic fragility, the public good will appear to depend on further prioritizing private capital development over human wellbeing, unless we challenge the underlying assumptions about this economic vulnerability.

II. From human capital to corporate capital in higher education As the global financial crisis has tightened private credit and consumer income, private capital gain increasingly depends on access to public assets. In the economically struggling post-industrial cities and rural areas that constitute much of New York State beyond New York City, the 64 branches of the state’s public university system loom large as resources for economic development. This comprehensive higher education system, named SUNY (State University of New York) was developed in the 1960s as part of an expansive scheme of public investment and public takeovers of private educational institutions in a vision that emphasized the public benefits of direct government support for building human capital and knowledge (Clark, Leslie, and O’Brien, 2010, p. xix). A half-century later, that vision is now being reversed in New York, not primarily by shifting support from public to private higher education, but instead by steering SUNY’s public resources to the control and benefit of private business. The public university has been reimagined as an “engine” of economic growth, implemented through a variety of changes in policy, structure, funding, and governance (Applebome, 2010; Berman, 2012). A major state initiative in 2011, called SUNY 2020, embraced a model that combines acceptance of declining public support for public employees and for students with increased public support for private sector business development (Governor’s Office, 2011a). In this model, significant new resources will come from students and their families, through a planned series of tuition increases (on top of major increases over the prior decade). The initiative grew from a plan for SUNY’s University at Buffalo campus that combined tuition increases with new private rights to form business deals and partnerships free from previous regulatory requirements for state procurement and for union control (Quigley, 2011). In its final statewide form, this de-regulation was joined with new public support for SUNY capital projects particularly aimed at campus medical and technology building construction. Promoting this vision, New York’s Governor Andrew Cuomo (2011a) explained, “The mission of the programme is to make SUNY a leading catalyst for job growth throughout the state, strengthen the academic programmes of the University Centers and demonstrate that New York is open for business. . . . The approach will leverage private sector and other source funding to further the goals

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of job creation and economic development” (para. 4). Alongside these legislative initiatives, the governor aggressively pushed for new union contracts requiring concessions from university faculty and staff (Kaplan, 2011). The governor promoted these labour concessions as a means to better support the private sector through leaner government and constraints on taxes. In a related initiative, the governor established a network of new regional economic development councils charged with allocating up to a billion dollars of state funds, with each council co-chaired by an academic official and a private business executive (Governor’s Office, 2011b). For example, the President of the University at Buffalo, one of the flagship SUNY research institutions, was paired with the executive of a leading local real estate development company (Governor’s Office, 2011c). The Buffalo area projects funded in the first year included some public infrastructure improvements, numerous direct subsidies to private businesses and nonprofits (especially for construction but also including environmental and arts programmes), and funding for new university–business partnerships focused on promoting medical and high-tech industries (Governor’s Office, 2012). It is nothing new for state policy to shift control over government spending to semi-private economic development authorities, designed to minimize grassroots democratic and community involvement and transparency (New York Jobs with Justice, 2007), and laced with conflicts of interest (DiNapoli, 2014). And compared to many similar state economic development authorities, the new regional councils were designed with somewhat broader board representation along with a greater degree of public participation and transparency. But, taken together with the other SUNY initiatives, this design for economic development is likely to further blur and undermine the academic mission of public universities. When higher education officials assume the role of choosing business ventures for public subsidies, they become to some extent investors or even partners in those private businesses, especially since much of this private development is linked to university real estate development and integrated with university research facilities. For example, in 2012, the governor and the Western New York Regional Development Council announced a $50 million state investment in a Buffalo project by a global pharmaceutical research and manufacturing corporation, to be integrated with the university’s medical campus, despite some evidence that the corporation was in shaky financial condition and had failed to attract private investment (Heaney, 2012). Following this public investment, the company eliminated a facility with 45 jobs in another struggling upstate city in the state (Watson, 2014b), and by fall 2014 had established an estimated 10 to 15 employees in a temporary new Buffalo facility, out of an initially predicted 75 workers (Watson, 2014c). As an investor newly dependent (politically and financially) on the success of risky private global commercial enterprises, the university is at risk of being diverted from cultivating academic goals such as independence, openness, and truth in research and teaching – as well as debate and analysis of economic development policy. Moreover, this university-based approach to economic development underscores a public policy aimed at enhancing rather than resisting human dependency on

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global capital power. While the state invests in speculative private sector employment growth through its universities, at rates reaching over a million of dollars per job, fiscal austerity measures have increased tuition and debt burdens on students from families likely to be struggling with stagnant or falling income or unemployment. In this new vision, to achieve the dream of upward mobility through higher education, students and families must not only shoulder more of the cost of education, but they also must help fund (through new public support) the upwardly mobile globally competitive jobs they can hope to secure with their university degrees. The latest step in SUNY’s reverse privatization project crystalizes the message that public education is a global neoliberal frontier ripe for gains to private capital from extraction of human resources and government assets. In 2013, the governor unveiled a plan initially called Tax-Free New York, later branded as Start-Up New York, stating that it would “transform SUNY campuses and university communities across the state into tax-free communities that attract start-ups, venture capital, new business, and investments from across the world” (Governor’s Office, 2013a). This programme uses the public university to advance global competitiveness, again not by producing knowledge or well-educated citizens, but instead by exempting some businesses from responsibility for state social support. The legislation rewards selected globally mobile businesses or expanding local businesses with major new tax reductions for locating their business on SUNY campuses (Watson, 2014a). The programme not only gives these businesses a ten-year exemption from sales taxes, property taxes, and from corporate or business taxes, but also goes further than typical tax-free development zones by exempting the private employees of those campus-based businesses from personal state income taxes for up to ten years (Governor’s Office, 2013b). In contrast, the state employees on campus whose work serves the university’s academic mission will continue to pay income tax (along with concessions in pay and benefits for many). In addition, students will continue to pay sales taxes for campus retail goods and services, as well as income tax, along with their recent increases in tuition and fees. Supporters justify the programme on the ground that New York State is uncompetitive with other states and nations because of its particularly high tax rate linked to relatively generous government social spending. In short, public universities become a new resource for protecting capital development from social responsibility. Given declining state government funding of education, American college or even professional degrees can mean lifetimes of debt for students and their families, replacing hopes of middle class security with increased vulnerability and dependence (Ross, 2013). These recent SUNY policies turn government away from academic missions of building resilient workers and informed citizens, and from a focus on independent intellectual pursuit of truth and justice, in exchange for a goal that seems less about ensuring actual economic outcomes than about embracing a new identity representing subordinate status. The anticipated jobs tend to appear as abstract products of non-human capital distanced from the actual humans holding them, obscuring questions of whether

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the jobs created will require or reward a college education, whether they will be unionized, and what wages and working conditions they will offer. These initiatives largely do not protect the public against risk that the investment will not produce the expected jobs, and include little in the way of public accountability for this job creation. In contrast, faculty and students are increasingly subjected to extensive performance metrics that tend to emphasize and rank short-term, tangible outcomes and achievements (Folbre, 2010, p. 105). In the first year of its operation, the Start-Up New York programme produced 76 jobs (Craig and McKinley, 2015). To attract the businesses providing these jobs to SUNY campuses, the state not only offered tax benefits but also paid an advertising firm roughly $25,000 per expected job with no evidence that this advertising increased business interest (DiNapoli, 2015). The majority of the participating companies were already located in the state; one used the tax subsidy to move a mile away from its previous main street location in the same town (Craig and McKinley, 2015). Although some gains to students and to scholarship are also part of the rationale for SUNY’s reverse privatization initiatives, the educational benefits (like internships or shared research) tend to be secondary and vague, a matter of faith rather than a focus of evidence and measurement. In short, this new policy vision entitles private corporate entities to siphon new public resources without significant reciprocal obligations to enhance academic, economic or social goals, based largely on a presumption of superior political status and economic power.

III. From human risk to social resilience In the neoliberal logic of privatization, disembodied corporate entities focused on non-human capital gain appear as law’s ideal liberal subjects deserving freedom and protection, both within and in place of government. Shifting the premise of law to the vulnerable subject does not mean we can deny or diminish the economic, political, and social power exerted by concentrated, globally mobile, financial capital. The risks faced by students, workers, or others whose livelihoods and lives depend on continually attracting and appeasing the interests of capital enrichment are urgent problems and material conditions, not only ideological constructs. But neoliberal policies of reverse privatization reinforce and exacerbate this human vulnerability by prioritizing public protection for capital development over human development. With an understanding that government pervasively and unequally mediates and distributes the costs of embodied vulnerability, we can better analyze how legal protections and state supports serve to not only respond to existing vulnerabilities but also to build dynamic resilience that makes some less vulnerable in the future. Targeting special public support to private capital tends to build new resilience for those businesses most dependent on gaining at the expense of workers, families, and society. As public policies seek to attract and protect financial capital by weakening security for workers (such as by restricting wage growth, education funding, pensions, health insurance benefits,

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tenure, unionization, and public employment), indebted local governments and workers become more dependent on the most powerful private capital owners for economic opportunity. That gives some private employers even more bargaining power to demand further public support as the price for elusive jobs, in a race to the bottom that leads to further economic vulnerability for the workers, families, governments and less mobile businesses excluded from these special benefits. Twentieth century feminist analysis revealed how unequal legal protections have produced the seemingly natural and private dependency of women family caretakers (Fineman, 1995). Similarly, the contemporary dependency of students, workers, and governments on the power of elite private capital results from problematic public policy choices. Both New York’s higher education initiative and Cooter and Schafer’s solution to global poverty treat widespread economic insecurity for workers as the result of a beneficial private hierarchy that must be reinforced with public power, so that private wealth governs society like white fathers and husbands governed the paradigmatic patriarchal family. Building on the earlier feminist analysis, vulnerability theory challenges the presumption that support for human development – such as education, work, health, and embodied human wellbeing – must inevitably depend on discretionary trickle-down gains from a system aimed at maximizing private capital gain. By shifting the goal of state policy from an abstract concept of economic growth to a more concrete, dynamic, and contextual analysis of the conditions of embodied human wellbeing, we can better see how prioritizing extensive state support for direct human development can be a vital route to economic power. The recent promotion of reverse privatization policies reveals how concentrated capital gains depend on extensive public support and protection. Social responsibility will depend less on enhancing the winnings of concentrated private capital if we can see broad-based resilience for ordinary humans as a condition that can be similarly crafted by law and government as a public priority.

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RETHINKING RESPONSIBILITY IN PRIVATE LAW Ronit Donyets-Kedar1

Introduction Private power, through both the empowerment of transnational corporations and the retreat of the state as the primary provider of social goods, has considerably diminished the public’s ability to consistently and effectively shape the public sphere. Current legal doctrine, in the US and elsewhere, remains unequipped to mitigate the consequences of such encompassing private power. A key drawback is the private–public divide, which designates the responsibility for the public interest to public law, while allowing private law to be guided primarily by concepts of autonomy and individual will on one hand, and efficiency on the other hand. Accordingly, the legal norms applied to private businesses focus on liberty and competition, while the more demanding standards of behaviour are applied to state-actors alone. This chapter aims to rethink certain private law principles and doctrines. It argues that in order to guarantee that persons have a real and constant opportunity to effectively shape their lives, the boundaries of legal categories with regard to public and private need to be redrawn. The main argument is that, in a “postprivatization” world, where an increasing number of individuals are exposed to private law arrangements, a new, more robust concept of responsibility in private law is required. In support of this argument, the chapter makes two distinctive yet related claims: first, the chapter maintains that the traditional distinction between private and public law, in as much as it is used for the a priori fending-off of potential claims against private bodies, is damaging; and second, it argues that a new, richer, idea of legal responsibility should be introduced to private law.

1 Assistant Professor of Law, College of Law and Business, Ramat Gan, Israel. For Gil’ad, who I dearly miss, as always.

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The chapter is divided into four parts. Part I surveys the changes in the Western world in recent decades, describing the rise in the power of corporations and the retreat in the power of the state. It presents the various ways in which the categories of private and public no longer ref lect traditional expectations. Part II critically examines current US law (the state action doctrine and corporate law) as a channel that may enable the application of more rigorous norms (such as due process, equal protection, consideration of stakeholders’ interests, etc.) to private bodies, but demonstrates the shortcomings of these mechanisms. It then moves on to examining soft law in the form of the Corporate Social Responsibility discourse, concluding that, up to now, US law has been unable to provide a remedy for contending with the ever-growing rise in corporate power and its considerable effect on the ability of individuals to partake in shaping the public sphere. Part III critically evaluates the theoretical grounds of the private–public divide. Part IV outlines a normative–theoretical model for transforming our private law concepts of responsibility. Drawing on Iris Marion Young’s writing on responsibility as well as on Martha Fineman’s discussion of vulnerability, it offers a new legal principle for responsibility in private law.

I. The rising power of corporations and the retreat of the state The rise in corporate power is ubiquitous: economically, for example, the income of large multi-nationals exceeds the budgets of most sovereign states: 66 of the world’s 100 largest economies are corporate entities (Roach, 2007). Similarly, the net worth of assets owned by these corporations exceeds the gross national product (GNP) of most of the world’s countries (Anderson, 2000, p. 463). Naturally, this economic power translates into significant social and political power, one of the important channels of which is lobbying (Ratner, 2001; Lessig, 2011; Liptak, 2010). These processes have led researchers to argue that the market is now more important than states (Strange, 1996). Corporate power in terms of environmental impact is also striking, in particular in the sense of the potential environmental damage that is in its power to effect. A stark example of this potential is the oil leak from an offshore British Petroleum (BP) rig in the Gulf of Mexico in 2010 that caused the severest ecological disaster experienced by the United States in the past 20 years (Center for Catastrophic Risk Management, 2011). Corporate strength, however, is manifested not only in economic, political or environmental power; it is also expressed in other, often covert ways, where corporations effectively shape the public sphere. It is this type of influence – not random or sporadic but structural – that is unanswered under today’s legal regime (Donyets-Kedar, 2014). Consider the following examples of two central issues – the labour market and the status of women in society – that are indicative of the complex and profound impact that private power has on our lives.

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With regard to the labour market, some 38% of US private-sector employees are employed by large businesses.2 Over one-third of the country’s workforce, then, is employed by large corporations. In the US, the top ten largest corporations employ close to 5% of the labour force. This means that great power is concentrated in the hands of the large private employers. The significance of this power runs deep: it is the power to shape the most basic characteristics of how we work, where we work, and how much we get paid for doing what. Think, for example, of the standards of remuneration in the private market, especially the high managers-to-workers salary ratio. While most of the employees of the top US companies earn less than $10 an hour, the wages of senior management are many times that (Zornick, 2012). For instance, the highest paid manager at Wal-Mart – the largest single private-sector employer in the US with 1.4 million employees in the US alone – earned a salary of $18.4 million in 2012. The ratio between the CEO’s wages and that of average-earning workers at Wal-Mart stands, then, at 1034:1. At Target and McDonald’s, the third and sixth largest employers in the US, respectively, the ratio is 597:1 and 434:1 (Hess, 2013; Payscale, 2013). This type of employment pattern radiates across the entire economy and fashions its accepted norms: According to census data from 2009–11 compiled by The National Employment Law Project, 66% of low-wage workers in the US are employed by businesses with over 100 employees (Zornick, 2012). Most of them do not make as much as $10 per hour. Indeed, the division of wealth in Western society has for some time been tilted in favour of the rich as well as the huge corporations, and the pace of this distortion is intensifying. In the UK, for example, while the average salaries of wage earners in the private market are declining, the salaries of senior managers are on the rise (Sikka, 2012). These practices undoubtedly have a huge impact on our societies, from economic disparities to the very concept of human worth. This position of influence of the corporate private sector on the labour market has far-reaching implications on other key areas of public life, such as the status of women in the labour market in general, and in senior positions in particular, which is similarly dominated by private practices. The fact that only 14–15% of executive positions in Fortune 500 companies are occupied by women (Soars, Bartkiewicz, Mulligan-Ferry, Fendler, and Wai Chun Kun, 2013) is to a great extent the result of private-sector choices with regard to the proper balance between work and home. These shape not only the work environment within the companies, but are affecting women’s position in society more generally. Consider the following example. In 2011, the Israeli Center for Transplants launched a campaign in the media and on posters on buses whose purpose was to encourage the signing of donor cards for organ transplants. The posters showed men, women, and children who had signed such a donor card. The Canaan Transport Advertising and Marketing Company, which was running the campaign on 2 Defined by the SBA as organizations with over 500 employees. A stricter definition of a small business, using a limit of 50 employees, would cut back their share to less than a third of the workforce. The share of large corporations correspondingly rises (Harrison, 2013).

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behalf of the bus companies, chose to refrain from presenting women’s images in the Jerusalem campaign, fearing the rage of ultraorthodox groups in the city, who consider the portrayal of women in public indecent. This decision gained wide condemnation in the press and among the public, the reason being that an advertising campaign of this sort determines women as irrelevant to the public sphere. A newspaper piece on the matter read “In recent years, the exclusion of women from the public space in Jerusalem has grown worse, and become an outrageous norm. [It now involves] the disappearance of any trace of the feminine sex . . . [c]ommercial companies who cooperate are complaisant with this phenomenon” (Rotem, 2011). A Jerusalem nonprofit organization and several of the city’s citizens appealed against Egged, the bus company, and Canaan Co., arguing that the exclusion of women from the posters constituted an infringement of the basic principles of equality, human dignity, and freedom of (political) expression ( Jerusalem Movement Association v Minister of Transportation et al., 2012). In response to the appeal, the bus company – largest in the country – argued that as a private body, it is not committed to public law principles of equality. The case is still pending, but the appeal’s chances of success appear to be rather slim, as the Israeli Supreme Court has previously ruled that the same bus company is not a “state actor” in the proper sense.3 As these examples illustrate, large corporations possess immense life-shaping power. Under the protective veil of “private bodies operating under private law”, large corporations generate practices that shape our identity and influence our most significant circles of belonging. As Naomi Klein argues, on top of the apparent aspects of shaping people’s consumerist habits, corporations have acquired a profound influence over the formation of individuals’ self-perception primarily as consumers (Klein, 1999). It is difficult to overstate this point: since culture – in the broad sense – is central to the fashioning of human consciousness and behaviour, the bodies that dominate the shaping of cultural codes and accepted norms of conduct have a substantial influence in shaping the nature of public life more generally. With their immense power to shape and reproduce culture, large corporations are therefore central constructors of reality itself. Parallel to the increase in the power of corporations and the decisive influence of corporate practices on the shaping of the public sphere, there has been a retreat in the power of the state and in its ability to serve, at least de facto, as a centre of power and effective governance (Strange, 1996). The process of globalization, enabling the mobility of goods, workers, and information, has led to a weakening of states’ ability to supervise corporations that operate (also) in their territory: a corporate headquarters 3 In Israel, the application of administrative law norms to private bodies is made possible by the “dualessence” doctrine, which allows private bodies to be considered as “dual-essence” bodies, to which “normative duality” applies: public law on the one hand, and private law on the other. Among the criteria set down by the courts for declaring “dual essence” are private bodies with an affinity to a public authority or bodies that operate according to a state franchise; bodies that fulfill central public functions or supply a vital product; bodies that have a monopolistic position; and so on. Accordingly, Israeli law recognizes bodies such as the Electricity Company, the National Burial Services Company, etc., as bodies of dual essence, and imposes public law duties upon them.

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may be located in a certain country, while shareholders may be concentrated in another, and plants or development centres in yet a third country. Since positive law is primarily territorial, it is difficult for a state to exercise effective control and supervision over bodies only part of whose activities take place within its jurisdictions. In a global world, with information and resources scattered among various parties, private and public alike, the centrality of government is fast diminishing. In contrast to the traditional model of the state – of central power and authority – the global economy presents a plethora of foci of dispersed power. This transformation undermines not only the ability of the state to command and control, but also the manner in which the very concept of authority is perceived (Clapham, 1993; Lobel, 2005). The privatization process, which has been pervasive throughout the Western world in the past decades, has exacerbated the difficulty: many states have privatized services, assets, and authority that in the past were held by the public. All around the world, public services such as healthcare, education, and welfare, as well as public assets, such as natural resources, national infrastructures, and even police, security, and some aspects of foreign policy, are being privatized (Dickinson, 2006).4 Some researchers refer to this as a “national obsession”, since “hardly any domestic policy issue remains untouched by disputes over the scope of private participation in the government” (Metzger, 2003). As a result, the status of corporations, as the bodies currently fulfilling a growing number of functions that in the past were carried out by the public, is strengthening (Vogel, 2005). This chapter shows that the emergence of these new fragmented centres of power makes it necessary for the enhanced norms of responsibility connected with “public actors” to be adapted to include these new (private) bodies and their activities. Accordingly, the traditional distinction between private and public as an a priori tool with which to decide the extent of responsibility of a certain body for its conduct is obsolete. My argument here is that law must impose more demanding norms of responsibility on such bodies, even if termed “private” and operating in a private law framework. This demand for enhanced responsibility shall be applied as a function of the influential standing of certain corporations with regard to the shaping of the public interest.

II. The public–private divide in American law: The law and its limits The distinction between public and private law is a classic distinction in Western jurisprudence in general, and in American law in particular (Barnett, 1986). As a rule, the branches of private law regulate relations among individuals in society,

4 Since in the US the government has not been the owner of many industries as in other countries, prevalent privatization within the US has been the privatization of services by the federal government, as well as by states and local authorities. Among those is the privatization of hospitals, public safety, waste collection, transportation, airport operations, data processing, water and wastewater utilities, etc. (Commission on Government Forecasting and Accountability, 2006).

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while the branches of public law regulate relations between individuals and the state. The distinction stems principally from the concept that interactions among individuals take place on the basis of their enjoying an equal position of autonomy and free choice. Therefore, the norms that regulate these relations need only safeguard fair procedure. The relations between the state and individuals, in contrast, are characterized by a stark discrepancy in power, so the excessive power of the state may endanger the liberties of individuals. In addition, the relationships between individuals and the state are characterized by the fact that the latter serves as a trustee of the public. The norms that regulate state–citizen relationships should reflect this special position, thus imposing increased obligations of responsibility on the state. Over the years, the legal distinction between private and public has drawn searing criticism. The critical legal studies (CLS) movement has long pointed to the politicization of the distinction, demonstrating that the autonomy merited by private law does not reflect neutrality in the state’s attitude toward interpersonal relationships, and does not advance fair competition; rather, critics argue, it reflects a conservative stance with regard to the existing order that benefits those with power (Horwitz, 1982; Kennedy, 1982). In a similar vein, feminist critics have claimed that the distinction forms a hierarchy, with clear supremacy going to “the private” (free of restricting norms). However, in light of the changes in power relations in society, and in particular in light of the sharp increase in the power of corporations, the state has ceased to be the only body that can imperil the liberties of the other parties (Horan, 1976; Raday, 1994). The proposal here therefore seeks to produce, by rethinking the concept of responsibility in private law, a new structure for extensively applying enhanced norms to private bodies that are in a position of real influence over the shaping of the public sphere. Before introducing this new approach, it is important to understand the limits of current legal doctrine. The next section will therefore be devoted to an analysis of the public–private divide in US law, and to the ways in which it prevents the application of more rigorous norms of behaviour to private bodies.

A. State action doctrine Under US law, the Constitution is taken to apply only to government conduct. Accordingly, the behaviour of private individuals or corporations is not restricted by constitutional limitations. The US Supreme Court has repeatedly held that the Constitution offers no shield against “private conduct, however discriminatory or wrongful” (Shelly v Kraemer, 1948). According to the “state action” doctrine, in order for constitutional directives to be applied to private bodies, there must be a significant element of state involvement in the activity of such bodies: “the inquiry must be whether there is a sufficiently close nexus between the state and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the state itself” ( Jackson v Met. Ed., 1974 [ Jackson]). With very few exceptions, state-action doctrine remains uncontested (Chemerinsky, 1985). Thus, only in cases where the state had delegated to a private body a

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function that is “traditionally exclusively reserved to the state” ( Jackson), such as when the private body was involved in managing elections for public office, has the court applied the state action doctrine to deem the private body responsible (Terry v Adams, 1953). In other cases, the court dismissed suits alleging discrimination by hospitals, employers, restaurants, cemeteries, etc. (Chemerinsky, 2011). This leaves private corporations with broad freedom with regard to issues that go well beyond running the business, but pertain to our way of life. Such is the case, for example, when a hospital refused to reinstate one of its doctors to its staff because he was performing abortions. This refusal was alleged to violate the doctor’s rights under the First, Fifth and Fourteenth Amendments, but the district court found that it did not have jurisdiction to grant relief because the hospital’s refusal involved no significant state action. The court held that while “the hospital was receiving funds from the government, as well as tax exemptions, these were not a sufficient connection between the state and the private activity. . . . since there is no state action, the termination of appellant’s staff privileges need not conform to the constitutional commands of the Fourteenth Amendment” (Watkins v Mercy Medical Center, 1975). Similarly, a private school that dealt with educating youth with social adjustment difficulties was not recognized as a public body despite its operating under a state contract and despite the fact that educational activity of this sort is typically considered a public activity (Rendell-Baker v Kohn, 1982). Likewise, discrimination against blacks at a childcare centre operated by the sheriff’s office was not deemed to constitute state action (Player v Alabama Dep’t of Pensions and Sec., 1975). The American Olympic Committee was also not recognized as a state actor when it refused to allow the San Francisco Athletics Club (SFAC) to use the word “Olympic” for the gay Olympic Games it was organizing. The Supreme Court ruled that the denial by the US Olympic Committee, which enjoys exclusive control over the commercial use of the word “Olympic”, did not constitute “state action” for the purpose of violating the SFAC speech rights, nor for the purpose of illegally discriminating against homosexuals (San Francisco Arts & Athletics, Inc. v US Olympic Comm., 1987). As these examples show, the doctrine of state-action significantly limits the ability of individuals to file suit against private bodies that are in violation of constitutional rights.5 And if this is the case with regard to infringements of protected constitutional rights, it is surely so for the more latent forms of injurious private power.

B. Corporate law According to the prevalent approach in contemporary Anglo-American corporate law, the primary goal of corporations is to maximize shareholder profits (see Bainbridge, 1993; Dodge v Ford Motor Co., 1919; Stout, 2008). This is the firms’ raison 5 Federal civil rights statutes supply some additional shield against racial discrimination by private bodies. The Civil Rights Act of 1964 (42 U.S.C. §§2000a-2000h (1982) prohibits discrimination in public accommodation, education and employment, but it too doesn’t cover many other forms of discrimination (Chemerinsky, 2011).

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d’être. Under this view, the corporation is thought of primarily as a financial institution, a nexus of contracts between various actors, first and foremost between shareholders and directors (Eisenberg, 1998; Jensen and Meckling, 1976). In light of the central role of shareholders under this approach, any managerial decision that deviates from maximizing profits, including one that directs profits to publicoriented purposes, is “suspect” as a misuse of the shareholders’ money. Thus, the responsibility of the corporation toward its stakeholders (the wider circles of those influenced by corporate actions) is considered extraneous to the corporation’s interests. The clearest manifestation of this approach is the well-known phrase by economist Milton Friedman, stating that since the shareholders are “the owners of the business”, the only “social responsibility of business is to increase its profits” (Friedman, 1972, 2002). According to this approach, corporate law constitutes a central branch of private law, and the role of the regulator is constrained to creating effective rules allowing the corporation to choose instruments that will maximize its shareholders’ profits in accordance with market considerations. While the shareholder primacy approach has come under some criticism (Blair and Stout, 1999; Millon, 1995, 2010; Mitchell, 1995; Winkler, 2004), which has grown stronger in the wake of the extensive 2008 financial crisis, it is still the dominant approach in American law (Hansmann and Kraakman, 2001; Hansmann 2006). While hardly anyone denies the legal primacy of the shareholder norm (if not as a matter of law then surely in practice), some scholars consider the enactment of what are termed “the corporate constituency statutes” in most US states, as a possible departure from it (see Subramanian, 2002). Constituency statutes, enacted during the 1980s and 1990s, permit directors to consider, and sometimes to prefer, the interests of other stakeholders when exercising their decision-making powers. While the specific directives of each statute vary among states, a common characteristic is that they make it possible for the directors not to act solely for the maximization of shareholders’ profits. Some scholars have suggested that the latitude in the discretion granted to directors is indicative of a shift away from the contractual model of the corporation (according to which the corporation is a set of contracts among self-interested, gain-seeking individuals), to a social conception of the corporation (whereby the corporation is a social institution, tied to all of its stakeholders by relations of interdependence) (Cox, 1997). This, they argue, may mean that the corporate constituency statutes indicate that the shareholder supremacy norm is wearing down (Green, 1993). Others, on the other hand, are sceptical (Bainbridge, 1993). Indeed, it seems that the hope for an already existing shift in American legal thought is premature. This is so for four main reasons. First, the practical influence of corporate constituency statutes on American corporate case law and practice has not been significant, to say the least. Courts have seldom dealt with constituency statutes in a relevant manner, and have yet to apply them in a way that would indicate a departure from the shareholder primacy norm. Second, in consideration of the fact that, historically, constituency statutes were enacted in reaction to the hostile takeovers of the 1980s and were meant to attenuate directors’ duties to shareholders in the context of mergers or acquisitions, the

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claim that these statutes represent a break from the shareholder primacy norm is further weakened. Indeed, this very specific context may possibly be the reason for the lack of cases applying the statutes in a general context. Third, with very few exceptions (Connecticut, 1997), none of the constituency statutes positively mandates that the directors take other groups’ interests into account.6 Rather, as the Committee on Corporate Laws of the American Bar Association has stated, the statutes seem merely “designed to protect directors against claims of breach of duty if they choose to take into account interests other than those of shareholders” (The Committee on Corp. Laws of the Am. Bar Ass’n, 1990 [Corp. Law Comm.]). A fourth reason for scepticism is that most constituency statutes typically allow the directors to consider the interests of other constituencies, “in considering the best interests of the corporation”. What are, then, the best interests of the corporation? The ALI Commentary to the Draft Principles of Corporate Governance states that “[a] business corporation should have as its objective the conduct of business activities with a view to enhancing corporate profit and shareholder gain” (ALI, 1984). It would therefore seem that the “best interests of the corporation” are subject to “corporate profit and shareholder gain” (ALI, 1984; Green, 1993). This apparently means that the latitude in the discretion of directors is still subject to (some form of) the shareholder primacy norm. Indeed, the Committee on Corporate Laws proposed this interpretation of the constituency statutes: “the committee believes that the better interpretation of these statutes . . . is that they confirm what the common law has been: directors may take into account the interests of other constituencies, but only as long as and to the extent the directors are acting in the best interests, long as well as short term, of the shareholders and the corporation” (Corp. Law Comm., p. 2269). In sum, despite the critique of some scholars, and despite the constituency statutes, the shareholder wealth-maximization norm still seems to be the dominant norm under American corporate law. It is therefore difficult to imagine that a suit against a corporation on account of its detrimental effect on the public (such as the exclusion of women from ads by a bus company) would even be considered, if such a policy threatens shareholders’ profits.

C. Soft law: Corporate social responsibility (CSR) Another possible response to the changes in power relations between the general public and large corporations is the accelerated development of the area of corporate social responsibility (CSR) (Porter and Kramer, 2011). As part of the criticism of the shareholder primacy norm described in the previous section, the requirement for some form of social responsibility of corporations has been 6 Until amended in 2010, the Connecticut law mandated that “[A] director of a corporation . . . shall consider” the interests of the corporation’s employees, customers, creditors and suppliers, community and societal considerations (Connecticut Constituency Statute, 2009, 2010).

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gaining ground, both within the business world and in the public discourse. Contributing to these trends, among other things, is a series of especially offensive behaviours by corporations that globalization processes and technological changes do not allow to remain under the public radar. While we have seen the law itself has not yet embraced effective restraining mechanisms, some argue that it is high time that corporations develop voluntary standards of responsibility. The corporations themselves (in what is arguably a preemptive measure) have joined the initiative (Shamir, 2007). Among the voluntary devices adopted by corporations are ethical codes, the publication of corporation responsibility reports, ethical investment funds, and the like. International institutions and organizations, such as the UN Security Council (Ratner, 2001) and the European Parliament (Official Journal of the European Communities, 1999) have followed suit. Despite these important developments, CSR is typically still an extra-legal, “soft law” discipline, referred to in the literature as “beyond compliance to law”. Thus, the measures that CSR encourages (codes, reports, etc.) still depend on corporate goodwill and are not usually enforceable. One of the main reasons for this weakness is the difficulties that arise with effective state regulation in a global economy. Issues pertaining to diverse standards of care in different countries, complicated supply chains, lack of transparency of corporate practices and other factors make territorial state law a weak tool in restraining corporate power and enforcing higher standards of behaviour on transnational corporations. The mobility of capital and goods in the global world therefore enables corporations to extract themselves relatively easily from the legal demands of a state that seeks to regulate their conduct and to migrate to another country where the legal standards demanded of them are lower. This is described in the literature as “the race to the bottom”, that is, the downhill slope on which countries are forced to continually lower their demands for regulation in order to compete with other countries to draw investors (Cary, 1974). This, coupled with the “shrinking” state due to the diminution of budgets or, at times, a choice of lenient policy, grounded in the “new governance” ideology (which is centred on regulation through cooperation, rather than by “command and control”), has considerably weakened states’ power over private bodies (Chinkin, 1999). The possible channels of non-state regulation – corporate voluntarism and international law – are similarly not especially promising. International regulation gives rise to weighty questions as to states’ double standards: on matters such as environmental standards, taxation, labour rights, capital market issues and the like, every state, on the one hand, hopes that other countries will impose severe codes of behaviour on corporations operating in their territory; at the same time, however, each state tries to lower its own regulation in order to attract corporations to operate on its own turf. Frequently, the result is the aforementioned race to the bottom (Dagan, 1999; Gurtner and Christensen, 2008). Indeed, there is great difficulty in fostering meaningful cooperation among a large number of countries divided not only by weltanschauung with regard to the ideal type of regulation,

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but also by varying economic and political contexts (such as the degree of market concentration, abundance of natural resources, the extent of capital’s influence on government, etc.). The voluntarist approach – according to which corporations adopt ethical codes to self-restrain their own conduct – raises even more difficult problems (DonyetsKedar and Sitbon, 2014; Klein, 1999). First, self-regulation, as many of its critics argue, is often but an exercise in public relations, undertaken only for the sake of appearances in order to present a responsible front to the public. In actuality, “responsible practices” – even by companies that adopt ethical codes, or declare themselves socially responsible in other ways – far from reflect responsible conduct on the part of the corporation. The cost of adopting CSR policies makes it unlikely that companies operating in a shareholder-oriented environment will entirely internalize expenditures associated with conduct that is more responsible. Second, the exclusively market-driven character of CSR weakens its potential for social change. Indeed, if acting responsibly and ethically impairs the financial growth of the company, management will likely stick to the shareholder-value norm that still retains a powerful influence. Similarly, the short-termism that characterizes impatient stock markets makes it difficult for companies to invest in social causes that often require longer-term perspectives. A second drawback is that ethical codes are typically defined very ambiguously. They therefore provide very loose guidance as to the proper conduct. Coupled with self-supervision and the absence of enforcement mechanisms, they do not hold great promise for change. Third, not all businesses are equally susceptible to market pressures from consumers or NGOs. Generic, non-“branded” companies and transnational corporations (TNCs) in some emerging economies face less exposure to public pressure and therefore feel less obliged to weigh societal concerns. “Good” conduct does not always lead to corporate prosperity, and “bad” corporations are not always driven out of the market. Even enlightened managers may lack the necessary incentive to voluntarily adopt a CSR policy and internalize societal externalities, because it may place their companies in an inferior competitive position. Together, these difficulties have led critics to depict CSR as a “greenwash” exercise that helps companies hide problematic practices. Even more importantly, CSR is often criticized as a means of preempting binding public regulation and allowing governments to bypass their obligation to regulate harmful business conduct. Some proponents even admit that for the socially responsible activities of companies to be truly effective, they must be supplemented and institutionalized by national and international regulation. Indeed, leaving the responsibility of corporations to voluntary regulation means conceding that large corporations have become the locus of significant public decisions. Therefore what appears to be a positive step – growing societal expectations that corporations will give weight to social and ethical considerations – is nonetheless ineffective as a true vehicle for change (Shamir, 2008).

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III. Undermining the theoretical grounds for the private–public divide

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The legal literature presents a catalogue of justifications for the distinction between private and public law. This part surveys these and critically evaluates their authority as per today’s reality.

A. The special characteristics of public law: Power and trust The main reasons for recognizing public law as a separate system of norms are the state’s disproportionate power in its relations with the individual and the perception of it as a trustee for the public’s interest (Donyets-Kedar, 2014). Whereas the interactions among individuals in society typically take place on an equal footing and reflect individual choice and autonomy, relations between the state and individuals are characterized by an inequality that may endanger the latter’s liberties. Additionally, the state is perceived as an entity that acts not in its own interests but rather to serve the interests of the public. The norms that regulate relations between the individual and the state must, then, reflect these special relationships. To this end, enhanced obligations of responsibility are placed on the state, such as the obligation to exercise due process, to act reasonably and without discrimination, etc. However, certain relationships between individuals in society also exhibit significant components of subordination between strong and weaker individuals. Such are the standard relations between individuals and large corporations. In addition to significant gaps in negotiating power, relations between large corporations and private individuals are also characterized by structural gaps in the access of individual actors to the shaping of the public sphere itself. As we have seen in the cases of women’s exclusion from bus ads, the wages of high-ranking private sector directors relative to those of rank and file workers in the same company, or the lack of women in private sector high management, private bodies are frequently positioned to significantly influence the shaping of the public sphere. There is therefore no relevant inherent difference between private and state actors in terms of power or potential harm. Injuries to individual liberties may well come – and often do – at the hands of powerful private bodies. These harms are sometimes as potentially dangerous as are those inflicted by the state. It stands to reason, then, to apply enhanced norms to such private bodies as well. Since the grounds for applying enhanced norms of responsibility to private bodies is linked to their unique position in society, it may sometimes be appropriate to apply these norms to smaller “private” bodies whose concrete position makes them central actors in shaping the nature and character of the relevant community. For example, a branch of a food chain in a far-off settlement might be considered a body with special responsibility toward the residents of that area.

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This responsibility might lead to the placing of an obligation on that body to allocate shelf space for local produce even if it yields insignificant attendant profits. The second claim in support of the public–private divide is that the state is the public’s trustee: it has nothing of its own, as it operates only on behalf of the public. Private bodies, on the other hand, even those that hold a special position of influence, aim to maximize wealth. This difference in purpose warrants, so the argument runs, different obligations. This claim, however, is limited. Private bodies are never entirely private. Thus, even “private” law is replete with limiting norms, grounded in social values, to which the private activity of private interest-seeking bodies is subordinate. Indeed, most basically, private law stems from the state and expresses the public resolution that individuals should be granted the power to regulate their own matters themselves, as long as they abide by threshold standards of fairness. As Singer points out, private bodies are at all times restricted by the basic principles of a free and democratic society: “A free society does not entitle us to ignore the interests of others . . . Through both custom and law, our market system reconciles the pursuit of self-interest with the promotion of the public welfare . . . corporations may be in the business of maximizing profits but they are not and should not be in the business of undermining the social fabric by ignoring applicable law” (Singer, 2008). Private law is saturated with other-regarding norms that limit self-interest. Contract law, for instance, restricts our freedom by applying duties of good faith, a duty not to act dishonestly in our contractual relations with others, etc. Tort law and property law as well are based on a fundamental notion that our actions must be carried out without negligence or recklessness towards others. Our enjoyment of our property is similarly restricted in order to avoid harming others’ enjoyment of theirs. While private bodies are not trustees of the public in some direct sense, it seems right to say that private bodies (especially those in favourable positions) may not ignore the public interests. The suggestion to view private bodies that occupy a position of special influence with regard to shaping the public sphere as bodies to which there is reason to apply enhanced liabilities – or at least not to prevent such a possibility owing to their classification as private – stems from this understanding.

B. The special characteristics of private law: Autonomy and corrective justice It is generally accepted that the unique nature of private law pertains to the libertyemphasizing values that lie at its core. Typically, then, private law is thought to be concerned with individual autonomy, self-fulfillment, and free will, in contrast to values of distributive justice and public welfare that lie at the core of public law. If this is true, there is good reason not to apply enhanced norms of responsibility to private bodies operating under private law, thus infringing upon their autonomy. Relatedly, it is argued that private law’s separateness emanates from the significance of private ordering in private law. Private ordering, as opposed to public or state regulation, is the practice whereby the parties regulate their own activities.

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The idea is that there are good reasons to enable the parties to “legislate for themselves” the rules that will apply to their interrelationship, so long as these rules are not harmful or exploitive. Private ordering has an advantage over public regulation in that it is set by active actors in the market, and reduces the constraints imposed on their freedom. The significance of private ordering to realizing such values as autonomy and free will is central to private law, so the argument runs, and therefore justifies considering it as a distinct field of less intervention. Relatedly, private law is sometimes ascribed the sole role of corrective justice, in contrast to public law, which is designed to advance the objective of distributive justice. Such an argument was raised by the Canadian jurist Ernest Weinrib (Weinrib, 1995), who contended that private law is rooted in the Aristotelian conception of corrective justice and warned against the use of private law to advance broad social goals, which would disintegrate this framework. Weinrib further argued that whereas the conception of distributive justice includes many different ways of distributing wealth in society, its embodiment of the principle of corrective justice is monolithic in character and relates to a single value of “correcting”, that is the reinstatement of a previous state of affairs. However, other scholars have shown that these distinctions are illusory (Nedelsky, 1989). First, as stated above, private law itself imposes a string of limitations on the ability of parties to legislate for themselves. Contract law, for instance, has an abundance of cogent articles that do not allow the parties to override them by agreement. These limitations reflect the profound belief that the power of certain individuals ought not to come at the expense of others’ autonomy. Only through these limitations is the value of autonomy universally realized. Other areas of private law are similarly laden with public-interest values: mass tort disputes, for example, relating to mass harms (such as hazardous waste disposal methods, bio-tech testing, smoking issues, etc.), are hardly private in the traditional sense (Rosenberg, 1984). Rather, these “private law” disputes involve questions pertaining to the public at large and go well beyond the individual parties (Bender, 1990). This is true with regard to property law, unjust enrichment, and other areas of private law, which all involve “public” concerns. Property rights are defined by the legal system. The security they provide rests on the power of the state to punish those who trespass on those rights. And the power and independence which individuals derive from property rests on the rules the legal system has set up to define what constitutes legitimate and enforceable transactions, what goods can be demanded on the basis of what sorts of claims. (Nedelsky, p. 18) Indeed, private law cannot properly be understood apart from the normative background in which it is rooted. Such, for example, is property law, a part of private law that is nonetheless immersed in values pertaining to the distribution of wealth in society (Dagan, 1999). The belief that it is possible to conceive of

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the economic sphere as being fundamentally distinct from that of public policy therefore lacks both conceptual and empirical grounds. It would seem, then, that the claim regarding the separateness of public as well does not establish an a priori reason for avoiding the application of enhanced norms of responsibility to private bodies. Private law cannot be termed an undisturbed realm of autonomy. Another argument against regarding private law as an arena for the advancement of the parties’ autonomy is that, in actuality, this is not achieved; rather, more often than not, what is considered “private ordering” is in fact the infusion of international business norms into corporate contracts that control the relations between parties. This difficulty was raised by Michaels and Jansen (2007) of Duke University, who examined the activity of multi-national corporations in the United States and Germany. The reality they describe is such that in many cases the concrete content of private ordering is in fact imposed on the parties by international business norms. Michaels and Jansen argue that these international norms are guided mainly by considerations of removing obstacles to trade and global competitiveness and reflect adherence to external international business practices, rather than to the parties’ will; they should not be seen as expressing the autonomous preferences of the parties. The autonomy that the parties allegedly have to legislate for themselves in this case, then, does not serve the objective for which it was created – to express the authentic will of the participants. It does, however, serve as a channel through which local law absorbs international business norms to which the parties subject themselves. Thus, under the guise of providing the parties with freedom for selfauthorship, private arrangements facilitate the flow of transnational business norms into state law through “state-detouring” channels. The World Bank, for instance, often demands that developing countries adopt certain private law norms (typically styled after US law) as a condition for receiving financial aid (Stieglitz, 2006). This point is worth stressing: the result of private ordering is that the practices of transnational corporations – guided by global business interests and adhering to international business codes – are locally implemented and may significantly impact the way of life of individual stakeholders in specific countries. These arrangements are at times controversial as to the values they further, and may very well generate a clash between local interests and global business interests (Mertens, 1997; Stieglitz, 2006). The immunity of these arrangements from judicial review under the veil of private bodies operating under private law is therefore problematic. Indeed, law’s refraining from reviewing these practices, due to their a priori classification as private action, may greatly impinge on the agreed-upon, inter-state shared values. Yet another problem with positing autonomy as a reason for not applying enhanced norms of responsibility in private law is that the standing of corporations as bodies with organic aspirations for self-fulfillment is questionable. Unlike natural persons, corporations are artificial legal creations designed for certain objectives. The association of corporations with the Kantian “end in itself” idea is hardly self-evident. When we defend the autonomy of corporations it is not clear that there is any compelling reason to do so.

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To sum up, the range of considerations as to the unique nature of public and private law does not offer a strong enough reason for an a priori divide between private and state action. As the literature on the subject has already shown, the distinction itself is illusory, as the areas of private and public are much more hybrid than they may sometimes seem. It is more proper to say that all of law, private law included, emanates from the public in the sense that it draws its power, in the most basic sense, from the authority of the state and ref lects public values. The values of individual liberty and autonomy, as well as the conception that a full and meaningful life is possible only through consideration of these liberties, are naturally predominant. However, recognizing the centrality of these values does not preclude the public and political elements connected with the “private sphere”. In effect, only such an approach attributes full importance to the value of autonomy – of all persons – for it insists that the law enables every person to have continuous access to participating in shaping the rules of the game, even if this access necessitates placing limits on the liberties of other individuals. Indeed, the distinction between public and private is instrumental; that is, it is a tool, a proxy, meant to guide the decision whether or not to ascribe enhanced obligations to certain bodies. It is important, then, not to locate reasons for imposing duties or refraining from doing so in the distinction itself, rather than in the considerations that support it. The question is, then, whether there are good reasons to apply enhanced norms of responsibility to both private and public action, in cases where the actor – public or private – has a substantial influence on the public sphere.

IV. The private is public: Rethinking responsibility in private law The previous parts have demonstrated the inability of existing legal doctrines to cope with situations in which private power is injurious to the public sphere, which in turn results in the decline of the public’s ability to meaningfully participate in shaping it. I have argued that the public–private divide impedes our ability to change this, as it serves as an a priori barrier to holding these powerful private bodies legally responsible for their conduct. The aim of what comes next is to assess the possibility of replacing the a priori labelling of bodies as private or public with a new concept of legal responsibility, applied to those entities that are in a position to significantly influence the shaping of the public sphere. In what follows, I shall discuss the theoretical foundations of this new concept of responsibility in private law, as well as offer an outline of the parameters for its application. The concept of responsibility has various meanings, even within law. The focus of my critique here is on the traditional notion of legal responsibility, which is rather narrow. According to this conception, persons are typically thought to be responsible for their actions if they have (some) control over them, can reasonably foresee and understand their consequences, and have rationally chosen to so

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act (Hart, 1968; Raz, 2010). Legal responsibility additionally requires that the act constitute a failure to conform to some legal duty. I want to suggest that the meaning of “responsibility” in private law is too thin, especially with regard to powerful private corporations. It over-relies on a neoliberal morality, which focuses on the agent’s autonomy and choice, and it reflects a vision of responsibility rooted in atomistic individuals, while ignoring other considerations of justice relevant for allocating responsibility. The concept of responsibility that is outlined below seeks to complement the narrow concept of responsibility with some more active, other-oriented principles. This stems from the understanding that focusing only on individual freedoms, without a complementary concept of obligations, undercuts the possibility of ensuring that all individuals in society have the power to participate in shaping the public sphere and to thereby maintain an active and meaningful social and political life. In this sense, the concept of responsibility that is offered here is constructive : it is meant to actively safeguard the democratic process from the unrestrained power of certain groups within society. More broadly, it is meant to be a manifestation of the social and civil partnership that grounds life in the public sphere. Integrating a robust conception of responsibility into the private law discourse expresses a move away from “procedural fairness”, such as the duty to act reasonably or with proportionality, towards an active concept of fairness that expresses the significance of the social partnership that mandates a joint shaping of the public sphere by all. In this sense, the call for applying norms of responsibility to powerful members of the social community reflects a republican perception of the polity, which deems a vital and inclusive public sphere a precondition for a free and meaningful life, both personally and communally.7 It also reflects the aspiration to a “responsive state” developed by Martha A. Fineman (2008), according to which the state – the polity – has a robust duty to shape and maintain its institutions and structures so that these do not inappropriately benefit or advantage certain groups or members of society, but rather ensures that all persons are equally resilient to cope with their vulnerabilities.

A. Responsibility and social structure The literature on responsibility and social justice, in line with the legal discourse on responsibility, typically analyzes the issue of personal responsibility by discussing questions such as free will, control, rationality, and the like. The idea is that there is an appropriate relation between the control a person has over her situation or actions – the measure of choice she exercises in her life – and the degree

7 By republicanism, I refer to the political theory that emphasizes the centrality of the individual and his rights, but at the same time views the existence of a developed political public sphere as a condition for the individual’s free, equal and meaningful life. It thus attributes great significance to participation in the political-public sphere, and to cultivating a commitment to the common weal and a civic consciousness. Rawls’s Theory of Justice is oftentimes considered republican.

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of responsibility attributable to her. The question of moral luck is central to this discussion: the more we consider luck a factor in the agent’s life (the family she was born into, her gender, the colour of her skin), the more we tend to say she has less control in the appropriate sense over her life, and, consequently, less responsibility. Luck egalitarianism is a position that argues that a person should not be worse off relative to others in society with respect to advantages that are a result of brute bad luck. According to luck egalitarianism, justice demands that people’s wellbeing should be determined only by the responsible choices people make and not by the differences in their involuntary circumstances. As G. A. Cohen (1989) puts it, the intuition here is that we should eliminate “disadvantage for which the sufferer cannot be held responsible, since it does not appropriately reflect choices that he has made or is making or would make”. In Responsibility for Justice, Iris Marion Young (2011) discusses the question of responsibility from the perspective of social structure. She argues that what luck egalitarians attribute to luck is sometimes the result of social structure. According to Young, the idea that only involuntary disadvantages should be neutralized fails to “distinguish between causes of relative disadvantage that are simply unlucky, and those that are the result of social organization and social processes”. Unlike the idea of undeserved fate, the idea of justice, argues Young, implies that the reasons for these disadvantages are somehow grounded in social institutions and the social structures they foster (p. 32). Fineman’s vulnerability approach likewise proposes that a structural focus replace the current equality discourse. Highlighting vulnerability as a universal, constant human condition, Fineman’s thesis transcends the “identities” antidiscrimination discourse, and offers “a more thorough and penetrating equality analysis – one that considers institutional arrangements . . . before indicting the individual” (2008, p. 18). Drawing on these insights, I argue that the connection between responsibility and social structure should be applied to our legal conceptions. If background social conditions are (at least in part) the cause of relative disadvantage for some, and if social structure is in fact the source of the superior position of some private bodies over others, then our legal concepts of allocating responsibility should reflect this structural empowerment. One way to address the uneven social position of large corporations is to hold them responsible for alleviating the disadvantage at which their position places others. Indeed, social structures have a central role in the production and distribution of social benefits (Rawls, 1970). If we regard society as a system of cooperation whose members are interdependent, then promoting justice implies that we have to make sure that the institutional norms and social relations are designed to neutralize disadvantages that these structures foster. It follows that in order for the principles informing the allocation of legal responsibility to be just, they must, as a matter of social structure, ensure fair access of every member in society to shaping the rules that determine the character of social life. Whereas today’s legal principles – such as the duty to act in good faith or in accordance with public policy – are preservative values, ensuring fairness in specific

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situations, they are not, unlike the idea of responsibility I have in mind, structurally transformative values, which neutralize the consequences of structural power relations. While it is clear that the existing principles may be important to achieve some aspects of fairness in law, they are nonetheless incapable of generating a real change in social structures and in their consequences. Thus, while the use of these principles may provide the court with tools for ex post compensation of an individual injured by, say, the dishonest behaviour of another individual, it is difficult to imagine, at least in most cases, that they would suffice to prevent a priori the injurious behaviour of the powerful body in question. Accordingly, what is required are principles that seek not only to balance the power relations among parties, but also to establish practices that will ensure the full and active participation of all individuals in the shaping of the public sphere.8

B. The criteria for allocating responsibility in private law An other-oriented, active and transformative concept of responsibility that corresponds with the requirements of justice set forth in the previous section needs to consider two central matters. First, it must take its starting point from a view of society, first and foremost, as a network of complex interrelationships between individual partners, who maintain reciprocal ties of interdependence, and who derive benefit from their partnership. Second, it must reflect the understanding that this system of cooperation is often not the result of voluntary relations between equals, but rather rests to a large extent on institutional structures – the law among them – that establish, enable, and preserve the access of members to shaping the public sphere. Taking social structure seriously in this way, the focus of what follows sets forth the scope of responsibility as a function of one’s position within the social structure. A first condition for considering the scope of responsibility of private bodies is premised on the nature of the relationship between the corporation and the public among which it operates. As a rule, the more central the private body is to public life and the more significant and widespread the connections it maintains with the public, the greater the degree of responsibility that should be ascribed to it (O’Neill, 1996). For example, a branch of a food chain that is located in a peripheral area might have certain obligations that differ from those imposed on a branch of the same chain located in a large city where it is one of many. That is because the position of a food chain’s branch in a far-off region may entail a more robust and complex web of interactions with the public residing in the region. These relations may significantly deviate from the relations that a similar branch may have with the residents of a large city. A branch of a food chain located in a faroff region may not only be the primary provider of food and basic supplies in the region, but also function as a meeting place, an anchor for other small businesses 8 See Fineman’s call for “a regime in which individuals have a true opportunity to develop the range of assets they need to give them resilience in the face of their vulnerability” (Fineman, 2008, p. 20).

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clustered around it, the spot where locals spend most of their earnings, etc. In addition, it is often the case that such branches sustain long-lasting relations with the community, including personal acquaintanceships between the staff, management, and local residents. These special relations mandate a different appreciation of the responsibility associated with them. Another example is the type of relations forged between the residents of company towns and the company owners, which are typically characterized by a significant degree of dependence. Indeed, because we are “positioned differently within a web of economic and institutional relationships, our vulnerabilities range in magnitude and potential” (Fineman, 2008, p. 10). According to the proposed standard, then, these special relations ought to serve as grounds for enhanced responsibility of the company towards its employees and the town’s residents. This means, for example, that the company’s relocation to another country for the sake of profit or a massive cutback in its labour force for fear of a future decrease in profits might be considered legally irresponsible. Another test of the affinity between a corporation and the public pertains to the question of benefit; that is, who benefits from the practice that leads to the excessive influence of the private body on the shaping of the public sphere? This issue has been discussed in the framework of global justice issues in international law, where several writers have proposed that the question regarding which bodies benefit from maintaining practices enabling such injustice should be among the considerations for imposing responsibility for issues of global injustice (Young, 2006b). This insight is applicable to local law as well: the more a body benefits from unfair practices, the more it must bear the costs of rectifying the harms caused by it. An example for the way both these tests – the nature of the relationship test and the who benefits test – may be put to work in practice is the recent case relating to Google Israel. The company refused to advertise a political campaign on the Internet in response to a proposed law in the Israeli Knesset on the matter of what are termed the “captive profits”. In November 2012, as part of a lenient governmental policy with regard to corporate taxation, the Knesset approved an amendment to the Israeli Law for the Encouragement of Capital Investment, which grants significant tax breaks to multi-national corporations operating in Israel (The Encouragement of Capital Investment, Amd. 69, 2012). The objective of the Bill (which has since officially passed in the Knesset) is to award huge tax breaks to a number of giant corporations operating in Israel with regard to the profits that these corporations have accumulated within the country but on which they have not paid taxes. In reaction to the Bill, several members of the leftwing Meretz Party in the Knesset sought to launch an Internet campaign against the proposed law. However, Google Israel refused to run the ads, on the claim they were of a “sensitive nature”. This decision was rather surprising, especially in light of the advertisements posted by Google in other cases of no less sensitive campaigns (Rosen, 2008). Owing to Google’s enormous power in the Internet advertising market, the practical meaning of its refusal to advertise the online campaign against the tax policy is to paralyze the public discourse on a matter of political controversy.

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There is no doubt that Google’s nonaction has had a decisive influence on the public sphere in Israel. The interesting question in this case is whether Google, as a private corporation, should have acted with greater responsibility toward the public by ensuring that there would be an opportunity to conduct an open public debate. On the basis of the nature of the relationship test, it is difficult to deny that Google’s relations with the Israeli public are intensive and quite far-reaching: Google’s search engine is not only the main one on the Internet in Israel, as in the world, but it has substantially changed our access to information and even the way in which we store, preserve, and perceive information more generally. YouTube, owned by Google, also generated a real cultural revolution, certainly in the world of access to music, and it is one of the three most viewed sites in the world (Fitzpatrick, 2010). Google’s mail platform supplies electronic mail services in scores of languages – Hebrew among them – to millions of users who through its services also organize documents, appointment calendars, lists of contacts, map services, and more. It is not coincidental that when the electronic mail services that Google supplies crashed for a number of hours, the public’s reaction was agitated, whereas the site’s return online was described as “an exciting reunion with a lost family member”. The official Google blog read: “We feel your pain and we’re sorry” (Gmail Blog, 2008). In effect, Google’s income from these services through advertising is possible because of the intimate connection that it maintains with its customers: Google surveys the ins-and-outs of the mailboxes of every account in order to facilitate personally tailored advertising. The way Google does business, then, relies on wide-ranging, intensive, and intimate relations with the public. These relations, I argue, call for a much larger degree of responsibility toward the public in the conduct of Google’s affairs. The who benefits test, too, favours placing greater responsibility on Google in the context of its refusal to advertise the campaign against corporate tax policy, from which giant corporations – Google among them – benefit. Indeed, the Bill effectively exempts large corporations from taxes on a considerable portion of their income that, without this law, they would be obliged to pay. As a company that might have been harmed by a public discussion on this matter (Google is known as a serial avoider of tax payments with the help of aggressive tax planners), the benefit to Google from its ability to control the Internet advertising market in such a way is very clear (Helft, 2010). In such a case, then, the two tests proposed above lead to the imposition of enhanced responsibility on Google when it chooses not to advertise a campaign against a corporate tax policy that makes Google richer. The discussion up to now has emphasized that the importance of balancing the power of large corporations means not only a balancing of the negotiating power of the parties, but also the ability to formulate an a priori conception of the public interest. Such was the case with Google just presented. Another example pertains to the issue of privacy. Take Facebook, for example. Facebook’s influence extends not only to violations of the right to privacy, but to the very concept and definition of privacy, and to the refashioning of our perception of what we deem

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personal. Thus, in response to criticism aired against Facebook in the matter of recurring violations of the principles of privacy to which it had committed itself, the company claimed that people need to accept that the world has changed and that the importance of protecting information that some still perceive as private needs to be reassessed (Etziony, 2012). Another criterion for the application of enhanced responsibility to private bodies pertains to the generic behaviour of a number of bodies that belong to a certain branch or share a similar position in the market. In these cases, the aggregate power of a string of companies produces unwarranted influence on the public sphere. These practices cumulatively block the access of other individuals to shaping the public arena. Note that this is not a requirement for monopolistic power over the market, but rather a certain type of cross-company practice that significantly affects accepted norms. An example to illustrate this point is the practice of investment banks, on the eve of the subprime crisis, of loaning money to people who clearly could not repay the loan (Greenberg and Hansen, 2009). In the Riggins case (Robert Riggins v Bank of America N.A. et al., 2013), for example, Countrywide Home Loans Inc. gave out a loan to Riggins, while falsifying his loan application to show an income that was grossly inflated, thus “deceiving Riggins into believing that he did in fact qualify for the loan, when in fact, he did not” (p. 30). The Perlas case dealt with a similar situation, concerning a different company (GMAC Mortgage, which at the time was one of the largest home-mortgage servicing companies in the US), where the appellants told the company in a loan interview that their yearly income was $50,000. In this case as well, the company later informed the appellants that they qualified for a loan, but never informed them that the loan qualification was based upon an inflated yearly income of over $100,000 (Perlas v GMAC Mortg., LLC, 2010). In both cases, the plaintiffs failed to repay the loan, and both argued that they would not have taken it in the first place if they had known they did not qualify for it. In both cases the plaintiffs’ fraud claim failed in court on the grounds that “the lender’s efforts to determine the creditworthiness and ability to repay by a borrower are for the lender’s protection, not the borrower’s, and borrowers rely on their own judgment and risk assessment in deciding whether to accept a loan” (Riggins, p. 13). The court added that although the plaintiffs assert that they did not know that the company used an inflated income on their loan applications, this was not a term of the agreement between the parties. Since all the terms of the contract were stated in the loan agreement, which both Riggins and Perlas signed, they failed to show that the contract itself was fraudulent. This is an example where the doctrine of enhanced responsibility offered here would have been useful: since this wrongful practice was not a singular incident limited to a specific company in its relation with one client, but rather a crosscompany phenomenon with a detrimental influence on the public sphere as a whole, the demands on the banks and home loan companies should have been more robust. The companies, especially in light of the efforts they made to get people to sign the loan agreements and the recommendations by their representatives to the

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borrowers with respect to the type of loan they should take, should have been held responsible for their conduct. In Young’s words, structural injustice exists “when social processes put large groups of persons under systematic threat of domination or deprivation of the means to develop and exercise their capacities, at the same time that these processes enable others to dominate or to have a wide range of opportunities for developing and exercising capacities available to them” (2006b, p. 52). The case of the predatory loans by financial institutions, using faulty practices, surely qualifies as such. The power to generate change is another factor to consider. The question is whether the power to generate change imposes a responsibility to so act. The narrow legal concept of responsibility discussed above requires that we directly link a person’s actions to the harm for which we seek to assign responsibility. The problem with allocating responsibility in some of the cases presented here, however, is that the harm may not be traceable in this way to a single wrongdoer. Such is the case, for instance, with regard to the outrageous gaps between the enormous wages that directors in the private sector receive and the pay of the average workers in the same companies; or with regard to the position of women in society. In such cases it is difficult to blame a single company for the generally accepted norms. However, if we take seriously the significance of social structure as the source of (some) injustice, then it makes sense to say that those who participate in generating the harmful practices are – at least partly – responsible for producing change. Indeed, when we understand responsibility in terms of structure, it is clear that the actions of advantaged bodies within the system are relevant to perpetuating, or changing, the social conditions. The republican conception in which my suggestion is grounded views a vital and open-to-all public sphere as necessary for maintaining a meaningful social life. Therefore, great importance attaches to the ways in which the change may actually be generated. Since the ability to foster change is often inherent in changing the conduct of the large corporations themselves, it makes sense to apply the power to change test to the appropriate bodies. Another important element in shaping the responsibility discourse in private law is the emphasis on context, in contrast to the current analysis according to hard-and-fast categories.9 The proposal calls for employing a differential attitude toward imposing enhanced obligations in various cases. Thus, in some situations a certain body could be deemed responsible for a certain behaviour, whereas in others the same body may be exempt. Recall, for example, the case of company towns, where the company may possibly be held responsible if it opts to shut the factory down instead of allowing the employees to buy it. The case may be different, for the very same company, where an entire town does not depend on it (Singer, 2008). Borrowing, as it were, from the laws of evidence, the proposal here seeks to lead to a transition from admissibility to weight: in contrast to existing 9 This proposal follows Fineman’s observation that “an inquiry into institutional and structural advantages and disadvantages would require . . . adjustments to legal institutions and theory,” resulting in a more nuanced, less categorical, analysis (Fineman, 2008, p. 20).

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law, which states that when a clearly private body is involved, the imposition of obligations of enhanced responsibility is not admissible, the proposal here reflects a shift towards the weight given to specific circumstances. A possible critique against the suggestion to abandon the distinction between private and public, as proposed here, is that imposing enhanced duties on private bodies that have a significant influence on the public arena might serve as a double-edged sword, for the costs connected with the application of more responsible practices might be rolled over, in the end, to the public. For example, placing enhanced obligations on the food chain branch might, owing to its location in a peripheral region, bring other costs, thus harming this branch’s profitability. This harm might then manifest itself in higher prices for the consumer or in inclining businesses not to consider the peripheral region. Placing more responsibilities on businesses in this manner may make it preferable for them to focus on regions where their activity will not be perceived as having such great influence. Indeed, placing enhanced obligations of responsibility might certainly create greater costs for the private body that bears this responsibility, and these costs might adversely affect its profitability. However, this is not new: the law already levies other normative demands that entail greater costs to the private bodies, such as the demands for a minimum wage, work safety and hygiene, prohibition of child labour, limits on working hours, and so forth. Just as we perceive the gamut of requirements that exist in law today as necessary for a just and fair life (sometimes at the expense of profitability), so too in this case. It should further be remembered that the proposal to impose enhanced responsibility does not emanate simply from a gap in negotiating power between giant corporations and individuals in the public, but rather from the existence of structural and institutional failures that enable certain bodies to exercise exceptional power with regard to the very rules that determine power relations, at the expense of the access of large groups of people to shaping the public sphere. Rectifying this situation necessitates a change in the allocation of responsibility among the various individuals in society. The theoretical foundation in which the argument for placing enhanced responsibility on private bodies is grounded in the ethical conception of a cooperative system that deems persons in society interdependent and forms a wideranging web of relationships between participants. These relationships make it necessary to impose enhanced responsibility on the members of society who contribute to the forming of social structures that result in disadvantage to others, and who derive their profits from these structures. Indeed, these factors mandate taking into consideration not only the profit potential inherent in the relations, but also the responsibility to rectify some of the disadvantage caused to others. It could be argued, however, that the focus on context may undermine legal stability or, worse, the principle of constitutionality, which stipulates that what is not expressly forbidden is permitted. Thus, so long as prohibitions on corporations are not set down by law, they are entitled to choose how to operate. The answer to this argument is twofold. First, despite the importance of legal stability, it is

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surely secondary to equality or justice. As demonstrated in the first part of this chapter, current legal doctrines such as the public–private divide and the stateaction doctrine undermine basic democratic principles and generate structural inequality in power relations among the various individuals in society. This failure is substantive, and it leads to significant harm to the rights of many individuals in a wide variety of situations. Indeed, the preference for the principle of stability over change in these circumstances reflects a conservative conception of law, which undermines its very ability to serve as a fair means of regulating public life in a democratic society. It should be recalled, further, that uncertainty will lessen as the principles of the application of enhanced norms to private bodies become more crystallized in the courts’ rulings. Second, it is difficult to say that the proposal imports foreign principles of responsibility into law. The content of the enhanced norms of responsibility already exists in law. As noted earlier, Joseph Singer (2008) holds that the proper interpretation of the notion of individual liberty (that is, the freedom to do that which is not explicitly forbidden by law) does not include the permission to conduct oneself in a way that subverts the principles of a free and democratic society. This mandates, according to Singer, paying proper attention to the interests of other persons. The recognition of the importance of protecting human rights, due process and equality, the value of obviating corruption, the duty to duly consider one’s fellows, etc. – all exist in our legal system. It is the extraction of these principles in the proper situations and their full and sincere application that we need to become better at.

Conclusion The central argument of this chapter is that in light of the growing power of corporations, together with the weakening of states, the theoretical grounds that lie at the basis of the distinction between private and public, as the starting point for the allocation of responsibility, are no longer justified. The chapter’s objective is twofold. First, it calls for abandoning the accepted distinction between private law and public law in as much as it serves as an a priori barrier to potential claims against private bodies. It further argues that the distinction works to perpetuate unequal power relations in society and undermines the ability of individuals to fashion public life by themselves. The chapter’s second objective is to propose new criteria for the application of enhanced responsibility, to be applied to public and private bodies alike. This may be achieved by applying the ethical critique on luck egalitarianism, which focuses on social structure as a source of injustice, to law. The heart of the proposition for when to apply the obligations of enhanced responsibility is the substantive influence of a certain conduct on shaping the public sphere. Its purpose is to counterbalance the consistent diminution in the power of the public to continuously and effectively influence the character and nature of the public arena. This proposal not only

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has the practical significance of improving the public’s position in shaping the public sphere, but also bears symbolic significance: the application of principles of enhanced responsibility to private bodies expresses the law’s recognition of the importance of values of responsibility, partnership, and respect for others. This recognition may encourage not only individuals who have been harmed by the injurious conduct of private bodies to retroactively challenge this behavior, but also encourage private bodies ex ante to take the rights of other, less powerful individuals, seriously.

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IN THE LAND OF CHOICE Privatized reality and contractual vulnerability Hila Keren1

To allow the market mechanism to be sole director of the fate of human beings and their natural environment . . . would result in the demolition of society. (Polanyi, 1944)

Introduction Privatization has made ours the age of markets and contracts. Long gone are the days in which only businessmen were engaged in contracting. Areas of life that once were governed by public norms are increasingly subjected to private ordering and, as a result, to the dynamics of the market. Thus, any inquiry that seeks to understand the relationship between privatization and vulnerability ought to include the question of what awaits the vulnerable subject at the end of the road, in a privatized world and under a contractual regime.2 The neoliberal state offers a very limited answer to this question due to the fact that, for the most part, it ignores the problem of vulnerability. Individual adults who contract are framed as exercising their autonomy and freedom of choice. They are presumed to be equal to each other, and the role of the state vis-à-vis their contracts is intentionally reduced to supplying enforcement services upon demand. Accordingly, any measure of response to vulnerability clearly falls outside the mandate of the neoliberal state and is conceptualized as an inappropriate intervention in the working of the free market. Since privatization imposes contractual relationships on all members 1 Southwestern Law School. 2 “Privatization” may be too narrow of a term. This chapter’s concern is less with the process of moving from public to private ownership and more with moving from public to private ordering. The broader process, which typically includes privatization as a component, could have been defined as neoliberalization. However, given the theme of the book I will use the term privatization to refer to the broader process.

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of society – stronger and weaker alike – this neoliberal paradigm exposes vulnerable subjects to grave risks. Counter to the dominant neoliberal paradigm, critical theories have challenged the private/public divide and have insisted that even the most private affairs be embedded in a broader social context and thus require public attention. In particular, the vulnerability theory has suggested that humans are never as independent and individualized as suggested by the neoliberal myth (Fineman, 2008, 2010). Rather, we all share a universal feature that connects us to each other and to our environment: the human condition of vulnerability. Drawing on these critical approaches, this chapter treats contracts as interactions constituted by social relationships and the law of contracts as a social institution operated by the state. From this perspective I raise several questions. First, what are the consequences of having to participate in the market while being vulnerable? Second, how does the neoliberal state treat the contracts that result from such participation? And third, what could a more responsive state do on behalf of its vulnerable subjects? Although there are a variety of situations in which contract law meets vulnerability, my focus is on its interaction with stress. Stress is a uniquely important form of vulnerability: it is an aspect of the human condition that is inevitable and universal; it is not limited to specific social groups. At the same time, stress has distinct social dimensions, and its full impact can only be appreciated under a careful contextual examination that takes socially constructed inequalities into account. In contrast to the neoliberal view, and especially in a privatized society, people often find themselves consenting to contracts under stress – not because they “freely” chose to do so but because they did not have, or could not have found, a better alternative. In those situations people find themselves subject to a predatory contract that results from the fact that the other party has taken advantage of their vulnerability. When litigation ensues, due to a demand to enforce the contract, the state, via its courts, can respond in two oppositional ways: deny the impact of stress on individuals’ decision-making and enforce the contract, or acknowledge the impact of stress and avoid enforcement. Critically, each of the opposing responses entails a “public” influence over the “private” relationship of the parties. And yet, under the neoliberal paradigm only the decision to avoid enforcement is considered interventionist, while enforcement is framed as respectful of the market. Accordingly, many courts enforce contracts that result from an exploitation of stress. But this does not have to be the result. Even under the current law the state has many tools to curb market exploitation. It also has full authority to develop any additional measures that may be required in order to achieve a safer marketplace where contractual consent truly represents a choice rather than a surrendering to pressure and manipulation. However, to employ existing tools more efficiently and to create new measures that would ensure market’s fairness, the neoliberal narrative of state’s removal from the market has to be supplanted by an alternative account. This chapter develops such an account by critically retracing the involvement of the state in the market with a focus on contractual vulnerability. What the

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state does or fails to do, I argue, has an impact on vulnerable subjects in three key stages. First, the state impacts the exposure of vulnerable subjects to the market. The more the state withdraws from the market the greater the exposure. Second, the state’s actions – mainly, but not only, via acts of regulation and deregulation – dictate the level of restraint imposed on stronger market players. The less the state monitors private market activity the greater the potential for exploitation. And third, the state’s ex post response to events of exploitation influences the harm caused to vulnerable subjects as well as the legitimacy of such behavior. The weaker the response of the state, the harsher the harm and the greater the tolerance of future exploitation. In accordance with these three stages, I argue in the first part of this chapter that the neoliberal state is involved in the market in a manner that severely increases the risk to vulnerable subjects. The state increases the exposure to the market, refrains from appropriate restraint of the market, and then fails to offer suitable protections to victims of contractual exploitation. The second part of the chapter seeks to explain why exploitative market transactions should not be conceptualized as merely resulting from poor individual decision-making. It demonstrates that in many instances the state is both involved in and responsible for the creation of distress that is acute enough to impair the ability to make the right choice. Highlighting the social distribution of stress, this part links life conditions in the worst neighbourhoods of this country to the susceptibility of their residents to contractual exploitation. The third part takes up the challenge of reimagining the role of the state. Revisiting the three stages of state involvement in the market, it asks: if the state is to be responsive rather than neoliberal, what might be done differently to decrease exposure to the market, restrain market exploitation, and better respond to occurrences of exploitations? Following the vulnerability theory I argue in this part that, in addition to better monitoring potential exploiters, a responsive state should proactively cultivate the resilience of vulnerable subjects and equip them with more tools to avoid or resist exploitation. To concretely situate the general arguments made along the way, I explore the case of contractual vulnerability within the context of agreements to borrow money against pressing financial need. Without sufficient public welfare programmes and equal access to banking services, individuals under financial crisis find themselves in the “free market” of credit and loans. In this under-regulated market, lenders are constantly targeting vulnerable borrowers and manipulating them. Lacking much choice, borrowers then consent to predatory loan agreements drafted by privileged private actors who seek to make profit from borrowers’ distress. When borrowers default they find themselves sued and subject to contractual rules. In courts when they describe their stress, arguing they had no choice and seeking relief, the neoliberal state usually turns to a self-interested individualistic model and refuses to protect them. However, learning how distress operates in those situations and to what degree the state is involved in creating it, can teach us how the risk of market exploitation can be significantly alleviated even if not totally eliminated.

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More generally I argue that, without replacing the neoliberal narrative with a vision of a responsive state, privatization’s results would be even worse than what we currently imagine. Put slightly differently, to fight growing inequalities a responsive state acting in the age of privatization has a duty to ensure that the market offers all its subjects equal opportunities for progress and growth.

I. Contractual vulnerability in a neoliberal state The role of the state in a privatized neoliberal world is ideologically minimal. Most of what matters is left to the market and to private ordering. Next, in the market, stronger private actors target and exploit vulnerable people, subjecting them to predatory contracts. Finally, as part of the neoliberal paradigm, the state’s legal system seldom aids those who get hurt in the market. All in all, the process weakens vulnerable actors while strengthening greedy players, and the free market game repeats itself and perpetuates inequalities. Stress is a key feature in this dreadful process and corresponds with its stages. First, the exposure to the market creates much stress. Second, the stress presents an opportunity for exploitation. And third, stress as a phenomenon is misunderstood and, thus, it rarely invites help. Focusing on the example of predatory lending, the following sections seek to explain the way privatization in a neoliberal state creates stress, facilitates its exploitation, and then leaves the distressed with no meaningful recourse.

A. Exposure to the market Broadly defined, privatization is a neoliberal act of “withdrawal of the state from many areas of social life” (Harvey, 2005). Such act of withdrawal could have been seen as an act of abandonment. Instead, the neoliberal narrative has captivatingly presented it as an act of creating a new space for individual freedom, increased autonomy, and more private choice. Under the same narrative, maximizing those individual liberties requires a market-based society in which voluntary exchanges are the way to progress and thrive. Short-term contracts are accordingly the tool that supplants lifelong institutions. For example, rather than working in the same factory for their entire lives and being subject to wage and health regulations set by the government or the relevant union, employees are nowadays expected to behave as market players. Under such a market regime and the commodification of human traits, employees turn into “disposable workers” (Bales, 2000). They need to move from one at-will employment to another and self-manage risks to their income and health. Accordingly, any crisis – global, national, regional, familial, or personal – translates into an issue of personal responsibility that people have to deal with individually, via market mechanisms (Mettler, 2011). Consider, for example, a contract employee whose child is severely ill and in need of medical treatments. Without state-established solutions such as public

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healthcare and a right to paid sickness days, such employee has to rely on the market. She has to arrange for private medical help, either by buying health insurance in advance or via an ad hoc contract with various providers of medical services. She also must choose between two market-based options: leaving her work while foregoing her right to income (temporarily or even permanently) and contracting for hired care while she is at work. In this example the employee’s natural stress due to her child’s illness is intensified by the economic struggles caused by her exposure to market dynamics. The individual freedom offered by a market-driven society is indeed a seductive idea. However, under conditions of vulnerability such individual freedom may turn out to be a trap. The market for credit offers an important example. In general, people who face economic challenges develop a pressing need of credit. This is especially true in times of a broad, deep, and prolonged economic crisis that precludes relying on non-market loans from family and friends. The need for credit forces stressed individuals into the marketplace and subjects them to loan agreements. Since the market for credit is highly segregated, different potential borrowers are only exposed to limited segments of it. This is one moment in which stress and vulnerability interact with the neoliberal world in a disturbing fashion. While all people in need of credit must turn to the market and use contracts, the most vulnerable borrowers can use neither credit cards nor the services of traditional banks. Instead, they are subject to a wild sub-market often called “fringe banking” (Caskey, 1994; Emerson, 2013). This sub-market includes cheque cashing outlets, pawnshops, payday loans, installment loans, auto title loans, rent-to-own leases, and other “alternative” credit arrangements reserved for “subprime” borrowers (Anderson, 2014). In fact, fringe banking is flooding the country with more physical locations than “McDonald’s, Burger King, Target, Sears, JCPenney, and Wal-Mart locations combined” (Emerson, 2013). In addition to physical locations, fringe banking is characterized by a rapidly growing activity (Martin, 2014). The problem is, of course, that fringe banking is a euphemism and not truthfully a banking system. In this segment of the credit market borrowers can only get credit under predatory terms, at a cost that, more often than not, ends up exacerbating their vulnerability. As many have pointed out, payday loans and similar high-cost loans are only artificially packaged as “short-term” loans. In reality they are based on a business model that necessitates – and yields – repeated borrowing and long-term indebtedness (Pew Charitable Trusts, 2012). Such patterns of lending thus create “debt traps”, aggravating any initial economic pressure and burying borrowers under growing financial distress (Melzer, 2011; Negro, Visentin, and Swaminathan, 2014). But things have not always been like this. Fringe banking has been gaining force for the last few decades (Emerson, 2013), and its emergence and development correlates – and needs to be associated – with the growing dominance of the neoliberal paradigm, starting in the 1970s. Generally, neoliberalism seeks to strip away the protective layers once allowed or even nurtured by the state (Harvey, 2005). In

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the particular setting of the credit market, and especially with regard to lending to vulnerable borrowers, this neoliberal approach manifested itself in a gradual disappearance of government-supported banking institutions that had once been specifically focused on servicing low-income populations. In fact, a study of the history of banking in the US describes the early days of banking as being heavily dominated by the state (Hoffman, 2001). Specifically relevant to the contemporary emergence of a market of predatory loans is the fact that, at the beginning, the state used its power and control to guarantee all its citizens an appropriate service that responded to their diverse needs. As Baradaran (2013, p. 498) writes: At the inception of banking in the United States, there was recognition that banks were an instrumental state entity and that they were to be used to benefit the “common people.” Thus, state and national governments employed banks to further government objectives. Many of the first state banks were chartered to meet the credit needs of farmers, planters, and mechanics who lacked access to the First Bank of the United States. Importantly, since the days of the first state banks and throughout the development of the American banking system, there have been various banking institutions that were created especially to serve the needs of those who could not effectively use mainstream banking. Even when those alternative institutions were initiated by private actors, the state was highly involved. Relying heavily on the power of law, the state facilitated and supported the growth of bank services to the poor. It did not leave the entire task to the free market and the power of competition. One famous example is the rise of credit unions in response to the Great Depression. Out of the fascinating history of credit unions, it is important to highlight here the central role played by the pre-privatization state. In 1934 Congress passed the Federal Credit Union Act to facilitate the creation of federally chartered credit unions (White, 2011). Concern for vulnerable borrowers stood at the core of this legislation. Indeed, the declared purpose of the Act was: To establish a Federal Credit Union system, to establish a further market for the securities of the United States and to make more available to people of small means credit for provident purposes through a national system of cooperative credit, thereby helping to stabilize the credit structure of the United States. Further, and most importantly, in 1937 Congress followed up with substantial and reliable financial support. It extended credit unions significant tax exemptions, offering them a critical government subsidy. This clear intervention in the free market was designed to save credit unions some of the costs imposed on mainstream banks in order to allow them to provide low-cost services to their members.

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Beyond its vast support of credit unions, the state was also actively involved in the development of other banking institutions with a similar focus on servicing those unserved by traditional banks. Well-known examples include “Saving and Loans” institutions (S&Ls) and Industrial Loan Companies (Baradaran, 2013). By the 1980s, however, exactly when waves of privatization and neoliberalism had gained enough force, all that changed. State-supported institutions that had focused on offering vulnerable borrowers fair alternatives to mainstream banking lost sight of their initial mission. Instead, they joined the fierce competition between financial institutions over serving the more aff luent members of society. Although nuances admittedly exist, one leading factor can explain this collective shift away from serving vulnerable borrowers: deregulation. A direct product of the neoliberal ideal of less governmental involvement and more reliance on the free market, deregulation became the name of the game (Harvey, 2005), and this game left behind credit-starved individuals. In general, deregulation of the financial markets meant less supervision and less control by the state. More particularly, the state released alternative institutions such as credit unions and S&Ls from their legal duties towards under-served populations. In the spirit of neoliberalism and in the name of expending the freedom of financial choice for Americans, credit unions, for example, were freed from the main constraint that formerly limited their ability to expand, namely the “common bond” restriction to potential membership (White, 2011). For the most part, it was this withdrawal of the state from the financial markets that has left too many people “unbanked”. Indeed, some estimates indicate that payday loan volume grew more than fivefold at the peak of the deregulation era, from the late 1990s to the mid-2000s (Stegman, 2007). This unbanking process and the growth of fringe banking – that is not banking at all – exposed borrowers to the whims of greedy and unsupervised market actors. And, as the coming section shows, lenders responded by exploiting the opportunity.

B. Restraining the market Private and unsupervised market players have been quick to find creative ways to abuse the excessive market freedoms allowed by the withdrawal of the state. Under minimal to no regulations of the financial markets, schemes of intentional targeting and exploitation have thrived. In the years surrounding the financial crisis of 2007–08, businesses with money to lend, operating under the radar of traditional banking rules, actively sought vulnerable candidates desperate enough to “consent” to predatory loan agreements. They used any aspect of potential vulnerability including race, gender, religion, linguistic barriers, areas of living, conditions of housing, immigration status, parenthood, and so on. Lenders’ expensive and sophisticated targeting efforts even prompted a website provocatively offering

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predatory lenders special devices such as “working poor finder”, “racial profiling tools”, and “military loan finder”.3 With little to no limitations set by the state, lenders’ targeting efforts have taken many forms but have always focused on vulnerability. For example, lenders have deliberately hired minority employees to sell loans to members of their groups and have paid minority celebrities such as Magic Johnson to advertise their services. Similarly, they have advertised in Spanish, clearly aiming at populations of more recent immigrants. Lending businesses have also offered referral fees to managers of low-income apartment buildings to pursue their struggling tenants. Moreover, they have sent their representatives to churches in underprivileged areas to persuade the pastors to encourage their members to apply for loans. Additionally, lenders have offered to take child support, alimony cheques, and disability payments as collateral, thereby especially targeting single mothers and the disabled (Houren, 2009). The effectiveness of targeting and exploitation practices has been increased by the geographical concentration of potential vulnerable borrowers. By and large, the “best” candidates for predatory lending have been found in the poorest areas of our country and especially in distressed urban neighbourhoods. As one manager of a payday business admitted, “We seek out low-income African-American and Latino neighborhoods because we know that this is where our most profitable client base is located” (Johnson, 2010). While people living in relatively affluent regions seldom see a payday store, residents of disadvantaged areas are exposed to unusual and disproportionate concentrations of such businesses – all in place to lure the most vulnerable borrowers in zones increasingly abandoned by traditional banks (Baradaran, 2013; Gallmeyer and Roberts, 2009). A recent study by the Federal Reserve offers significant statistical support to the spatial basis of predatory lending. It defines certain urban neighbourhoods and rural areas as zip codes with higher concentrations of payday stores and tellingly names them “Payday ZIPs” (Bhutta, 2013). Probably the best documentation of the targeting and exploitation of residents of distressed areas is offered by the literature concerning the subprime crisis in the context of housing loans.4 As in the context of payday-style loans, each borrower who signed a predatory housing loan agreement had different individual circumstances that might explain her or his decision to contract with a lender. However, with time we have learned that the subprime crisis was not only, and perhaps not mainly, about the borrowers’ individual choices. We now have evidence that many people were preyed upon, not as individuals, but rather as members of vulnerable communities who belong to certain social groups and reside in poorer, impoverished, and neglected neighborhoods. African-Americans and Latinos 3 The website is presented as belonging to the Predatory Loan Association and can be found here: http://pla.frontseat2.webfactional.com/. 4 The better documentation has two main reasons: more studies and litigation due to the magnitude of the loans and the fact that for the most part the crisis is over and better lends itself to analysis.

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were affected more than any other group, but the elderly and the poor have also suffered (Hunt II, 2003). Sophisticated and powerful actors, traditional banks, and other creditors alike, have used the deregulated financial markets to take advantage of borrowers with limited bargaining power. For a long time, and especially during the years preceding the recent economic crisis, these sophisticated lenders had developed a new market for subprime loans in a calculated manner. At present, it is recognized that lenders engaged in “reverse redlining” – a nomenclature that importantly connects past forms of race-based discrimination characterized by refusing mortgage lending to residents of certain areas (“redlining”) with the more recent sales of predatory loans to these same populations (“reverse-redlining”) (Keren, 2015). Notably, the same neighbourhoods that currently host the largest concentrations of predatory fringe banking were also the sites of exploitation during the heyday of reverse redlining. The twenty-first century form of redlining was market-based and is thus a typical product of a neoliberal regime. Similar to other predatory loan agreements, housing loans were sold via market negotiations and were based on securing borrowers’ consent. As in the case of fringe banking, lenders steered vulnerable residents of “credit-starved neighborhoods” to borrow more than they could afford under terms worse than they deserved (Hernandez, 2012). To illustrate: in one case, lenders executed immense pressure on a borrower who was an immigrant from Barbados working as a custodian at a day-care centre (Barkley v Olympia Mortg. Co., 2007). When the borrower expressed concerns about his ability to repay the loan, the lenders kept reassuring him and his wife that they could afford to repay the loan with income from tenants that the lenders promised to help them secure. During the closing, the borrower grew so stressed that he suffered a heart attack and was taken to the hospital. Consequently, the borrower became unemployed, but the lenders were not deterred and relentlessly contacted the borrower and his wife until they eventually managed to seal the deal. This case, which eventually ended in foreclosure, exemplifies the intensity of the targeting efforts against vulnerable borrowers. Acts targeting vulnerable borrowers have been followed by exploitation both in the case of fringe banking and in the context of housing loans. Loans made in those settings are controlled by predatory contractual terms that are immeasurably worse than what is offered to mainstream borrowers. The short-term high-cost loans offered by fringe banking are based on interest rates ranging from 300% per annum to over 1,000% per annum – rates that are sometimes 100 times higher than what is offered in the mainstream credit market (Martin, 2014). Similarly, when it came to housing loans pre-subprime crisis, predatory lenders routinely pressured borrowers to take loans at prohibitive interest rates, charged them exorbitant fees for unnecessary or nonexistent products and services, imposed steep penalties on defaults, and generally utilized a variety of other predatory methods to strip borrowers of their equity (HUD, 2014). In addition to this evident exploitation, some of the terms of those predatory loans are especially designed to obtain borrowers’ consent by concealing the

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predatory nature of the loan until it is too late to retract. This method makes the neoliberal ideal of expending free choices a sham. For example, the vast literature analyzing the subprime crisis describes a system of offering borrowers very tempting entry requirements from fast approval processes that avoid verifying the ability of borrowers to pay off their loans to very low initial payments at “teaser” rates that misleadingly make the loans seem affordable. Typically, only after a while, and only after the borrower signed a detailed loan agreement, did the borrower realize that the loan was structured to balloon, requiring rapidly growing payments based on significantly increased (“adjusted”) interest. Unsurprisingly, when such predatory methods are used, it is only a matter of time until borrowers have to default. Inevitably, the outcomes of such default are a desperate need for more high-cost credit, a prolonged entrapment in debt, and intensified vulnerability. A vicious cycle results as conditions become even riper for additional market exploitation. More forward looking, any state attempt to help borrowers by preventing future market-based exploitation is unlikely to succeed under the currently dominant neoliberal approach. A regime hyper-committed to small government and free market is, by definition, reluctant to limit lenders by regulation and to establish state institutions that would supervise their compliance with such regulation. President Ronald Reagan evocatively expressed those neoliberal sentiments when he said, “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help’” (Gawande, 2009). If we want to assist vulnerable individuals who must function in the market and who are often exploited via contracts, it is, therefore, necessary to break away from neoliberalism and its constraints. We have to recognize that, as a matter of fact, many contracts are less a product of Adam Smith’s invisible hand and more an outcome of acts and defaults of “the invisible state”.

C. Ex post response to market exploitation The neoliberal paradigm works to insulate the state from any responsibility for the outcomes of those targeting and exploitative behaviours. Idealized notions of autonomy and choice operate to conceal the role of the state, while making the messy reality appear as if it comes from a mixture of individual choices – some sound and some flawed. Accordingly, decisions concerning where, when, and how to purchase a home, and how, and from whom to borrow money to finance such a significant purchase, seem like random private choices made freely in the marketplace. Such framing impairs both the willingness and the ability of the state to offer help. Any state effort to assist borrowers after they have fallen prey to predatory loan agreements has to overcome two leading neoliberal premises: one regards contracts, and the other concerns the role of the state. Contracts are seen as the shrine of the market and as crucial to its proper functioning. Accordingly, and almost without exception, contracts should be enforced in order to facilitate the market’s work. At the same time, the state is supposedly removed from the market, and

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consequently its role vis-à-vis the market is by and large limited to enforcement of contracts via its courts. Courts are thus very limited: any decision to invalidate a contract produced by the market is perceived as an extreme measure that jeopardizes the sacred freedom of contract and amounts to unwanted intervention by the state. In a neoliberal state, courts are thus struggling to justify the release of parties who consented to contracts even if those were signed under the most stressful conditions (Keren, 2013). Courts’ response to the quest for relief presented by victims of reverse redlining can demonstrate the lack of state help to those exploited in the market. First, the state exposed the borrowers to the market of mortgages by urging them to become homeowners as part of the American dream (Katz, 2009). Next, the state deregulated this market, calling lenders to show “creativity” and supporting a shift from a supervised risk-limited mortgage marketplace to a risk-loving one (Immergluck, 2011). And then, after borrowers were exploited in the market, the state’s courts have shown reluctance to “intervene” and help, repeatedly rejecting borrowers’ arguments that reverse redlining had taken place. Instead, courts have been inclined to enforce predatory loan agreements and to order foreclosure if borrowers could not pay. I offer a fuller discussion of the systematic failure of reverse redlining arguments in courts elsewhere (Keren, 2015). For the purposes of this chapter it is important to highlight how much of this failure is related to the neoliberal paradigm, which attributes to people absolute independency and unbounded capability and then judges them for making the wrong decisions. The same paradigm also idealizes the market and is willing to ignore its flaws while tolerating behaviours that capitalize on such flaws. In the case of Grimes v Fremont Gen Corp., for example, a low-income African-American couple from a neighbourhood predominantly populated by minorities was manipulated by shrewd lenders into signing a predatory mortgage agreement (Grimes v Fremont Gen Corp., 2011). The agreement included many of the hallmarks of subprime lending such as teaser rates and adjusted interest. When sued by the lenders for defaulting on their loan, the borrowers argued that they were targeted and exploited as part of a larger scheme of reverse redlining. Despite the fact that at the time of litigation the government was already settling with lenders who were involved in reverse redlining, the court dismissed the couple’s request for relief, reasoning that they had failed to prove concrete discrimination. And, in this case and in many others (Keren, 2015), without recognition of reverse redlining (a deliberate exploitation of structured vulnerability) the predatory loan agreement has remained in control. Furthermore, in many of these cases, the established contractual defenses, such as the equity-based unconscionability, were similarly ineffective to release borrowers from their responsibility to pay for what has been framed as their market choices. On the whole, when privatization is performed within a neoliberal paradigm, it tends to entrap vulnerable subjects between a rock and a hard place. On one hand, as described earlier, they are pushed into the private market, but on the other hand, while participating in the market, they are left without regulatory

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supervision, subject to the mercy of exploitative market players, and denied ex post help. In the context of subprime lending, the results have been disastrous. Branded by images of gutted neighbourhoods, boarded-up windows, foreclosure signs, and entire families living in their cars or on the streets, the situation has presented the state with a new challenge. If released from neoliberal constraints, what should the state’s response be? Namely, can we overcome the problem presented by the vulnerable subjects’ consent to their own exploitation, and, if so, can we justify the state’s anti-exploitation acts? The first step towards answering this question requires a better understanding of the vulnerability of those who are placed by privatization at the heart of the marketplace without enough resources to cope with the risk of exploitation. The second step calls for a shift of focus back to the state to illuminate its role in the creation and perpetuation of seemingly individual vulnerabilities. The coming section takes those steps in order.

II. Contractual vulnerability in distressed neighbourhoods Why would vulnerable subjects sign predatory contracts? One inclination is to blame the victims and attribute to them a variety of negative qualities and flaws. Indeed, one risk of taking a neoliberal approach is that framing outcomes as a product of “choice” invites a critical judgment of the chooser and assigns her, and no one else, the responsibility for the consequences. And yet, people may make decisions out of lack of choice; they may, for example, consent to borrow money for an unreasonable interest rate because they are under significant stress and no other reasonable alternative exists. As we have seen earlier, lenders have targeted distressed borrowers by using neighbourhoods and zip codes as proxies. The lenders’ strategy is not arbitrary; it correlates with the social distribution of stress in our society and is designed to take advantage of this form of vulnerability. While the neoliberal state frames contracts as the products of free choices made by fully capable autonomous adults, the first step toward battling market exploitation in a privatized world is unmasking the existence of vulnerability. According to the vulnerability theory, the neoliberal focus on the autonomous individual provides only a partial (and biased) glimpse of human nature (Fineman, 2008, 2010). Instead, as Fineman suggests, “vulnerability” – “the ever-present possibility of harm, injury, and misfortune” (2008, p. 9) – better captures a universal human condition that we all share. And yet, the universal condition of vulnerability depends on particular circumstances and ought to be carefully contextualized. Breaking away from the neoliberal outlook and replacing it with a contextualized analysis of vulnerability is thus key to explaining the phenomenon of predatory contracts and to accounting for the role of the state in allowing the formation of such contracts. The answer to why anyone would sign such problematic contracts relates, I argue, to stress as a leading form of vulnerability, and to the impact of stress on decision-making. I develop this answer in two steps: first, by describing how residing in a distressed neighbourhood imposes chronic stress on its residents for a

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variety of reasons that have to do more with the state than with each resident; and, second, by showing how the negative impact of chronic stress on one’s decisionmaking process may render consent to contracts defective. Consequently – and for reasons that go beyond the autonomous individual – the exploitation of vulnerability in a privatized marketplace systematically yields a type of consent that has little to do with the mythical free choice.

A. Chronic stress in distressed neighbourhoods The conditions in the worst neighbourhoods of our country – the kind of localities that sociologists regularly define as “distressed neighbourhoods” – translate into the acute individual vulnerability of their residents. While many studies show a strong correlation between living in distressed neighbourhoods and the poor physical and mental health of these neighbourhoods’ residents, fewer offer an explanation. Recently, however, researchers have suggested that a neighbourhood’s uniquely disadvantaged social context, and particularly the stress it inflicts on its residents, explains residents’ health problems more than the residents’ individual circumstances (Kim, 2010). More simply put, life in distressed neighbourhoods causes chronic stress, and chronic stress increases illness. As opposed to courts’ quick dismissal of stress as a “subjective feeling” (Keren, 2013), the leading professional understanding is that stress is a process rather than a given condition (Pearlin, 1989). In brief, the stress process is tripartite – comprised of (1) stressors; (2) coping mechanisms; and (3) outcomes, both physical and mental, which emerge when stressors outweigh coping resources. Living in the worst neighbourhoods impacts all stages of the process. It exposes residents to the most intense clusters of stressors, while depleting residents’ coping resources, thus leaving many with enhanced individual chronic stress (or distress), which causes severe health problems and impairs important capabilities. Understanding the important link between living conditions and individual constraints counters the neoliberal sentiment, often reflected in legal analysis, that individuals are solely responsible for their situation in life (Aneshensel, Ko, Chodosh, and Wight, 2011). The discussion below follows the structure of the stress process and uses it to explain the unique operation of stress in the neighbourhood setting.

B. Stressors Residents of distressed neighbourhoods suffer from many environmental stressors in addition to their own poverty and other possible personal sources of stress, such as sickness or divorce. On a daily basis, and without pause, residents are exposed to events, conditions, and behaviours that carry a potential for danger and harm. Some stressors stem from human behaviour, such as a high exposure to crime, violence, drug abuse, drinking in public, loitering of unsupervised youth, vandalism, and the relentless presence of panhandlers and homeless people. Other stressors stem from negative physical conditions, such as poor sanitation, run-down and

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abandoned buildings, high levels of noise and pollution, and neglected public facilities. In general, residents of such disordered neighbourhoods suffer from the decay of their surrounding environment and experience a loss of civic control. Tellingly, residents and many others often refer to distressed neighbourhoods as “ghettos” – crowded and isolated urban settings from which escape is unimaginable (Jones, 2013). Accordingly, in one litigation regarding predatory lending, the financial products sold by Wells Fargo were discussed as “ghetto loans” (City of Memphis v Wells Fargo Bank, 2011). The weight that these stressors bear on residents, and the resulting sense of threat they endure is a phenomenon known as the clustering of stressors – i.e., when independent stressors, such as vandalism and noise, accumulate, converge, and proliferate (Lazarus and Folkman, 1984). As one study described it, “highly impoverished neighborhoods may be the source of numerous chronic stressors” (Latkin and Curry, 2003, p. 36). Additionally, studies show the cumulative effect of stressors over time and indicate that the longer the exposure to neighbourhood stressors, the greater their impact (Clarke et al., 2014). To take an example relevant to subprime borrowers, when low-income meets racism, lack of higher education, and an environment infused with violence and crime, these stressors have an intensified combined effect that is particularly hard to manage. By and large, residing in disordered neighbourhoods creates what some scholars have called “ambient threat” – signs and cues of impending danger. Ambient threat results from living in a noxious environment, being subject to constant signals of awaiting harm, and experiencing community chaos, as well as other incivilities associated with a breakdown of social control (Ross and Mirowsky, 2009). Importantly, part of the ambient threat is economic. Studies show that the lack or shortage of banks and the profusion and concentration of payday shops signal to residents of distressed neighbourhoods that they are surrounded by economic uncertainty and risk (Gallmeyer and Roberts, 2009). In addition, ambient threat elicits a variety of negative emotions, such as fear, anxiety, and anger. Those emotions can be interpreted either as additional stressors or, as explained below, as factors that work to impair coping mechanisms and, more generally, residents’ resilience. Finally, race surely plays a role in the neighbourhood context and functions as an additional stressor that augments the other stressors and further amplifies their effect (Brondolo et al., 2011). Since minorities are the majority in neighbourhoods of concentrated poverty and leaving the neighbourhood is nearly impossible, one result is lasting racial segregation (Solow, 2010). Such segregation increases exposure to the intense stressor of discrimination and adds one more layer to any given level of stress. Overall, there is a growing consensus that residents of distressed neighbourhoods endure a prolonged exposure to a uniquely intense combination of stressors.

C. Coping When people are exposed to similar stressors, the resulting stress they experience still varies, and is mainly attributed to differences in their access to the resources

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available for coping with such stressors. Neighbourhood distress not only intensifies residents’ exposure to stressors, it also has a significant negative impact on residents’ ability to cope with those stressors. As studies explain, there are various ways in which neighbourhood distress works to deplete residents’ material, social, and mental resources – all of which are essential resources for both alleviating and coping with the impact of stressors. First, even seemingly “personal” coping resources one possesses are highly influenced by the environment in which a person lives. Neighbourhoods play a determinative role in one’s education, income, social ties, attitude, and level of confidence. For example, growing up in a disadvantaged neighbourhood limits one’s educational opportunities and may damage one’s self-esteem, both of which are crucial to one’s ability to cope with stressors (Solow, 2010). To illustrate, when schools look and feel like high security prisons and have no libraries or even working bathrooms, fewer personal coping resources are accumulated (Jones, 2013). Second, the ambient threat discussed earlier, or the perceived dangerousness of distressed neighbourhood streets, creates a fear of walking around one’s neighbourhood. This increases residents’ tendency to retreat socially and psychologically from their communities by remaining indoors, staying away from certain sites, avoiding strangers, and generally keeping to themselves (Chappell et al., 2011). The resulting isolation deprives residents of a leading resource in coping with stressors: an effective social support system. Such an impeding alienation is further enhanced by the neighbourhood’s physical conditions, especially by the typical scarcity of safe and inviting public gathering places that are abundant in better neighbourhoods, such as lush green parks, vibrant community centers, rich libraries, shiny shopping malls, and well-maintained sports facilities. Therefore, residents of deprived neighbourhoods have very meagre opportunities to comfortably meet with each other and engage in conversations and other social exchanges that are a must for coping with stress. Third, many of the stressors typical to distressed neighbourhoods, such as crime and decay, are beyond individual residents’ control. Residents’ inability to exercise control over such stressors adds to these stressors’ negative impact by depleting the residents’ specific ability to cope (Matheson et al., 2006). Further, the lack of control present in such chaotic conditions broadly suggests a breakdown of social control and abandonment by the authorities. In the face of such cues, residents often develop an intense sense of helplessness (Sapolsky, 2004; Seligman, 1975) and powerlessness (Ross and Mirowsky, 2009) that further undermines their resilience. This psychological internalizing process, sometimes called “structural amplification” (Ross and Mirowsky, 2013), also sabotages hope – an affective disposition that is indispensable for any effective coping (Abrams and Keren, 2013). After all, “[i]f one can’t influence conditions and events in one’s own life, what hope is there for the future?” (Ross and Mirowsky, 2009, p. 51). Most pertinent to our engagement with predatory lending to residents of distressed neighbourhoods, studies show that in an atmosphere where residents constantly feel powerless, residents may also feel “unable to fend off attempts at exploitation” (Ross and Mirowsky, 2013).

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Finally, linked to both the problem of social isolation and the sense of powerlessness, residents of distressed neighbourhoods often feel further alienated because they cannot trust civil institutions and private members of their own community. One major problem that pertains to the role of the state is the residents’ complex relationship with the police. While residents of affluent neighbourhoods view police as a source of protection, the case is profoundly different in disordered neighbourhoods. Despite these being high-crime areas characterized by frequent emergencies and violent events, the innocent residents sometimes fail to call the police because they believe that the police are unlikely to come. Or, if the cops do come, there is a fear that they may “harass the very people who called them” (Anderson, 1999). Similarly, policies of “stop-and-frisk” and cases of killing of innocent residents by cops – both most common in distressed neighbourhoods (Evans, Maragh, and Porter, 2014) – make the police a cause of fear and stress, rather than a resource of order, safety, and support. Even more generally, sentiments of fear and distrust of the police and other legal institutions are perpetuated by a reality of lawlessness and lack of civil order. The results are exacerbated feelings of helplessness and isolation that, on the whole, take their toll on residents. It particularly may explain why residents facing exploitation by lenders would feel powerless to cope with the pressure and indisposed to complain formally or otherwise seek legal aid.

D. Outcomes The link between residing in impoverished neighbourhoods and suffering from individual chronic stress is not only explained by the fact that such localities are replete with excessive stressors and lack the necessary resources to buffer them. It is further validated by many findings of a strong association between such residency and the known outcomes of the individual condition of distress. At the individual level, prolonged stress can produce both immediate and long-term consequences, which run the gamut from the physiological to the cognitive and to the psychological (Talbott, 2007). Significantly, the leading symptoms of the individual condition of distress are strikingly common among residents of disordered and disadvantaged neighbourhoods, even when controlling for personal circumstances (Diez Roux and Mair, 2010). Perhaps the most salient findings in this context are those regarding depression. Many works highlight the strong bond between individual stress and depression and its ties to the secretion of stress hormones (Sapolsky, 2004; Talbott, 2007). Critically, numerous studies show a sound association between perceived neighbourhood disorder and subsequent depressive symptoms, even after adjusting for baseline depressive indicators. Indeed, a recent study concretely found that neighbourhood context “matters to depressive symptoms over and above individual characteristics” (Wight, Ko, and Aneshensel, 2011, p. 30). Clearly, such findings challenge the individualistic response of society to the problem of stress and the inclination to hold persons solely responsible for the outcomes of their condition.

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Overall, the findings regarding neighbourhood-based depression have salience in the legal context of predatory lending. When people are under stress further compounded by depression, there is very little they can actively do to resist exploitation by others. There is a proven connection between stress, depression, and impaired agency. A frequent feature of major depression is “psychomotor retardation”, a severe decrease in the ability to concentrate or act, which makes even simple activities, such as making an appointment or getting dressed in the morning, exhausting and nearly impossible to accomplish (Sapolsky, 2004). Put more generally, residing in a distressed neighbourhood is associated with all the leading symptoms that typify the chronic stress condition. While these unfortunate outcomes appear to be individual, their source is mainly social: a result of living in a toxic environment as opposed to a product of individual choice-making. Thus, residents of distressed neighbourhoods are very vulnerable and particularly attractive prey for geographically based exploitation – the seeming business model of many predatory lenders.

E. Stress and decision-making One particularly important outcome of this socially produced chronic stress is the impairment of decision-making processes, the same processes that are so crucial for one’s ability to navigate a market-based privatized world. In fact, studies particularly show that prolonged stress can “wreak havoc with decision-making” (Thompson, 2010, p. 117). A simplified explanation of this phenomenon is that the distressed brain is overwhelmingly consumed by the need to cope with the stressors and their outcomes. Recent developments in neuroscience have allowed researchers access to the precise brain processes that create this effect. While under non-stress conditions, the brain orchestrates an “intelligent regulation of behavior, thought and emotion” (Arnsten, 2009, p. 411), under conditions of psychological stress, special hormones are secreted and interfere with that regulation. Evolutionarily geared to prepare the body for a “fight-or-flight” response, those stress hormones limit the ability of the brain to do other, less urgent, tasks. Therefore, under stressful conditions, the amount and quality of information we can recall, process, and store declines (Thompson, 2010). At the same time, stress hormones work to “switch the brain from thoughtful, reflective regulation . . . to more rapid reflexive regulation” (Arnsten, 2009, p. 415). While such a mechanism may be important for coping with a physical threat, it becomes fundamentally detrimental when people are expected to make market choices that require analysis, self-control, and long-term thinking (Keren, 2013). Moreover, since courts systematically refuse to assist parties who had a reasonable alternative to signing a predatory contract, it is important to realize that stress distorts the very ability to consider available alternatives. One study comparing the review of alternatives by calm and distressed participants (Keinan, 1987) showed that stress disrupts the essential process of scanning possible alternatives, causing people to miss some otherwise obvious alternatives. It also found that

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distressed people reviewed the limited alternatives that they were able to notice, in a frantic and inefficient fashion. Overall, the people under stress demonstrated a significantly higher inclination to decide prematurely before appropriately considering their options, a flawed process that resulted in disproportionally making the wrong decisions. Combined, those findings seriously challenge the tendency to blame the victims of contractual exploitation for failing to make a better “choice” and for not finding market or legal alternatives to signing predatory contracts offered to them. In sum, the main take-away from a non-legal investigation of the connection between life in a distressed neighbourhood and chronic stress is the social, or public, nature of the problem. Greedy lenders target, manipulate, and exploit residents of these areas because of their apparent vulnerability. For the most part, and beyond anything that can be attributed to individual “choices”, such vulnerability stems from social conditions and policies, including privatization-driven abandonment of the distressed neighbourhoods by the state. Such vulnerability is not an individual matter but rather, to use Professor Martha Fineman’s words, “the result of institutional practices and operations” (Fineman, 2012, p. 1755). It is therefore crucial that general society – as represented by the state – be held responsible for the unjust distributive outcomes. With special relevance to the legal system, this insight identifies a need to take social aspects into account, rather than continuing to frame exploitative contracts in terms of individualistic decisions in a free-market game. As powerfully demonstrated by the patterns of predatory lending, without appropriate accountability for the role of the state in the market, the game is severely rigged against the vulnerable. Under a neoliberal regime and without proper state response, stronger market players are allowed, or even incentivized, to utilize their power oppressively in an ongoing manner that yields growing inequalities and perpetuates exploitation. In contrast, a responsive state, as theorized in Fineman’s writings, ought to proactively respond to social problems. At the minimum, the state cannot allow its stronger subjects to make private profits out of social problems created by the state. The coming section considers what can and should be done by a responsive state.

III. Contractual vulnerability in a responsive state Theorizing the reality of distressed neighbourhoods as a form of vulnerability entails reexamination of the obligations of the state to these neighbourhoods’ residents. A vulnerability analysis greatly magnifies state responsibility for the institutions and structures that confer favours and privileges on some, while leaving others vulnerable, with fewer resources of resilience. Accordingly, the vulnerability theory demands reconceptualization of the role of the state. It “requires that we imagine responsive structures whereby state involvement actually empowers a vulnerable subject” (Fineman, 2008, p. 19). To ensure that privatization does not end in greater harm to vulnerable subjects and to society at large, a change from a neoliberal state to a more responsive state is necessary. Such change should

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include a revision of the state’s approach to each of the three aspects discussed in the first part: exposure to the market, restraint of the market, and ex post response to market exploitation.

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A. Exposure to the market Admittedly, privatization pushes people to the market and exposes them to the risks it entails. A responsive state should monitor such exposure and mitigate some of the resulting risks. People in dire economic situations, for example, should not be left alone to navigate the market system and cope with its complexity. As opposed to the neoliberal model of total separation between state and market, it is important that the privatizing state remain present and affirmatively involved in the market to ensure that privatization does not end in greater harm to the most vulnerable populations. To illustrate, in the context of predatory lending, such state affirmative involvement may take the form of state presence in the market of loans and the offering of state-based credit alongside other market options. This promising trajectory is discussed below and can demonstrate how the responsive state can curb vulnerable subjects’ exposure to market pressures. One of the few government agencies explicitly authorized, not by a statute but by the United States Constitution itself, is the United States Postal Service (USPS). This agency has recently suggested a response to the economic vulnerability of those unserved or under-served by banks (US Postal Service, 2014). Offering a nuanced account of the reality of “bank deserts”, and the unequal distribution of banking services, the USPS proposed to enter the market of financial services. According to this proposal, post offices around the country will start offering affordable and safe loans, thereby providing vulnerable borrowers an alternative to payday loans and other predatory credit arrangements. Pragmatically, the idea of postal banking has several important advantages for vulnerable borrowers. First and most critically, postal loans would be significantly cheaper. In fact, one detailed example included in the USPS proposal showed that a loan of $375 would cost a borrower $48 in interest and fees – less than one-tenth the cost of such a loan if made by payday lenders (estimated to be $520) (US Postal Service, 2014, p. 13). Second, USPS already has branches in many neighbourhoods of the type discussed here – those that have been long deserted by commercial banks. Similar to payday shops, it is thus geographically well-positioned to offer vulnerable borrowers financial services in their direct and familiar vicinity. Third, unlike banks (and somewhat similar to payday lenders), post offices are perceived as informal institutions, which most people are accustomed to and with which they feel at ease (Baradaran, 2014). Interestingly, it may even be the fact that post offices are not shrewd market players but rather connected to the state that would award them greater trust and reliability. In sum, as Baradaran puts it, “The USPS is far from the most efficient or successful government agency, but it may just be the perfect institution to accomplish the monumental undertaking of providing the credit the poor need to escape poverty” (Baradaran, 2014, p. 175).

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More theoretically, the proposal of postal banking is in harmony with the profile of the imagined responsive state. First and foremost, postal banking “would function to ensure meaningful equality of access and opportunity” (Fineman, 2012, p. 1721). A responsive state cannot tolerate a reality of “unbanked” or “underbanked” people since banks are “societal institutions that distribute social goods” (Fineman, 2010, p. 256). When banks fail to serve all it is the duty of the state to actively counter the resulting inequality. Offering state-based financial services via USPS is thus one appropriate way for the state to guarantee that the opportunities that financial institutions provide are evenly distributed. Moreover, in her essay “It’s Time for Postal Banking”, Baradaran takes the argument of state involvement one step further, recommending that the state should not only allow postal banking but also subsidize it. Spending “public” money to support lending to vulnerable borrowers, she argues, is appropriate and justifiable. In a way that correlates with the vulnerability theory, she makes the case that a duty of the state is to refrain from privileging some at the expense of others. In this context, Baradaran reminds readers that the state has been subsidizing mainstream banks for many years, thereby awarding them state-produced privileges, most recently via expensive “bailouts”. This reminder demonstrates Fineman’s argument that, despite the neoliberal myth, the market has never been free from the state or completely “private” (Fineman, 2012). Rather, it has always been dependent on resources and structures provided by the state – a fact that should legitimize ideas such as state-subsidized postal banking.

B. Restraining the market In addition to being in the market, the responsive state has an important role in restraining the market and actively preventing market exploitation of the vulnerable by the privileged. To fulfill such role, the state ought to minimize both the abuse of powers by strong market players and the susceptibility of weaker market players to manipulation and oppression.

Forbidding exploitation Since life in a deregulatory state resulted, as described earlier, in a colossal collapse, many agree today that regulation of the market is necessary, not only on behalf of vulnerable people, but also because the market itself has proved vulnerable and dependent on the supervision of the state. The question is, therefore, not so much whether to regulate the market, as how to regulate it. In the context of predatory lending, states vary in their answers to these questions. As far as payday loans are concerned, for example, some states ban them, others allow them but impose limitations such as capped interest rates, and still others allow them without any restraints. Despite many regulation efforts, however, exploitation persists and “the efforts of states have largely failed” (Martin, 2014, p. 261). Lenders escape limitations by using easy to manipulate loopholes or by operating from an “unregulated

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zone”, such as a permitting state or the generally unregulated cyberspace. Focus on the problem of exploitation of vulnerability, thus directly leads to the conclusion that, at the very minimum, federal regulation of the world of predatory lending is long overdue (Johnson, 2012; Martin, 2014). Indeed, in 2007 Congress took a step in this direction when it enacted federal law – the Military Lending Act – with regard to predatory lending to active-duty military members and their dependent family members. At the very minimum, then, a responsive state should utilize its authority to categorically forbid usurious lending and strictly enforce such ban. However, and unfortunately, such measures alone are unlikely to eliminate exploitation due to the persistence of greed.

Anti-targeting acts As we have seen before, geographical concentration of vulnerability attracts exploitation efforts by making it less costly and more effective. For that reason, lenders have focused on easy to locate vulnerable communities and have deliberately targeted their members. Recognizing patterns of targeting and addressing them is, therefore, another path for a vulnerability-minded state to take. For example, in the context of payday loans, some local authorities have used zoning regulations to combat the concentration of payday shops in the most vulnerable areas (Gallmeyer and Roberts, 2009). The vulnerability approach in general, and the study of distressed neighbourhoods in particular, can offer such a method theoretical support. By monitoring the distribution of institutions involved in predatory lending, the state does more than raise the cost of accessing vulnerable borrowers. It also uses its control of public resources to actively shape the public sphere in a manner that alleviates, rather than exacerbates, vulnerability. Notably, an abundance of payday shops is not only a result of targeting efforts but also a cause of additional stress for the residents of the area, as it marks their neighbourhood disordered. Limiting payday shops via zoning can thus be seen as an act of care by the responsive state – a refusal of the state to let neighbourhood conditions further deteriorate.

Cultivating resilience Like stress, exploitation results from the gap between exposure to pressure and the capability to cope with it. For that reason, it is almost impossible to imagine exploitation of a powerful market actor such as a big bank. Accordingly, an effective way to battle market exploitation is to empower the potential victims of exploitation. Such an effort is theorized under vulnerability analysis as understanding “the role of the state and its institutions in the production of human resilience” (Fineman, 2012, p. 1769). While market exploitation flourishes where people’s coping resources are depleted, a responsive state should cultivate resilience (Abrams and Keren, 2013). For example, in the setting of distressed neighbourhoods, the state

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can curb exploitation by providing residents with a better living environment and by developing appropriate support systems. While neglect of the state creates vulnerability, state investment in parks, community centres, public libraries, public transportation, health clinics, and the like, can go a long way towards the cultivation of resilience. Beyond the cultivation of neighbourhoods’ resilience, a responsive state can further restrain exploitation by engaging in the cultivation of financial resilience. An important step in this direction was the creation of the Consumers Financial Protection Bureau (CFPB), a special independent agency established under the Dodd-Frank Act. Importantly, upon its inception the CFPB was mandated to do much more than utilize its traditional power to regulate the market. In a manner that fits the vulnerability theory’s call for “non-authoritarian” state activity (Fineman, 2008), the new agency was specifically assigned with educational powers and legally authorized to provide consumers “with timely and understandable information to make responsible decisions about financial transactions” (DoddFrank Act, s 1021(b)(1), 2010). While the legislation’s rhetoric may sound like it is echoing the neoliberal narrative of individual choice and personal responsibility, the express permission to empower people via education opens many possibilities for a more responsive state. Indeed, the CFPB provides consumers a variety of important new resources for survival in the financial market. For example, on its website the CFPB offers a free, friendly, and accessible tool entitled “Ask CFPB” (CFPB, 2014a). Borrowers of a payday loan, for example, can teach themselves what an APR is, how to calculate it when it is not disclosed based on their charge for a two-week loan, and why it does matter even when lenders tell them otherwise. “Ask CFPB” not only offers significant knowledge in a highly accessible form, it also does so in an empowering rather than patronizing manner. Users of this tool are treated as partners of the state and not merely as people assisted by the state. Accordingly, “Ask CFPB” invites users to collaborate with the state and enrich and improve the database, for example, by suggesting questions they find important and by adding public comments to existing information. Moreover, recognizing that many consumers may have limited access to those Internet-based resources, the CFPB has additionally begun engaging in outreach via collaborations with schools, libraries, and social organizations (CFPB, 2014b). These collaborative initiatives exemplify how the state can better respond to market vulnerabilities by utilizing public and nonprofit institutions. To illustrate, the CFPB has developed training tools for social services staff as well as a downloadable toolkit entitled “Your Money, Your Goals” that trained personnel can use to help people “set goals, choose financial products and build skills in managing money, credit, and debt” (CFPB, 2014c). Interestingly, some scholars have suggested that to improve its empowering impact, the agency should also use market methods currently utilized by corporate America, such as creating a cell phone app to assist borrowers in finding safe and affordable loans (Johnson, 2012). Taken

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together, the CFPB’s actual, planned, and suggested educational activities suggest how a responsive state can proactively foster market resilience of its vulnerable subjects. All in all, by focusing on patterns of vulnerability, the responsive state can and should supplement privatization with measures designed to monitor the exposure of vulnerable subjects to the market, restrain powerful market players, and cultivate resilience in more vulnerable market players. To be sure, none of these measures alone will suffice to defeat market exploitation. Together, however, they may have enough impact to significantly reduce the high risk presented by the current market, which still operates under a neoliberal paradigm. And yet, it is important to note that all these measures are preventive in nature and designed to operate ex ante, before exploitation occurred. A responsive state should, therefore, be ready to further respond ex post to predatory contracts that were formed despite these preventive measures.

C. Ex post response to market exploitation In a common law system the state’s ex post response to market exploitations via predatory contracts is entrusted to the courts. Yet, many greed-born contracts are going under the legal radar, fully performed without any judicial review. Oftentimes the exploited parties are simply too vulnerable to litigate. They lack the means, monetary and otherwise, to resist their abuse by seeking legal help. This difficulty alone should bring the responsive state to protect class actions and, accordingly, to invalidate any attempt by market players to impose contracts that include a waiver of this imperative procedural tool. Every once in a while, however, an exploited party manages to bring her case to court and ask for relief from enforcement, a way out of the contractual trap. In those situations courts need to choose sides: between exploiters and the exploited, enforcement and non-enforcement. There is no doubt that, jurisprudentially, courts are authorized to refuse to enforce the unfair contracts that result from exploitation. Legislators and precedents have established a variety of legal tools that the courts may utilize to that effect, the key of which is the doctrine of unconscionability. A responsive state needs to use its authority to invalidate unconscionable contracts to denounce market exploitation. It should not be deterred by a neoliberal approach that generally disapproves intervention and, more particularly, calls for minimal use of the unconscionability doctrine (e.g. Epstein, 1975). How would the idea of unconscionability work in the context of predatory loan agreements? Most jurisdictions divide the discussion of unconscionability into two “prongs”: the procedural and the substantive (Lonegrass, 2012). The procedural prong of unconscionability relates to the process of making the contract. Under this, courts of a responsive state should use a “totality of circumstances” test, reviewing the human condition of the individual borrower in a

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socially sensitive way. Unconscionability allows such analysis because it is “an open-ended, undefined concept subject to judicial definition case-by-case” (Randall, 2004, p. 194). The vulnerability analysis should include the neighbourhood’s conditions and the impact of living in such a challenging and disempowering environment. These environmental aspects must be combined with any personal information, such as the health or age of the borrower. Attention should be given, for example, to the length of exposure to the neighbourhood’s environment; the conditions of the specific neighbourhood; the existence or absence of social services, and the individual symptoms of distress, such as diagnosed depression or medically treated insomnia. The more the analysis of the circumstances shows the borrower’s vulnerability, the greater should be the willingness of the court to award relief. Another part of the analysis under the procedural prong should focus on the lender. The court should review the lender’s behaviour prior to the finalization of the loan agreement and examine how exploitive the lender was in dealing with the vulnerable borrower. Here, geographic targeting efforts, as well as every nondisclosure, hollow promise, inflated income or value, and tempting misleading entry rate – to name a few common tactics used by lenders – should be taken into account. Under the substantive prong of unconscionability, courts review the contract’s specific terms and the overall fairness of the transaction. Courts of a responsive state should search for all signs of predatory lending that mark the agreement as unfair and render the terms of the loan significantly worse than other loans available to less vulnerable borrowers. For example, in the context of small loans such as payday loans, terms that in reality mean a three-digit APR, ought to be a strong indication of unfair transaction in light of the fact that the mainstream market is lending money for far less interest. Despite neoliberal resistance (e.g. Epstein, 1975), fully utilizing the doctrine of unconscionability against predatory contracts has several important advantages. First, it is both a natural and feasible legal response that some courts already utilize to fight market exploitation and which can be instantaneously applied by additional courts. Second, by such use of the doctrine, courts can effectively establish an explicit norm with expressive and educational powers against exploitative market behaviour. Third, the use of an extensive contractual doctrine like unconscionability can assist against exploiters’ constant attempts to manipulatively avoid state regulations, such as in the case of Internet lending. It would allow the state to send the clear and general message that any form of exploitation is forbidden regardless of the concrete method used. Finally, unconscionability provides remedial f lexibility that particularly fits the interaction between the state and the market in a privatized world. Courts are authorized not only to invalidate the entire contract, which may be problematic in light of the need for economic stability, but also to use their discretion to take a more nuanced and contextual step, modifying the exploitative aspects while keeping the agreement intact.

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Conclusion When privatization takes place, the state leaves individuals at the mercy of the marketplace. What the neoliberal paradigm frames as “a land of choice” is, in reality, a true danger zone, particularly for vulnerable people. And, according to the same paradigm, the state cannot help. It is required to do little or nothing regarding anything that appears to impose a threat to the myth of the free market. Accordingly, to imagine “benign” privatization, we should be able to envision and promote a different relationship between the state and the market. As suggested in this chapter, we need to supplant the neoliberal state with a responsive state. A responsive state would accompany any privatization with a series of measures that seek to both curb exploitative market behaviour and cultivate the resilience of its vulnerable subjects.

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PART II

Privatization and corporatization

The second section of this book examines how trends toward privatization interact with trends toward corporatization. The authors dive deeply into the relationship between privatization and market principles. They also examine how laws designed to support economic activity, such as contract and intellectual property laws, can exacerbate vulnerability and undermine resilience. Erinn Cunniff Gilson’s chapter, “Entrepreneurial subjectivity, the privatization of risk, and the ethics of vulnerability”, examines how the cultural allure of an ideal of invulnerability hinders the creation of ethical and just actions and policies in response to vulnerability. More specifically, Gilson argues that prevalent conceptions of risk and responsibility contribute to the appeal of invulnerability, and constitute an entrepreneurial mode of subjectivity that requires privatization of risk. This entrepreneurial subjectivity contributes to an inability to recognize the full normative significance of vulnerability, and respond ethically to vulnerability as a common feature of life. Laura A. Foster’s piece, “Privatizing Hoodia: Patent ownership, benefitsharing, and indigenous knowledge in Southern Africa”, discusses the privatization of knowledge and resources in South Africa by examining the particular case of the indigenous San peoples’ struggles over the patenting of a succulent plant that suppresses appetite and subsequent benefit-sharing. Foster argues that nation-state governing of contractual benefit-sharing aims to ensure the protection and recognition of indigenous peoples, but in fact primarily serves entwined nation-state and capital interests in maintaining access to indigenous peoples’ knowledge and resources. Through examination of this case, she demonstrates the need for a more responsive state – one divorced from the logics of privatization – in order to more fully meet the needs of vulnerable subjects. Stephanie Ben-Ishai and Saul Schwartz’s piece, “Credit counselling in Canada: An empirical examination” presents original research on the not-for-profit credit

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counselling industry in Canada. Their findings and analysis show that the partial privatization of solutions to overindebtedness have obscured rather than highlighted the options available to consumers. They argue that the lines between public and private options have been blurred to the point where they are difficult to discern, and the consumer debtor is ultimately disadvantaged rather than helped. Risa L. Lieberwitz’s chapter, “Privatizing and corporatizing the university: A US and UK comparison”, traces how entrenched corporatized structures in US higher education are finding their way into the UK’s public university system. Lieberwitz notes that though the means used for privatization in each country are different, in both corporatization of academic research and teaching promotes a goal of integrating universities and industry. She argues that this integration undermines the university’s identity as a public institution with a public mission.

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6 ENTREPRENEURIAL SUBJECTIVITY, THE PRIVATIZATION OF RISK, AND THE ETHICS OF VULNERABILITY Erinn Cunniff Gilson1

Vulnerability has been the subject of and impetus for much feminist thinking and activism about ethics and social justice. In recent years, scholarship and discussion of the theme of vulnerability has expanded significantly (e.g., Bergoffen, 2011; Butler, 2004, 2009; Drichel, 2013; Fineman and Grear, 2013; Gilson, 2014; Mackenzie, Rogers, and Dodds, 2014). The aim of this chapter is to analyze some practical challenges faced by a feminist ethics of vulnerability in Western neoliberal societies, specifically in the context of the US. In particular, the chapter seeks to account for the allure of an ideal of invulnerability that hinders the creation of ethical and just actions and policies in response to vulnerability. The central argument suggests that culturally prevalent conceptions of risk, danger, and responsibility contribute to the appeal of invulnerability, and are constitutive of an entrepreneurial mode of subjectivity that requires privatization of risk. In the context of this chapter, privatization has both a rhetorical and a literal sense: it refers both to how vulnerabilities and risks are rhetorically deemed an issue of private individual responsibility rather than public concern and to how responsibility is actually shifted from the public, collective sphere to the private sphere of the corporate world and individual choice. The overarching contention is that entrepreneurial subjectivity results in specific ethically damaging consequences: first, since entrepreneurial subjectivity relies on a reductively negative view of vulnerability, individuals are increasingly averse to vulnerability, regarding it not just as a condition to avoid but also as a bad character trait to possess; second, the vulnerabilities of others and one’s self are consequently regarded as products of failures of responsibility rather than conditions common to human experience; 1 Assistant Professor, Philosophy & Religious Studies, College of Arts & Sciences, University of North Florida. This chapter is a revised and expanded version of Chapter 4 of my The Ethics of Vulnerability: A Feminist Analysis of Social Life and Practice (2014).

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third, accordingly, responsibility for risk and for common human vulnerabilities is increasingly privatized rather than shared. Thus, entrepreneurial subjectivity contributes to an inability to recognize the full normative significance of vulnerability, and respond ethically to both the vulnerabilities of others in adverse conditions and vulnerability as a common feature of life. The first section offers a brief overview of the ways the concept of vulnerability is employed in feminist ethical and social justice projects, and highlights two challenges facing these projects. The second section provides some methodological background for an analysis of the relationship between dominant forms of subjectivity and vulnerability by engaging with Michel Foucault’s work on neoliberalism and governmentality. The third section draws on the sociology of risk to make sense of how risk-taking and risk-avoidance are deployed in projects of self construction, that is, in the formation of dominant modes of subjectivity. The fourth section considers the ethical, social, and communal implications of an entrepreneurial mode of subjectivity and the relation to risk that characterizes it.

I. Feminist ethics of vulnerability Feminist work on vulnerability has often taken as its starting point the way vulnerability and related conditions such as dependency have been marginalized in ethical, political, social, and legal theory. Vulnerability was both regarded as exceptional, a condition pertaining to those whose circumstances were deemed unique (the very young, very old, and disabled persons), and regarded as a flaw, the absence of all-important attributes such as autonomy, independence, selfsufficiency, and an impediment to exercising one’s rational capacities freely. Vulnerability itself is often associated with femaleness and femininity, and women have historically been those primarily responsible for caretaking and thus dealing with experiences of vulnerability and dependency. Thus, feminist thinkers critiqued both the devaluation of dependency and vulnerability, in contrast with the valorization of (implicitly masculine) autonomy and independence, and the marginalization of the concerns of the “private” domestic sphere where caretaking takes place (Kittay, 1999). As a pointed alternative to traditions that have denied, devalued, and ignored vulnerability, they have sought to root ethical, political, and legal prescriptions in the basic, unavoidable fact of human vulnerability (Fineman, 2008). The concept of vulnerability brings to the fore what has been neglected – frailty, dependence, susceptibility, interrelatedness, and the contingency of our development – and an ethics based on vulnerability articulates how these conditions serve as the ground for ethical prescription (of varying types and strengths), and political and legal policy. Generally, there are two different approaches to an ethics of vulnerability, which each define vulnerability in slightly different ways. On the one hand, vulnerability is conceived as an unavoidable condition that defines human life: it is an ontological condition that defines our corporeal and social existence, and thus is fundamental to that existence. Understood in this way, vulnerability is shared and

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universal in the simple sense that we are all vulnerable and none of us can avoid our vulnerability. On the other hand, vulnerability is conceived as “the contingent susceptibility of particular persons or groups to specific kinds of harm or threat” (Mackenzie et al., 2014, p. 6). The special vulnerability of particular persons or groups is a heightened vulnerability to harm due to their “lack of or diminished capacity to protect themselves” (2014, p. 6). Both approaches are oriented toward calling for greater social responsibility in relation to vulnerability. Recognizing vulnerability as a condition of special impairment necessitates more extensive responsibility for others who are especially vulnerable on the part of individuals, groups, institutions, and the state (see Goodin, 1985). Recognizing vulnerability as a shared fundamental condition, however, has more nuanced implications for responsibility. As Judith Butler’s (2004) work has emphasized, ethical responsiveness itself is predicated upon a process of reckoning with vulnerability instead of attempting to repudiate it through fantasies of mastery and control. On Butler’s view, because our shared vulnerability is the condition that links us to one another, it is the condition that can and should compel us to take responsibility in relation to one another. Responsibility for vulnerable others thus grows out of experiences of vulnerability, which reveal to us that we are bound to one another by this shared condition and that our actions can either exploit or attend to it. If we choose mastery, control, and invulnerability we inevitably also choose to exploit the vulnerability of others. Thus, denying our own vulnerability generates an absence of responsibility for and unethical action toward vulnerable others. Although these two approaches appear quite different, they can be reconciled by understanding vulnerability as a complex, intersubjective condition (see Gilson, forthcoming; Scully, 2014). Most basically, vulnerability refers to an openness to being affected and affecting, being susceptible to change. Often this change is harmful but sometimes it is not. A more comprehensive understanding of vulnerability identifies it in terms of four key features: (1) potentiality: to be vulnerable is to be open to being affected or perhaps susceptible to harm, but it is not yet to be harmed; (2) sharedness: vulnerability is an unavoidable common condition; (3) differential distribution and realization: vulnerability as a condition of potential is universally shared but the specific forms vulnerabilities take are always situational and, as such, experienced in vastly different ways by people who are differently situated in relation to social, political, legal, and economic structures, institutions, and norms; (4) ambivalence: the experience and value of being vulnerable can be both negative or positive; that is, being vulnerable opens us up to affection and care as well as to harm and neglect (see Gilson, 2014, pp. 130–140). The concept of vulnerability, however, has come under scrutiny from various perspectives and raises a host of difficulties (Bankoff, 2001; Brown, 2011). Here I highlight two interrelated problems, one that might be called conceptual and one that might be called practical, although each problem has conceptual and practical dimensions. The conceptual problem lies in the dominant way vulnerability is conceived: in a reductively negative fashion. The practical problem lies in the pernicious consequences of the evaluative connotations of this reductive understanding.

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On a reductively negative understanding, vulnerability is equated with susceptibility to harm and is regarded as a condition in which the vulnerable person is weak, dependent, passive, incapacitated/incapable, and powerless. This view is an oversimplification in several ways. First, vulnerability is conceived as a fixed property of some individuals that is relatively immutable; certain individuals and groups are deemed vulnerable, whereas others are not, and this attribution of vulnerability is unlikely to alter. Second, it is reduced to a homogenous property: vulnerability is just susceptibility to harm, which is understood as essentially tantamount to harm or impairment itself. Thus, the presumption is that vulnerability means the same thing for all those deemed vulnerable. Third, the consequence of the first two oversimplifications is that vulnerability is perceived as characterizing some and not others. This attribution of vulnerability is accompanied by a corresponding, hierarchical ascription of value in terms of agency and other socially desirable capacities and traits. Thus, being vulnerable ends up being perceived as a character trait, a property, or a state that has negative value, is bad, and thus is to be avoided. This kind of understanding of vulnerability takes it to be oppositional, fixed and static, and hierarchical (Luna, 2009). Conceiving vulnerability in this way can have paternalist, patronizing, and controlling consequences (Brown, 2011). The problems arising from the evaluative connotations of this way of understanding vulnerability should already be clear. Vulnerability is opposed to invulnerability, which is aligned with the majority of culturally valorized qualities. Invulnerability, understood as imperviousness and the absence of susceptibility, is a form of closure and a way of shutting oneself off from that which may affect one (especially in ways that are perceived as negative). Invulnerability is seen as a positive, desirable condition that bespeaks strength and capacity, and in this way is opposed to and deemed incompatible with dependency, powerlessness, and weakness. Thus, invulnerability is central to popular conceptions of autonomy, capacity, responsibility, and agency. Accordingly, the feminist critique of androcentric conceptions of agency and autonomy is really a critique of the overvaluation of invulnerability at the centre of these notions. Valorizing invulnerability, therefore, leads to the fantasies and projects of mastery and control against which Butler warns. One seeks to control others and one’s self, mitigate uncertainty and insecurity, and secure certainty or safety for one’s self. Thus, pursuing invulnerability is one of the consequences of a simplistically negative understanding of vulnerability. A feminist approach to vulnerability should challenge both of these problems. It must reject both the dualist construction of vulnerability that equates it with weakness, locating it in series of hierarchical dualisms that involve perniciously gendered associations, and the ideal of invulnerability, which is tied to an illusory notion of self-sufficient autonomy and denials of dependency. Likewise, a feminist approach is sensitive to the interrelation of ethics and social norms, and is attentive to how social norms for responsibility can skew ethical prescriptions and policy related to these conditions (see Walker, 2007). Consequently, a feminist ethics of

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vulnerability necessarily engages in social critique as a crucial dimension of ethical activity (see Gilson, 2014).

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II. Entrepreneurial subjectivity and risk This section explicates some valuable conceptual resources found in the work of French theorist Michel Foucault. Foucault’s work is of particular interest because it offers insight into how the social construction of danger and risk, and their changing social meaning, leads to the demand for social control and management at the institutional and individual levels. Of particular significance is how, on his analysis, certain dangers and risks come to be allowed, encouraged, and eventually construed as desirable because, for instance, their existence is a precedent for increased surveillance or because inciting such risks generates forms of subjectivity that are economically or socially advantageous. The core thesis of Foucault’s thinking on power suggests that contemporary relations of power are at work throughout the social body as a whole and are productive, not merely repressive, in so far as they produce knowledge, beliefs, behaviours, norms and customs, institutions, standards, and so on. Historically, the functioning of power has shifted from “juridico-discursive” power – the top-down power of a sovereign king, most notably exercised in the right to execute – to “biopower”. Through the concept of biopower, Foucault analyzes how the processes of life itself become political matters, issues and objects of control and regulation (1990, p. 142). Whereas sovereign power could simply take life or let live, biopower operates in a multiplicity of ways in order “to foster life or disallow it” (1990, p. 138); it instigates, manages, controls, monitors, organizes, optimizes, encourages, regulates, reinforces, and so on. Thus, whereas the quintessential mode of sovereign power is prohibition through the law, the central mode of biopower is the norm, which operates through measurement, evaluation, and hierarchical ranking, all of which constitute more meticulous mechanisms of control. The norm is a continuous corrective mechanism that makes it possible to implicate all the minute aspects of daily life in relations of power. This conception of power enables analysis of the interplay between institutions, social and economic structures, policies, subjectivity, individual behaviour, and dominant perspectives articulated in bodies of knowledge and transmitted via social norms. In particular, a biopolitical perspective calls for consideration of the simultaneously individualizing and totalizing effects of contemporary forms of power. On Foucault’s analysis, biopower operates at two different levels that are joined in practice: through discipline at the level of the individual body and through regulatory control at the level of the social body or population. Disciplining the bodies of individuals makes them simultaneously more efficient and productive, and more obedient. Regulatory controls intervene to manage the population as a whole; such controls take the biological existence of the population as their object, seeking to increase both knowledge of that population (via demographic studies, for instance) and control of that population (via policy, for

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instance). The two dimensions of biopower coincide, if not always harmoniously so. For instance, the discipline to which an individual is subject and to which she subjects herself when, in accord with her doctor’s recommendation, she monitors her dietary and exercise habits in an effort to lose weight and become healthier is also always part of a web of relations of power that link the individual to the broader social milieu. Norms about health and appearance circulate in the social sphere, are institutionalized in the medical establishment and thus transmitted through the advice of authorities, are reiterated in local and national policies concerning health, and manifest in the economic sphere in the form of myriad commodities (weight loss products, personal training sessions, home gym equipment, apps for tracking one’s exercise, and so on) that both presuppose and entrench said norms. Most notable is the suggestion that disciplinary techniques of institutional management, control, and organization lead simultaneously to an increase in efficiency and capacity, and to an increase in docility and subjection in individuals. Discipline “increases the forces of the body (in economic terms of utility) and diminishes those same forces (in political terms of obedience). In short, it dissociates power from the body” (Foucault, 1995, p. 138). Thus, disciplinary power is especially successful in mitigating danger. Any increase in aptitude is achieved in tandem with an increase in domination, submission, and obedience. Bodies’ energetic capacities are diverted from rebellion but amplified in the service of an externally imposed end. On Foucault’s account, one of the paradigmatic forms taken by modern power relations is panopticism, which has its origins in Jeremy Bentham’s descriptions of the ideal prison: one in which a tall guard tower is positioned in the centre of a circular building containing the prison cells, rendering the prisoners always visible while the guard is invisible to them, and thus precipitating self-discipline and self-surveillance on the part of the prisoners who would never know if or when they were being watched. Panopticism links epistemic certainty, the knowledge that ensures that there is no risk, and disciplinary control. Epistemic certainty – or the pretence of it – makes disciplinary control possible, and disciplinary control is effected through epistemic certainty. The nature of this connection shifts as epistemic certainty becomes increasingly difficult to achieve. Disciplinary control will proliferate and diversify, but there will be no corresponding increase in epistemic certainty or security. Thus, the pursuit of epistemic certainty is heightened; we wish to know all the risks we face so that we might protect ourselves against them, but their unknowability is precisely what renders them dangerous.2 What remains crucial, however, is the closure that is affected through the presumption and pursuit of epistemic certainty. Only with security of this type and a concomitant deactivation of danger, is discipline enabled to do 2 For this reason Ulrich Beck claims that our contemporary “world risk society” is ironic: “the irony of risk” is that “rationality . . . encourages anticipation of the wrong kind of risk, the one we believe we can calculate and control, whereas the disaster arises from what we do not know and cannot calculate” (Beck, 2006, p. 330).

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more; it not only “neutralize[s] dangers” but can positively “increase the possible utility of individuals” because such increase no longer poses a threat (1995, p. 210). Such an analysis of how subjects are shaped – in relation to the institutions in which they participate, the spaces they occupy, the modes of relationship in which they engage, and the activities they take up – is integral to understanding both the production of forms of subjectivity that eschew vulnerability in favour of invulnerability and how to challenge such forms of subjectivity. Only by understanding how increased capacity comes to be paired with normalizing practices can we understand the precise appeal of ideals of invulnerability in contemporary life. The pursuit of invulnerability is conceived widely as a pursuit of enhanced capacity. The view that maximizing one’s abilities will enable the achievement of a certain kind of invulnerability supports the overvaluation of invulnerability. It also requires a simplistically negative view of vulnerability that associates vulnerability with weakness, incapacity, and all that which is inferior and thus must be repudiated. A comprehensive critique of invulnerability takes account not only of how invulnerability is an illusory ideal, one that is premised on a stereotypically masculine understanding of autonomy, but also of invulnerability’s allure. That is, critiquing the practical appeal of invulnerability requires accounting for how increased capacity is achieved at the price of increased docility and obedience, that is, of the ways in which invulnerability actually involves subjection. Thus, in the subsequent discussion, the aim is to understand how particular constructions of danger and risk function both to manage populations and, in so managing them, to instigate particular behaviours and attitudes in individuals within those populations. Individuals are disciplined and exercise self-discipline, but such discipline cannot be severed from broader socio-politico-economic objectives it may serve. In order to account for the allure of the ideal of invulnerability more fully, I mine three key ideas from Foucault’s 1978–79 lecture course The Birth of Biopolitics (2008), which offers an extended analysis of liberal and neoliberal economic thought: (1) the intertwining of risk and control; (2) the economization of the social sphere; and (3) the entrepreneurial mode of subjectivity that accompanies them both. These three ideas contextualize the neoliberal framework in which privatization of responsibility dominates and shapes normative subjectivity. Before turning to these topics, however, a brief word about the differences between liberalism and neoliberalism is needed. In general terms, economic liberalism is considered to have its origins in Adam Smith’s formulation of the idea of the free market as the best route for progress, development, and human liberty. Liberal economic thought went on to develop in a Keynesian direction that allowed a significant role for the state in ensuring employment and regulating inflation. Contemporary neoliberalism rejects this substantive role for the state. It might be summed up through an inventory of political and economic policy directives that include trade liberalization, comprehensive deregulation, privatization of public services with the aim of shrinking the public sector, and the implementation of such policies globally. Thus, a contemporary example of neoliberal intervention is the structural adjustment policies imposed by international financial institutions such

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as the World Bank and the International Monetary Fund on so-called developing countries. Such policies require a country to scale back its public services and to implement austerity measures, among other things, in order to qualify for loans for development from said institutions. More specifically, according to Foucault’s analysis, neoliberalism is distinguished from classical liberalism by virtue of the role attributed to the market in relation to the state. Whereas liberalism seeks to demarcate space for a free market, that market still falls under the supervision of the state. This supervisory relationship is reversed in neoliberalism; the free market is considered to act “as the organizing and regulating principle of the state” (2008, p. 116). This shift takes place in the context of concerns about the legitimacy of the state, thus, in particular, in German neoliberalism post-WWII (ordoliberalism). Features of this shift include corresponding doctrinal changes that result in differing governmental rationalities. Departing from the liberal view that the key feature of the market is free economic exchange, which is based on the assumption of equality, the neoliberal view holds that the key feature of the market is competition, which rests upon inequality. Following from this change, in contrast with the liberal idea that the free market is best achieved through an absence of regulation, laissez-faire, neoliberalism maintains that the conditions for the market to flourish require “an active policy [of intervention to create favorable conditions for competition] without state control” (2008, p. 132). In the context of these shifts, of particular interest is, first, the relationship Foucault perceives between, on the one hand, culturally conditioned ideas of risk, and, on the other hand, the new techniques of control and management to which these ideas lead, in particular techniques of self-control and self-management. Risk is a defining factor in the governmental rationalities of liberalism and neoliberalism because of the constant interplay of freedom and security. Risk assumes a significant rhetorical function in maintaining the balance between freedom and security. Freedom is understood not simply as the absence of interference, but as a space demarcated by governmental rationality in which a set of allowable activities can occur. Liberal governance simply is “the management of freedom[,]” which it “proposes to manufacture . . . constantly” (2008, pp. 65, 63). Rather than simply giving free reign to freedom, liberalism manages it and, in so doing, produces freedom. More specifically, freedom is produced in relation to that which threatens it. Since it is always threatened – since there is always something “in the production of freedom [that] risks limiting and destroying it” – it is ensured through “the establishment of limitations, controls, forms of coercion, and obligations relying on threats, etcetera” (2008, p. 64). As a consequence, control and freedom are intertwined in so far as freedom is understood to be possible only in light of the management of risk and the achievement of security. Yet, these methods of management and control represent a potential danger themselves; they may overreach, overextend themselves, unduly interfering with zones of liberty. Thus, there is a constant need to balance the competing but complementary imperatives of freedom and security so there is neither excess nor absence of either. Risk thus

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operates as the basis for control. Without a sense of risk, the possibility of danger, there is no impetus to control and nothing to manage. Thus, Foucault concludes rather presciently, “there is no liberalism without a culture of danger” (2008, p. 67). The presence of danger and risk renders the techniques of management aimed at achieving security, and freedom within secure bounds, necessary, rational, and acceptable. Danger, consequently, is an omnipresent potential; however, its ubiquity is a consequence of, and necessarily paired with, management. Just as liberalism produces freedom by setting the terrain of liberty, so it produces danger. Accordingly, individuals “are conditioned to experience their situation, their life, their present, and their future as containing danger” (2008, p. 66). Examples of such anticipation of danger and risk are numerous: individuals, institutions, and governments worry about risks as diverse as terrorism, national debt, food safety, gun ownership and, conversely, restrictions on gun ownership, sexual assault, texting while driving, cancer, pandemic diseases, and even the extent of government intervention itself. Second, neoliberal thought generalizes “the ‘enterprise’ form”, (2008, p. 225). Doing so involves both conceiving economy and society as composed of “enterprise units”, and inverting “the relationships of the social to the economic” (pp. 242, 240). Social issues such as education, childrearing, and healthcare are interpreted and understood primarily in economic terms, and, specifically, in terms of the greater or lesser risk (or cost) posed to individuals and society as a composite of individuals. Thus, with neoliberalism the domain that is subject to management and control by state is the social sphere, which is organized so as to serve and preserve, but not interfere with, the freedom found in the economic sphere. In the specifically American form of neoliberalism, Foucault contends that economization, an “economic analysis of the non-economic”, operates as a “grid of intelligibility” that renders comprehensible a whole range of behaviours, activities, and relationships (p. 243). Such an economized framework of intelligibility entails both that individuals live their lives continually enmeshed with enterprises, and that they must understand themselves tacitly and consciously through this framework such that they make themselves “a sort of permanent and multiple enterprise” (p. 241). Thus, Foucault concludes, “the individual becomes governmentalizable, . . . power gets a hold on him to the extent, and only to the extent, that he is a homo œconomicus” (p. 252). Commenting on the application of an economic grid to criminal behaviour, he contends, “society appears as the producer of conforming behavior with which it is satisfied in return for a certain investment” (p. 256). The consequence of the imposition of an economic grid of intelligibility is that society produces and consumes conformity: economized, managed in line with economic rationality, society produces “conforming behaviour” on the part of individuals in so far as they are homo œconomici, in so far as they take themselves as enterprises. Being homo œconomicus, economic man, consists of an array of norms, construed as ideals and obligations that conduce to bring individuals into conformity with the values and policies of a neoliberal state, which organizes society to serve the economy.

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Third, the aforementioned presuppositions of the neoliberal terrain set the stage for the predominance of a particular type of relationship to self on the part of the individual inhabiting this terrain. This mode of subjectivity, Foucault suggests, is one defined by entrepreneurship. One of the consequences of understanding of one’s environment as imminently dangerous is that one not only accedes to being managed and controlled, but also enacts self-management in an exemplarily panoptic manner. Yet, according to the rules of the neoliberal game, “each remains master regarding himself”, which means that self-management is undertaken in the name of freedom and with the aim of enhancing one’s capacities. As homo œconomicus, the individual is “an entrepreneur of himself” (2008, p. 226). If panopticism makes the individual his own disciplinarian, it is because whoever is subject to it “inscribes in himself the power relation in which he simultaneously plays both roles [that of observer and observed, trainer and trainee, teacher and student]; he becomes the principle of his own subjection” (1995, pp. 202–203). Similarly, as an entrepreneur of himself, the individual governs himself, ostensibly freely, in accord with the prevailing politico-economic values. He disciplines himself, producing not just goods and capital through his work, but, perhaps more significantly, producing himself as the bearer of human capital. As enterprise units, individuals are tasked with increasing their capital via their skills and abilities, their “capital-ability”, as Foucault puts it (2008, p. 225). Thus, as Lois McNay notes, “Individual autonomy becomes not the opposite of, or limit to, neoliberal governance, rather it lies at the heart of its disciplinary control” (2009, p. 62). For the entrepreneurial subject, freedom and autonomy are found within the subtle mechanisms of social control that characterize neoliberal governmentality, but since these encourage “active differentiation” and “regulated self-responsibility” rather than homogeneous submission to an external authority, the entrepreneurial subject feels himself to be exercising and even expanding his autonomy (McNay, 2009, p. 63). Yet, when one disciplines oneself in order to develop one’s capitalenhancing capacities, one in effect engages in conforming behaviour. Indeed, those behaviours that increase one’s “capital-ability” are conforming ones in so far as they are accepted as economically beneficial.

III. Privatization of risk and the shaping of the self I turn now to consideration of how subjectivity is shaped through particular kinds of relationships to risk. Work done in the sociology of risk provides a valuable reference point. Generally, the sociology of risk includes three approaches with different foci (see Lupton, 1999, pp. 1–11). First, a cultural-symbolic approach epitomized by the work of Mary Douglas maintains that risk is not an objective feature of the world but is culturally and symbolically framed. Second, the “risk-society” approach advanced by Ulrich Beck and Anthony Giddens considers how risk is increasingly a defining and dominant feature of global society. Third, a governmentality approach to risk follows a broadly Foucaultian trajectory; it explores how risk is at issue in the rationalities of governance and management

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and how governmentality encourages particular kinds of relationships to risk. The questions that orient much of this literature focus on how risk functions as a tool in a biopolitical regime by asking “what is done in the name of risk”? (Baker and Simon, 2002, p. 18). In line with this last orientation, the analysis that follows concerns itself with the issues of how relationships to risk are formative of particular modes of subjectivity, how the differential framing of both risks and the parties taking on or securing themselves against risk is conducive to entrepreneurial subjectivity, and the impact that the dominant understanding of normal subjectivity has on the role public institutions play in assuming risk. Overarching all of these issues is the question of how the disposition toward risk cultivated in the contemporary neoliberal context facilitates abnegation of responsibility in relation to vulnerability. In relation to risk, an entrepreneurial subject is one who becomes adept at personal cost-benefit analyzes concerning the risks she takes, adopting a calculative attitude about how potential risks might affect her individual human capital. As sociologists of risk illuminate, however, it is not the case that some risks are inherently desirable and others are inherently undesirable. Indeed, what is conceptualized as “risk” is itself socio-historically contingent. Risk is something that we simultaneously eschew and embrace, both as individuals and as members of a social body. As a consequence, attitudes toward and techniques for managing risk are complex and ambivalent. Given the social shaping of the meaning of various risks, distinctions between the kinds of risk considered appropriate to embrace – stock market speculation, for instance – and the kinds considered appropriate to eschew – unprotected sexual activity, for instance – may indicate less about the nature of the risk itself and more about predominant social, cultural, and moral values. The framing of actions as risks, and as either risks worth taking or risks to avoid, indicates what kinds of activities are considered worthy, what character traits are regarded as estimable, and what goals and aims are deemed realistic and desirable, and for whom. Thus, risk is an implicitly value-laden notion. It calls upon presumptions about individual responsibility and morality that impact how the value of security from different types of risks and the appropriateness of individual or communal assumption of the burden of risk are assessed. Taking some risks may be deemed morally praiseworthy while avoiding others is also regarded as crucial for moral responsibility for oneself. In the context of neoliberal values, entrepreneurial subjects must both boldly court and assiduously avoid risks of different sorts. One takes certain risks because they are likely to pay off, figuratively and literally, but also deliberately avoids or refrains from taking others either because they lead to probable harm, decreasing one’s human capital, or because they are too risky and not a good investment, so to speak. From the perspective of this economized frame of intelligibility, dangers are omnipresent; thus it falls to the individual to ward off these dangers and negotiate the varieties of risk that may be encountered. Risk-avoidance in particular involves both developing capacities of prevention through which one controls one’s situation, a central part of one’s set of “capital-abilities”, and exercising precaution in

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the face of uncertainties that cannot be mastered (Ewald, 2002). For example, one exercises not just to be fit but also to prevent various health problems, and one eats well not just because high quality food tastes good but also because it might protect against various diseases and foster overall health. Avoiding negatively coded risks in this way positions one as a responsible moral agent, as does assuming such responsibility as an individual rather than awaiting and depending upon the social distribution of risk. Embracing risk, however, is equally necessary for the individual who is an entrepreneur of herself since it is only through courting certain risks that she can positively increase her human capital. To illustrate this point, I briefly sketch an example of courting risk drawn from Jonathan Simon’s study of the ethos of mountain-climbing in order to show how this kind of interaction with risk is formative of entrepreneurial subjectivity and, as such, facilitates ignorance of vulnerability and concomitant repudiations of responsibility. I utilize this example in particular because it focuses on a risk-taking activity that is paradigmatic of the type of risk that functions to enhance human social capital. It exemplifies how in subjectivity-enhancing risk the assumption of risk is voluntary, a non-necessary undertaking that actually involves seeking or creating a challenge for oneself and overcoming it so as to somehow prove oneself. Simon’s analysis centres on “the relationship between new governmental rationalities that urge the embrace of risk . . . and the discourses of extreme sports[,]” and rests on a distinction between mountaineering and summiteering (2002, p. 180). Popular depictions of mountain-climbing typically focus on summiteering, which is defined by a “fetishization of the summit”, a focus on the “unmediated adversity” faced by climbers, aspirations to set records of various sorts, and the belief that reaching the summit of a mountain is a form of redemption, “a test that marks the participant as among an elect” (pp. 190–192). Mountaineering, in contrast, is defined by a broader understanding of one’s activities and the requirements of climbing mountains. It involves “an ethical and communitarian ethos[,]” an emphasis on the technical skills necessary for ascending and surviving extreme conditions, and a more developed understanding of the interdependence crucial for successful climbs (pp. 181–182). Simon notes that as mountainclimbing expeditions have become more commercialized and consumer-oriented, the summiteering dimension has prevailed. In essence, one can buy access to a summit; depth of skill and understanding, and interdependence and cooperation are superfluous. These two perspectives on mountain-climbing are characterized by different ideas about what one does when one embraces risk. The summiteering perspective leads to a privatization of one’s project and responsibility in relation to it, and thus a concomitantly narrow understanding of struggle and adversity, which is thoroughly externalized, “reduced to a singular and natural force [the mountain] with which negotiation and compromise are impossible” (p. 191). Risk is embraced by the person who seeks to ascend to the summit as “a device for proving and redeeming the self” (p. 198). Taking this risk is a way to demonstrate one’s mastery of a mountain and, by extension, one’s “mastery in the world of the marketplace and

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the home” (p. 190). Thus, risk is conceived as a thoroughly individual matter, a personal choice to better oneself. The ways the summiteer depends on others – sherpas and guides, most obviously – are conveniently ignored when summiting is construed as an act of individual will and accomplishment. The entrepreneurial subject undertakes the risk because the project of climbing a mountain “promise[s] a new subjectivity” via an increase in one’s capital and status (p. 190). It is a risk worth taking only because it is formative of subjectivity, because it is regarded as a way “to bring about personal growth[,]” and does so because it results in a calculable pay-off (p. 192). That is, it connotes something recognizable in our social milieu: individualized mastery, achievement, and victory over challenges, and the establishment of a superior self via the conquering of risk, all of which are forms of invulnerability. A risk is one worth embracing when it is judged that it will indeed lead to an increase in one’s human capital and a new, improved self who radiates self-sufficiency, self-control, and achievement. The judgment that this kind of risk is one worth taking can only be made in a social context in which these values of invulnerability are esteemed. Using such risk-taking as a means to self-enhancement requires a social context in which invulnerability is valued and vulnerability is devalued, and deemed a failing and weakness. Thus, although it might seem intuitive to associate the pursuit of control and invulnerability with the avoidance of risk, even when embracing risk the entrepreneurial subject seeks control by endeavouring to manage her human capital: maximizing it by taking certain risks and minimizing its reduction (or stagnation) by avoiding other risks. It is crucial to note that only privatized risks afford entrepreneurial subjects this kind of opportunity for self-enhancement. In this context, privatization refers both to the increasing economic privatization that occurs when the provision of services and resources is shifted from the public sphere to the private sphere, as well as to the ideology and rhetoric of privatization that mandates shifting responsibility to the private self that necessarily accompanies economic privatization. The former takes two complementary forms: as necessary basic services are taken over by the private, corporate domain, responsibility for securing these services falls to individuals. The rhetoric that attends economic privatization emphasizes individualism and personal responsibility for obtaining such needed services and resources, and presumes the isolated, self-sufficient, masterful subject much critiqued by feminist thinkers. This rhetoric thus neglects the reality of dependency that persists even in the context of economic privatization. Both dimensions of privatization are manifest clearly in the example of summiteering: ascent to the peak of a mountain becomes a matter of purchasing services yet is not reduced to the mere ability to render payment since the ideology of privatization allows the summiteer to construe his act as that of a self-sufficient individual. In the process, it elides the twinned realities of financial privilege and inequity, and backgrounds the summiteer’s dependency on the guides and sherpas who accompany him. In a neoliberal context, for risk-taking to contribute to the positive selfconstruction of an entrepreneurial subject it must be privatized in both senses.

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Communal or socially distributed risks seemingly offer no such opportunities for increasing the capital-abilities of the entrepreneurial self. First, as it is conceived within the dominant neoliberal paradigm, the social distribution of risks and their benefits and burdens is typically regarded as a way to avoid significant risk rather than a way to embrace it, as in social welfare programmes. Moreover, avoiding risk appears to contribute less to positive self-construction. Avoiding negatively coded risks is perceived as doing the barest minimum to take responsibility for oneself and one’s family. Thus, availing oneself of the social distribution of risk is construed as an evasion of the most basic personal responsibility. Second, given an ideal of the self as an isolated, invulnerable individual, one can only enhance one’s self by choosing to take a given risk, using one’s own abilities to conquer it, and thus having one’s own abilities, effort, and success recognized by others. The social distribution of risk does not allow for this valorization of individual mastery and capacity. The consequence is that if subjectivity is understood and experienced as entrepreneurial subjectivity idealizing invulnerability, then there is little incentive to distribute risk, take responsibility for shared vulnerabilities, or avow and understand one’s own vulnerability.

IV. Implications for social responsibility Entrepreneurial subjectivity, the comportment toward risk that characterizes it, and the ideology of privatization are all thoroughly entwined. As both a politicoeconomic practice and a rhetoric that motivates action and belief, privatization encourages entrepreneurial subjectivity and its characteristic relation to risk. But the relationship is a reciprocal and mutually reinforcing one: entrepreneurial subjectivity and its accompanying attitudes about risk sustain trends toward increasing privatization since privatization creates the conditions in which entrepreneurial subjects can develop themselves as successful and invulnerable. Thus, all have a significant impact on our ability to reckon with vulnerability and take responsibility in relation to it. In this section, I explore the consequences of the differential privatization of forms of risk and vulnerability for ethical relations. I contend that such privatization prevents us from acknowledging vulnerability in a way that is adequate for ethical relationships with others and ourselves. One of the primary ethical harms of this mode of subjectivity is how it is premised on inequity and, as I will argue, on ignoring the relevance of inequity: it takes resources both to avoid and to embrace risk, and given the increasing privatization of many risks, most choose to deploy their resources to ward off detrimental risks by meeting basic needs. Thus, those who stand to benefit most from embracing capacity-increasing risks are those who already possess the economic and social resources with which to take such risks. So, the successful entrepreneurial subject benefits from the increasing privatization of risk because he is already positioned in such a way to increase his status, self-conception, and “capital-abilities”. Those who lack the requisite economic resources and the social benefit of privileged status in the dominant culture are hindered when much risk

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is considered to be most appropriately assumed by private persons rather than by collective institutions. The privatization of risk and responsibility stabilizes and enhances the self-conception of those entrepreneurial subjects who are perceived as taking risks, enabling them to appear masters of their fate, but it simply exacerbates the vulnerability of those who are perceived to be at risk and lack the resources to take autonomous control of their situations. This chapter has focused thus far on the concepts of danger and risk, and how our perceptions of dangers and risks are socially shaped, in particular, by the exigencies of the dominant neoliberal politico-economic framework. It is also important to consider the relationship between the concepts of risk, danger, and vulnerability. The connection between vulnerability and risk is a clear part of rationales for risk-avoidance and risk-taking. Risks are avoided and are coded negatively as presenting danger when they are believed to render one vulnerable to harm. Risks are coded positively and embraced when they present an opportunity to pursue invulnerability. Often the two concepts are conflated with one another and vulnerability is often thought to be an especially negative form of risk. For instance, when persons are positioned as vulnerable in the sense of being especially susceptible to harm, they are regarded as at risk. In this way, risk can operate as a conceptual stand-in for vulnerability, but as such it offers more leeway for incorporating value-laden assumptions. Different social status and modes of subjectivity are attributed to those who are framed as actively taking culturally validated risks and those who are framed as passively being at risk. When one is at risk, the vulnerability the risk might precipitate is wholly negative, equivalent to harm; experiencing such vulnerability is regarded as adding nothing to one’s social capital. When one takes on a positively coded risk, on the other hand, little attention is paid to the vulnerability involved; the focus is on the challenge and its overcoming. Any vulnerability is transient, localized, and eliminated as soon as one triumphs through the risky endeavour. The connotations of passivity and incapacity that define being at risk, however, do not prevent individuals from being held privately responsible for the riskiness of their position. From the neoliberal perspective, being at risk may mean that one is passive and lacking in necessary capacities, but one can consequently be blamed for the failure to develop those capacities and to make oneself an active agent. Thus, when vulnerability is understood through the lens of risk, responsibility for it is often privatized. When we interpret vulnerability in terms of risk, it is easier to hold individuals (rather than communities) responsible. One example of this phenomenon is the perception of health insurance in the US. By understanding the issue of healthcare and insurance in either/or terms – of choosing either to take risks by not obtaining insurance or to adopt a precautionary attitude by obtaining insurance – health and responsibility for it is rendered a wholly individual matter. The shared condition that makes health insurance necessary, corporeal vulnerability, is obscured. Likewise, the simple fact that this condition is one all human beings have in common, that all have to contend with physical illness, aging, and accidents,

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remains rather hidden. Thus, using risk as a conceptual surrogate for vulnerability can facilitate an unequal distribution of responsibility, one that favours those who are already culturally positioned as active risk-takers rather than passively at risk. As articulated in the previous section, the conceptions of responsibility at the heart of entrepreneurial subjectivity are framed in terms of the politico-economic suppositions of neoliberalism. Central to the unethical character of neoliberal practices and conceptions of responsibility is the way they not only are premised on inequity but function to entrench it even more deeply. A core part of this ideology, which Foucault highlights, is a cultural overvaluation of economic ends and the actors who are seen as integral to achieving those ends. Another related significant dimension of neoliberalism is the way it allows for and, indeed, is premised upon, selective social distribution of risk. As the Foucaultian perspective indicates, neoliberalism entails increased management of the social sphere in the service of the maximum freedom of the economic sphere. The consequence of establishing economic ends as the most socially valuable ends is the differential and inequitable privatization of risk: the social sector activities and services needed by families and workers such as education, recreation, and child-care are increasingly privatized while the risks attendant on the economic sector, which is paradigmatically “private”, are publicly distributed through “corporate welfare” of various sorts (see Lazzarato, 2009, p. 124). As Martha McCluskey points out, the subsidizing of corporate needs and mitigation of corporate risk is framed as an issue of efficiency and thus contrasted with the subsidizing of caretaking through social welfare policies, which is framed as a form of redistribution. This framing, McCluskey argues, construes corporate subsidies as neutral, objective, and in the public interest (because aimed at efficiency) whereas subsidies for caretakers are construed as partial, subjective, and only benefiting particular interests (because aimed at redistribution) (2002a, p. 118). This way of framing the issue is far from neutral, of course. It rests instead on a “double standard for moral hazard” according to which social welfare leads to the moral hazard of increased reliance on public assistance but the comparable reliance of corporations on subsidies is not even conceived as a moral hazard but rather an inevitability and “a price worth paying” (2002a, p. 126). What is at stake in the differential privatization of risk is not just the needs of the social sector versus those of the economic sector, but also estimations of the worth of those who benefit from the collective distribution of risk: when one’s worth is equated with one’s ability to bring economic gain, privileged entrepreneurial subjects win out. Risks are privatized for those who are not regarded as economically valuable such as labourers and caretakers, rendering their position more precarious, whereas they are publicly distributed for those who are regarded as economically valuable such as CEOs and corporations who ostensibly create jobs, those who produce capital. This framing of human worth and moral status by an economized grid of intelligibility shapes or, rather, misshapes our assessment of risk and risk-taking: [B]order-crossing undocumented immigrants who defy heavily armed government authority in pursuit of personal economic gain could, in theory,

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personify the values of neoliberal risk taking. However, in mainstream U.S. politics and culture, even if immigrants’ pursuit of gain in the global market requires entrepreneurial, anti-bureaucratic nerviness, their behavior is typically understood instead as base recklessness; not as self-reliant glory seeking but as parasitic evasion of responsibility. (McCluskey, 2002b, pp. 164–165) As McCluskey illuminates, the reductive economic lens through which we understand risk, social value, and the public good enables us to ignore the falsity of common apprehensions of character and value. Neoliberal ideology ought to mandate that we esteem border-crossing immigrants for their initiative and willingness to embrace risk. From a reductive economic perspective as well as a xenophobic one, though, the undocumented immigrant appears to contribute little of value to the public good and is even depicted as draining resources. In contrast, corporate executives and corporations in general are thought to provide jobs, industry, and economic growth. Thus, there is a tendency to view their activities in a positive light, as active, self-sufficient forms of risk-taking even though “multi-national corporations that represent the triumph of free-market risk taking inherently depend on socialized risk spreading for their success” (McCluskey, 2002b, p. 165). These are the estimations of worth that undergird entrepreneurial subjectivity and account for its appeal. Why is this perception of risk and social benefit so dominant, especially given that those who reap its rewards are few and far between? In their analysis of the ideological features of late twentieth century capitalism, The New Spirit of Capitalism, Luc Boltanski and Eve Chiapello (2007) contend that the economic and social arrangements of capitalism are continually changing themselves in response to critique and it is through this process that normative justifications for capitalism are offered. Yet, capitalist economic and social arrangements must offer more than simply theoretical justifications such as those conventionally associated with liberalism and neoliberalism (e.g., the efficiency of markets and so on). They must motivate the participation of those who do not clearly benefit from these arrangements and typically do so in terms of practical, immediate concerns of autonomy and creativity, security, and justice. If capitalism provides a space for self-determination and novel interesting work, gives grounds for the expectation that one’s children will achieve as secure an existence as oneself, and justifies participation as promoting the common good, then it will achieve buy-in. On their account, then, the ideology that composes the “new spirit” of capitalism is not mere false consciousness, a mystification of reality, but rather constitutes a “shared set of beliefs, inscribed in institutions, bound up with actions, and hence anchored in reality”. Neoliberal ideology addresses itself to the aforementioned concerns about autonomy, security, and justice. If capitalism has been criticized for stifling creativity and limiting the autonomy of the majority of workers, this critique has been incorporated into the new neoliberal ideology (p. 326). The main discursive features of entrepreneurial subjectivity – self-sufficiency, independence, personal

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responsibility, self-realization and development, and so on – appeal to the desire for autonomy and make working on oneself to develop one’s “capital-abilities” a basis for more enthusiastic involvement in capitalist economic arrangements. One implication of this (il)logic of privatization is that it insulates those who are privileged from the effects of vulnerability by spreading the risk of their endeavours and so reinforces two misperceptions about risk and vulnerability: first, that vulnerabilities and undesirable risks are individual matters, and, consequently, second, that risk can be avoided with just a modicum of precaution because it is a matter of what one chooses to assume and not equally a matter of that to which one is subject. So, engagement with risk is perceived simplistically to be either wholly active (one takes it, one avoids it) or wholly passive (one fails to exercise precaution or take advantage of a risk-taking opportunity) rather than an engagement undertaken in the context of complex socio-politico and economic structures. This understanding aligns more readily with dichotomous preexisting frameworks for moral and social evaluation, wherein passivity is “bad” and activity is “good”, and accordingly presents clear imperatives about what one should do in order to be successful, respected, and so on. While the selective distribution of risk inherent in privatization shields corporate risk-takers from risk, it also exposes most others to increased risk and vulnerability. Maurizio Lazzarato proffers the example of “workfare” or “welfareto-work” programmes as an instance of increased risk: Contemporary policies regarding employment, for example ‘workfare’, which forces those in receipt of assistance to work, are policies that introduce degrees of insecurity, instability, uncertainty, economic and existential precarity into the lives of individuals. They make insecure both individual lives and their relation to the institutions that used to protect them. It is not the same insecurity for everyone whatever the level and conditions of employment, yet a differential of fear runs along the whole continuum. (2009, pp. 119–120) The production of increased insecurity for welfare recipients exacerbates the precarity of their position. Here we see an extension of Foucault’s notion of discipline as maximizing submission and obedience while developing capacities and efficiency. If welfare recipients are inadequately entrepreneurial subjects, “workfare” compels them to shift to an entrepreneurial mode of self-relation by making benefits contingent upon work or self-“improvement” of some sort. Thus, insecurity precipitates concession to self-management in line with neoliberal norms; it produces docile but purportedly more capable bodies. The insecurity that stems from the risk of losing one’s benefits is one particular kind of insecurity on the continuum of fear to which Lazzarato refers. More broadly, the omnipresent danger in this economized frame of intelligibility is economic slowdown, loss of jobs, and diminishment of profits. Additionally, as Boltanski and Chiapello demonstrate, in contemporary capitalist societies, autonomy for white-collar workers in certain

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spheres of the world of work is purchased at the price of security (2007, p. 190). In efforts to address the critique that the standardization that characterizes capitalist work is a source of disenchantment and alienation, some employers have sought to give their employees greater autonomy and have focused on inspiring their creativity, enabling “self-knowledge and personal fulfillment” (p. 90). Yet, this focus has been paired with an increase in the casualization of work and a valorization of qualities such as flexibility, mobility, adaptability, and availability that in actuality bespeak heightened insecurity. Therefore, another point of insecurity is the risk of being unemployable and the sense of inferiority such risk involves. To avoid such risk one must be employable and “[t]o be employable one must conduct oneself and have a lifestyle which is in harmony with the market” (Lazzarato, 2009, p. 127). Thus, security is found instead in “employability”, “the personal capital that everyone must manage, comprising the total set of skills people can mobilize” (Boltanski and Chiapello, 2007, p. 93), which thus generates demands from the world of work that “penetrate more deeply into people’s inner selves – people are expected to ‘give’ themselves to their work” (p. 98). Yet, given that the demands of the market are unpredictable and continually changing, being an aspiring employable entrepreneurial subject entails constant awareness that one is never good enough and must always be increasing, maximizing, and developing one’s capacities. Even for the most privileged and aspirational of entrepreneurial subjects, the danger that accompanies neoliberalism inculcates a sense of insecurity. One’s sense of one’s own vulnerability – experienced negatively as being at risk and susceptible to harm – is thus heightened. What one does to address this sense of precarity, however, is thoroughly privatized and depoliticized: one simply endeavours to make oneself more employable (see Boltanski and Chiapello, 2007, pp. 190–191). The result is that the simultaneous individualization and intensification of vulnerability prevents recognition of shared vulnerability.3 Insecurity prompts a kind of solipsism wherein others are primarily competition and not equally vulnerable compatriots. Thus, the kind of preoccupation with risk and insecurity that characterizes entrepreneurial subjectivity buttresses the reductively negative view of vulnerability. This relation to risk, in which one takes it as an individual obstacle with which to cope or overcome, simultaneously relies on and reinforces the notion that vulnerability is to be avoided at all costs and personal invulnerability is the utmost achievement. For the entrepreneurial subject, vulnerability is coded as weakness and hence as something to avoid because it undermines rather than enhances human capital. Vulnerability is not a risk that “pays off”. Within our economized grid of intelligibility, it is merely a cost and rarely a benefit. By definition, entrepreneurial subjectivity is vulnerability-averse; an enterprise protects itself from conditions of vulnerability rather than seeking to avow, experience, or respond sensitively to them. The modus operandi of entrepreneurial subjectivity is control, 3 Specifically, the vulnerability of the marginalized and “unemployable” is completely disregarded by this way of addressing precarity and insecurity (see Boltanski and Chiapello, 2007, pp. 232–235).

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both over the self and over the effects others may have on the self. Indeed, control of others can be a vehicle for achieving self-control; there can be no upheavals within the self if others cannot affect it in unpredictable ways or if those effects are denied. Entrepreneurial subjectivity thus masks the unavoidable vulnerability that characterizes life, covering it over with an illusory ideal of self-made individuality. By entrenching this solely negative view of vulnerability and resultant aversion, entrepreneurial subjectivity facilitates repudiation of responsibility for vulnerability both by fostering disavowal of vulnerability instead of reckoning with it as a fundamental, unavoidable condition and by devaluing those who are vulnerable to harm as deficient and weak. Consequently, vulnerability can be neither an ethical resource, an experience with which we reckon authentically, nor a condition that is the basis for endorsing truly adequate and compassionate public support for one another.

Conclusion This analysis of entrepreneurial subjectivity and the privatization of risk aimed to clarify and elaborate the practical challenges to an ethics of vulnerability, as well as to argue against these specific dimensions of neoliberalism on the basis of their unethical implications. As I have sought to demonstrate, the equation of vulnerability with susceptibility to harm is a necessary move in the privatization of responsibility and is, moreover, enshrined in entrepreneurial subjectivity. It is, de facto, a privatizing view of vulnerability because it breeds worry about dangers and risks, construed as individual, leading to a narrow focus on one’s own precautionary activities and on cultivating a successful, healthy self. Given its supporting role in the privatization of risk and entrepreneurial modes of subjectivity, this reductively negative view of vulnerability is also the basis for repudiation of responsibility for vulnerable others. Overall, therefore, entrepreneurial subjectivity, and the privatization of risk and responsibility that accompany it, presents an ethic of vulnerability with four distinct but interrelated challenges. First it constitutes a form of subjectivity in which people have difficulty understanding themselves as vulnerable, rationalizing and justifying patterns of thought and action that seek invulnerability. Second, privatization prevents or hinders any understanding of ourselves as participating in the social structures that create vulnerabilities; privatizing choices and activities makes them seem the pure results of one’s own effort and thus enables one to ignore how individual actions aggregate and therefore contribute to social problems. Third, as a consequence, the prevalence of entrepreneurial attitudes produces an unwillingness to share responsibility for vulnerable others who may be disadvantaged by those social structures or susceptible in light of the corporeal vulnerability we all share. Lastly, there is a general inability to conceive of ourselves as sharing in a common vulnerability. In relation to these obstacles, an ethic of vulnerability must do more than merely stipulate responsibilities and must, further, seek to lay the ground for assuming those responsibilities. That is, it must be a critical ethic that

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first exposes the functioning of the norms surrounding vulnerability, especially those that favour invulnerability, control, and privatization, and then challenges them. A key part of challenging entrepreneurial subjectivity is accounting for its appeal, as I have sought to do here; in a socio-politico-economic context in which dangers and risks are perceived as omnipresent, an entrepreneurial form of subjectivity is compelling because it promises control of ever-proliferating uncertainties by way of self-management and self-enhancement. It does so, however, at a price: increased capacity is accompanied by increased submission, for instance, to the norms that dictate who is “employable”, and depends upon an erroneous and inequitable form of individualism and privatization. We can only break with dominant ways of living and valuing if we understand how they maintain their dominance and venture to offer alternatives that fulfill similar needs and desires in more ethically sound ways. Thus, an ethic of vulnerability is one of targeted resistance, countering entrepreneurial forms of subjectivity as a way to resist the increasing privatization of vulnerability and responsibility, and revealing the reality of shared vulnerability that is belied by the rhetoric of privatization.

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PRIVATIZING HOODIA Patent ownership, benefit-sharing, and indigenous knowledge in Southern Africa Laura A. Foster1

Introduction In March of 2003, San peoples sat beside South African scientists and government officials to sign a contractual benefit-sharing agreement. At the centre of the agreement was Hoodia gordonii, a Kalahari Desert succulent plant known by San as !Xhoba, used for generations to suppress hunger, increase energy, quench thirst, treat wounds, and ease breast feeding. Through the use of biochemical assays and clinical animal trials, scientists with the South African Council for Scientific Research (CSIR) identified Hoodia-based extract processes and chemical compositions for suppressing appetite. They provisionally patented their invention in 1997 and entered into a partnership with Pfizer, and eventually Unilever, to develop Hoodia gordonii into a blockbuster anti-obesity product for humans. Hoodia patents, however, sparked controversy. Indigenous San peoples, with a coalition of lawyers and environmental activists, accused CSIR of stealing San traditional knowledge without prior informed consent and began demanding compensation.2 After two years of opposition and negotiation, the parties gathered to sign the San–CSIR Hoodia benefit-sharing contract, which granted San peoples monetary and non-monetary rewards from potential Hoodia sales and positioned San as “stakeholders” in the privatization and commercialization of Hoodia. 1 Laura Foster, JD, PhD, is Assistant Professor of Gender Studies at Indiana University, where she is also Affiliate Faculty in the IU Maurer School of Law and African Studies Program. She is also a Senior Research Associate in the Intellectual Property Unit at University of Cape Town Faculty of Law. 2 I generally use the terms San and Indigenous San peoples to refer to a collective group of peoples across Southern Africa who self-identify as indigenous peoples and who have historical connections to the land prior to invasion and colonial settler expansion. San historically refer to the plant as !Xhoba, but in their political organizing also use its botanical name Hoodia gordonii so I refer to the plant as Hoodia as well. I use these terms cautiously, though, with recognition of the limits of language itself in discussing relations of power and inequality.

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In 2008, however, expectations regarding San–CSIR benefit-sharing began to change. Unilever dropped plans to develop Hoodia products in late 2008 and hopes for a financial windfall to San peoples plummeted. Unilever’s termination of the programme raised anxieties among San that the benefit-sharing agreement had officially failed. At the same time, South Africa had just passed legislation governing bio-prospecting and benefit-sharing under the Regulations on Bioprospecting, Access, and Benefit-sharing (“2008 BABS Regulations”). Aimed at regulating the privatization of knowledge in ways that protected indigenous peoples and resources, the new law now required entities engaged in bio-prospecting to enter into contractual relations with indigenous peoples before patenting and commercializing indigenous biological resources. The privatization of Hoodia knowledge provides insights into how these new forms of governance are similar yet different from colonial histories as they regulate through modes of both inclusion and exclusion. Colonial practices of bioprospecting operated under what Foucault (2003 [1994]) refers to as “states of dominations” (pp. 291–292). Power was located in fixed sites of control to exploit subjects and exclude them from power (Foucault, 2003 [1994]). As colonial voyages sailed to new lands in the Americas and Africa, colonialists settled in these lands, encountering and exploiting indigenous peoples, bringing them under colonial rule (Schiebinger, 2004). They sought to dominate indigenous peoples through the taking of land and acts of violence in order to secure colonial power. More contemporary forms of governing, however, as Elizabeth Povinelli (2002) notes, bolster nation-state interest not through domination, but by enrolling indigenous peoples within the very processes of power. For instance, Jennifer Reardon (2012) examines how new techniques of genomic research secure hierarchies of power by both including and excluding indigenous peoples. Extending Foucault’s notions of governmentality, Nickolas Rose similarly argues that, rather than powers of domination, the relationship of science and society are now conditioned through “powers of freedom” (1999, p. 1). Rose argues that new styles of governing have emerged since the late twentieth century whereby the state no longer governs social problems, but rather grants individuals new freedoms enabling them to address problems on their own. Autonomous liberal subjects are now conditioned to be responsible subjects in control and accountable for their wellbeing. In other words, the state has increasingly become what Martha Fineman refers to as a “restrained state” that is less responsive to social problems and inequalities (2008, p. 239). Central to this shift are increased processes of privatization whereby the state funnels social obligations to private entities with the promise that certain goods will be returned to the public. Legal conditions are designed to give individuals freedom, choice, and autonomy to ensure their own welfare. Structures of governing have thus ceded to private ordering and market logics that serve the interests of the private, rather than public sphere. A factor within these shifts has been an increased emphasis on the privatization of knowledge and resources through patent ownership. Government policies increasingly emphasize the importance of intellectual property rights. It is assumed

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that patent ownership is a key driver of innovation toward developing medicines and improving healthcare. For instance, South Africa passed the Intellectual Property Rationalisation Act (1996) extending intellectual property rights throughout the country. That same year, South Africa’s Department of Arts, Culture and Technology stressed that aligning patent ownership with international norms was crucial “to best promote innovation” (South African Department of Arts, Culture, Science and Technology, 1996, p. § 6). De Beer, Armstrong, Oguamanam, and Schonwetter (2014) note how privatization of knowledge and resources, as mediated by patent ownership, has increasingly become tied to the development goals of South Africa. In this chapter, I discuss the privatization of knowledge and resources in South Africa as related to indigenous San peoples’ struggles over the patenting of Hoodia and subsequent benefit-sharing. I also consider how South Africa has begun regulating such forms of privatization in ways that offer limited protections to indigenous peoples. Elsewhere I have addressed Hoodia struggles through notions of biopolitics (Foster, 2012) and a methodological emphasis on “critical cultural translation” (Foster, 2014), while arguing for attention to the materialities of patent law (Foster, 2016) and calling for a feminist decolonial approach to patent ownership (Foster, forthcoming). Expanding upon this work, this chapter interrogates patent law through notions of privatization and vulnerability by addressing how patent ownership and contractual benefit-sharing become sites for understanding how new forms of governing secure interests of nation and capital not through the domination of vulnerable subjects, but rather through their simultaneous inclusion and exclusion. For instance, in order to secure rights, San peoples make strategic decisions over narrow legal registers of contractual benefit-sharing that empower San as modern political subjects, but also disempower them as fixed, nonmodern peoples. Through similar mechanisms, nation-state governing of contractual benefit-sharing aims to ensure the protection and recognition of indigenous peoples, but continues to primarily serve nation-state and capital interests in maintaining access to indigenous peoples’ knowledge and resources. Examining the privatizing of Hoodia through patent ownership rights, contractual benefit-sharing, and new government regulations generates arguments for a more responsive state divorced from the logics of privatization in order to more fully meet the needs of vulnerable subjects.

South African and San histories The privatization of Hoodia-based chemical compositions through patent ownership is embedded within colonial histories of the taking of San lands, resources, and cultures. Similarly entangled within such histories, San struggles over benefitsharing seek to challenge the taking of Hoodia knowledge as a symbolic extension of past colonial and apartheid violence against San peoples. Heterogeneous groups of indigenous peoples were present in South Africa prior to its colonization by Dutch and British settlors in the seventeenth and eighteenth centuries. Archeological evidence suggests San peoples have been living in the region for

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over 20,000 years (le Roux and White, 2004). They lived in more arid conditions of Southern Africa in small mobile groups employing a wide range of expert skills through their hunter–gatherer lifestyle. They hunted game, gathered edible plants, and developed expert knowledge of local plants and animals as they adapted to locally abundant or scarce conditions. Artistic expression was also highly valued, as San engaged in complex forms of rock art, music, and dance (Parkington, Morris, and Rusch, 2008). San groups shared similar ways of life and a set of click sounds within their different languages, but were also quite heterogeneous. Adapting to distinct local conditions, San populations such as Ju|’hoansi, Khwe, G|wi, Naro, !Xun, or ||Gana differed from each other (le Roux and White, 2004). San practices, cultures, and knowledge also shifted over time through relations with other indigenous Khoi pastoralists and eventually Black Bantu-speaking peoples. Khoi shared similar physical features to San, but were less mobile and more engaged in agrarian practices and the herding of sheep and cattle. They distinguished themselves from San, referring to them as “Sonqua” or “Soaqua”, meaning “those who forage” (le Roux and White, 2004, p. 4). Khoi shared similar forms of language and custom amongst themselves, but differences were also found across various Khoi groups of Nama, Griqua, Koranna, and Cape Khoi (Le Fleur and Jansen, 2013). Relations between the two groups were complex and changing as mutual relations of trade and exchange gave way to violent clashes between them. The emergence of Black Bantu-speaking groups between fourth century A.D. and the late eighteenth century also changed Khoi and San relations (Thompson, 2014). As their diverse cultures and farming economies began to dominate southeastern Africa, Black Bantu-speaking groups began threatening San and Khoi ways of life. In response, San struggled for survival by killing and taking livestock, but violent clashes with Black Bantu-speaking peoples resulted in the deaths of many San and Khoi. With the emergence of the Dutch Cape Colony in 1652 relations and tensions between these groups again shifted. The Dutch East India Company brought in slave labourers from southeast Asia to help build infrastructure for the growing colony (Beinart, 2001). Dutch settlers also increasingly took possession of land and began growing crops and herding cattle. Tensions between Dutch settlers, San, and Khoi subsequently rose. Settlers referred to San in a derogatory manner as “Bushmen” or “Bosjesmen”, meaning low-status “people from the bush” who engaged in hunting and gathering (le Roux and White, 2004, p. 4). They distinguished San Bushmen from Khoi, who they referred to as “Hottentots”. Violence eventually ensued between the groups as Dutch colonists took Khoi cattle, exploited divisions among indigenous groups, and used sophisticated weaponry against them. Given this violence against indigenous societies, Thompson (2014) notes that by the early 1700s many San and Khoi communities were decimated and pulled apart, and many were forced to work for Dutch landowners under harsh conditions alongside slaves. Pastoral farming and the white, Dutch settler population grew throughout the eighteenth century until a new wave of white colonization came about. British

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colonial settlers arrived in the Cape Colony in 1795 and took over by 1806. They established an even stronger presence in 1820 with the arrival of 4,000 additional settlers (Thompson, 2014, pp. 52–55). British settlers occupied lands previously inhabited by Black Bantu-speaking peoples and asserted firm distinctions between themselves and earlier Dutch settlers who they derogatorily called “Boers”, meaning farmers. Dutch speakers, however, referred to themselves as “Afrikaner” and engaged in not only farming, but hunting and pastoralism as well (Beinart, 2001). Despite British proclamations in 1828 granting San, Khoi, and former slaves equality before the law, Thompson (2014) notes that conditions of poverty and landlessness forced many to remain working on white farms. Emancipation and legal recognition, however, established the foundations for a new class of peoples as colonial officials began referring to Khoi, San, and former slaves as “Cape Coloured People” to distinguish them from white ruling classes and Black Bantu-speaking Africans. Such characterizations would serve as foundations for racial classifications under South African apartheid rule in the latter half of the twentieth century. Privatization and control of land and resources was enacted through very different registers of power during the colonial era through the domination of indigenous San peoples. Dutch and English settlers secured colonial, white rule through the taking of lands and resources. They also excluded San peoples from social institutions and committed violence against them, contributing to San peoples’ loss of land, livelihood, and ways of life. Privatization in the colonial era involved more discrete practices of domination as colonial settlers took ownership control over lands and resources that were historically communally shared. Such histories become important for understanding struggles over the privatization of Hoodia plant properties that seek to include San peoples as “stakeholders” within Hoodia commercialization. Contemporary processes of privatization may differ from histories of colonial domination, but they remain embedded within such histories and cannot be understood as divorced from them.

Privatization of Hoodia through patent ownership For South Africa and its CSIR, Hoodia was thought to be the next big blockbuster drug and funnel millions in revenue to the economy. Hoodia had the potential to treat obesity and to secure South African interests within the profitable ethnopharmaceutical weight-loss industry. South African scientists, rather than multinational corporations in the global north, were the ones who held patents on Hoodia, so they maintained initial control over Hoodia commercialization. The patenting of Hoodia properties thus differed from accounts of bio-piracy whereby companies in the global north were privatizing the resources of countries in the global south. In this case, it was South African scientists patenting plant properties previously known by indigenous peoples. The patenting Hoodia properties empowered South African scientists as producers of science in promising and limited ways that both included and excluded San peoples.

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An understanding of patent law is central to developing insights into these practices of privatization. Patent law is a set of legal standards regulated by administrative government offices such as the United States Patent and Trademark Office and the South African Companies and Intellectual Property Commission. In exchange for public disclosure of an invention, the government agrees to grant the inventor temporary monopoly control over the materials and processes related to the invention (South African Patent Act 57, 1978; United States Patent Act, 2011). Rights are granted so long as the inventor can meet certain required elements of patentability. For instance, under South African and US law, applicants must show that their invention is patentable subject matter and also novel, nonobvious, and useful or inventive. Subject matter considered patentable only applies to manmade cultural inventions and not things found in nature.3 In the case of Hoodia, patent ownership applies not to the plant itself. Rather, it attaches to the chemical composition isolated and purified by scientists, which could suppress appetite. The Hoodia patent specification document outlines how Hoodia becomes patented invention (van Heerden et al., 1998). Collected plant material is treated with a solvent, its valuable properties extracted, and then further purified through interactions with water and chemical solvents. Scientific technologies of Waring blenders, rotary evaporators, column chromatography, and bioassays procedures help to transform Hoodia gordonii into patentable subject matter. Nature becomes invention when homogenized, separated, and mixed with chemical solvents to reveal its precise chemical properties. Scientific practices are then structured through the legal language of patent law to delineate Hoodia found in nature from Hoodia in the lab because it is the latter that matters most as potential global capital. Privatization of Hoodia properties positioned South African scientists as producers of science. Colonial histories of science historically constructed South Africa as a “living laboratory” or source of raw material, rather than site of knowledge making (Tilley, 2011). But CSIR scientists held Hoodia patents, which redirected the flows of scientific knowledge production from global south to global north, thus challenging these colonial pasts. Patenting Hoodia became a symbol of a changing postapartheid South Africa and the opening up of scientific fields to those formerly excluded as knowledge producers. For instance, Vinesh Maharaj, one of the lead scientists who is credited with much of what is known about Hoodia, identifies as coloured. Under apartheid, those classified as coloured received more educational benefits than those designated as black, but they experienced discrimination nonetheless and had fewer educational opportunities than whites (Osseo-Asare, 2014). In patenting Hoodia plant properties, Maharaj challenged these apartheid pasts in becoming a producer of Hoodia science. As producers of Hoodia science and owners of Hoodia patents, CSIR maintained initial control over Hoodia commercialization. Patents facilitated South 3 Under US law, to obtain patent rights, an invention must be “markedly different” from its natural state (Association for Molecular Pathology, et. al. v Myriad Genetics, Inc., et. al. 569 S.Ct. 12–398 (2013)). South African law implies a similar doctrine, although with less specificity due to less guidance from case law.

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African desires for what postcolonial science studies scholar Ruha Benjamin (2009) refers to as a “lab of their own” (p. 341). They obtained patent rights then quickly sublicensed their invention to UK-based biotechnology firm Phytopharm for assistance in developing Hoodia-based products. Phytopharm’s chief executive officer, Richard Dixey, had a strong background in traditional medicines, which informed his leadership of the company whose motto was “inspired by nature”. To commercialize Hoodia products on a global scale, however, CSIR and Phytopharm would need to find an even larger commercial partner with more resources, which was initially found with Pfizer. The multi-national pharmaceutical corporation headquartered in New York quickly came on board in 1998 hoping to develop Hoodia into an ethno-pharmaceutical drug – a pill to cure obesity. By July of 2003, however, Pfizer merged with Pharmacia, resulting in the closure of its Natureceuticals unit and the decision to end Hoodia development as an anti-obesity drug (Wynberg, Schroeder, and Chennells, 2009, p. 96). The withdrawal of Pfizer was four months after CSIR agreed to share benefits with San peoples. It would take CSIR and Phytopharm a year to find another development partner, this time with Unilever, a multi-national consumer good company with headquarters in both England and the Netherlands. Unilever sought to develop Hoodia properties into a functional food product to treat obesity, much like their already popular Slim-Fast® line of products. Privatization of Hoodia through patent ownership and contractual sublicensing governed relationships between CSIR and its development partners. These practices of privatization acted as legal adhesive, bringing scientists from the global south into relationships with researchers in the global north. Nation-states such as South Africa in the global south are historically vulnerable to the patenting and exploitation of their resources from entities in the global north. When South African researchers patented their own nation-state resources they challenged hierarchies of global north/south and colonial histories of exploitation. At the same time, they also re-inscribed colonial and apartheid powers by patenting Hoodia plant properties historically known and used by indigenous peoples. Compelled to operate within normative mechanisms of drug discovery, CSIR scientists positioned themselves as producers of science through the privatization of Hoodia knowledge, which San peoples and their representatives vigorously contested. CSIR scientists learned about the Hoodia plant from colonial botanical guides detailing its uses by San peoples, but CSIR scientists initially failed to credit San peoples for contributing to their “scientific” knowledge. CSIR scientists did not obtain prior informed consent for the use of indigenous San knowledge nor did they enter into benefit-sharing prior to patenting Hoodia properties. Hoodia patents did not legally prevent San from using the plant because the patent applies to the chemical compositions within Hoodia and the scientific processes of extraction to separate the compounds from the plant, not the plant itself. Yet, patent ownership also has a socio-cultural force that can deter the use and circulation of patented resources. The scope of Hoodia patents created uncertainty for San

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peoples who expressed desires to grow and sell Hoodia as a sustainable fair trade product to reduce appetite. Patent ownership can commit violence against indigenous peoples however in different ways, especially at an epistemological level by valuing certain ways of knowing over others, for instance, by designating knowledge produced by CSIR scientists over that of San peoples. Patent ownership is contingent upon maintaining binaries of nature and culture, thus items discovered in nature are not patentable, only man-made cultural inventions. The Hoodia plant is found in nature, but becomes cultural invention when scientists isolate its chemical compositions and their market potential. CSIR and Phytopharm scientists cast Hoodia as a “natural product” that would treat weight loss, but when it came to securing patents, they stressed their triumph in making Hoodia properties distinctly different from nature by isolating particular chemical compositions. Patent law thus rests on a cornerstone of nature/culture binaries in order to distinguish CSIR Hoodia knowledge from San peoples’ ways of knowing. In doing so, legal recognition of CSIR patent rights values and positions CSIR ways of knowing as more modern, while devaluing San peoples’ knowledge as less modern, traditional, and mere raw material. In reinforcing hierarchies of knowledge production, patent ownership maintains a set of nature/culture binaries that are historically gendered and racialized. The subordination of women, Sherry Ortner (1998) argues, is partially understood by socio-cultural associations of women with nature versus men with culture (p. 583). Women have and continue to be characterized as closer to nature due to their reproductive capacities and association with caretaking. This is in contrast to men, whose intellectual work is aligned with conquering nature and with producing creative, cultural works. Being considered closer to nature, women are subordinated to a lower status in the private, domestic sphere, while men are constructed as natural participants in the public sphere of private, economic enterprise. Such binaries, however, are also racialized, meaning not all women or men are treated alike. Historical constructions of men and women of colour as closer to nature have been used to deny them full humanity. For instance, Carl Linné (1735), an eighteenth century Swedish botanist and zoologist, classified San and Khoi as less than human and closer to animals. Patent ownership thus relies upon a set of binary assumptions of nature/culture that are not ahistorical or value neutral. Privatization of Hoodia may engender CSIR scientists as producers of science, but it also secures hierarchies of power by valuing CSIR ways of knowledge over that of San peoples and by reinforcing gendered and racialized binaries of nature/culture.

Benefit-sharing and San as modern/nonmodern subjects Contractual benefit-sharing becomes a site where privatization of knowledge begets more privatization. San peoples make a strategic decision in demanding benefit-sharing as a way to contest the patenting of Hoodia properties through recognition of San ways of knowing. In doing so, San are enrolled as stakeholders

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within the commercialization and privatization of Hoodia, so the more Hoodia fulfills its promise as weight-loss product the more San peoples stand to benefit. In other words, CSIR Hoodia patents and plans for commercialization remain intact. Attention to these processes requires an understanding of how contractual benefitsharing both empowers and disempowers San peoples through privatization. San resistance against the patenting of Hoodia was enacted through a collective group of San peoples, lawyers, and environmental activists. A mobilizing network was already in place, emanating from earlier struggles to reclaim land taken from San through systems of colonialism and apartheid. Daniel Huizenga (2014) and Steven Robins (2001) have each written about San political mobilization around land claims, noting the tensions and heterogeneity in which San peoples navigate. Political action against the patenting of Hoodia took on similar, yet different forms. A critical moment in launching San political organizing against Hoodia patents emerged when Biowatch and Action Aid brought the story to the attention of a newspaper reporter for The Observer in London named Antony Barnett (2001) who reported that the Hoodia cactus had kept San “bushmen” alive, but the “Western drug industry” had stolen their secret to “make us thin”. While Phytopharm and Pfizer officials were busy seducing the media and their shareholders about the wonders of Hoodia as a “dieter’s dream”, they had failed to obtain prior informed consent from San to use their knowledge. In fact, Phytopharm chief executive, Richard Dixey, was quoted two months earlier, saying giving back was difficult “especially as the people who discovered the plant have disappeared” (Firn, 2001, p. 2). San peoples were not extinct; on the contrary, they were actively mobilizing to demand contractual benefit-sharing from CSIR patent owners. Members of the South African San Council, along with their lawyer, Roger Chennells, began pressuring CSIR to enter into benefit-sharing negotiations. The government research institution had historically been in the service of the former apartheid-era government, engaging in research projects supportive of the government’s interests in racial segregation. The controversy over Hoodia forced CSIR to confront its own racist past and to determine how best to meet the demands of a new South African polity transitioning from apartheid. Marthinus Horak, another scientist with the Bio/Chemtek Unit, suggested that their Unit wanted to consider benefit-sharing with San peoples, but only after the drug had finally been tested and approved (Barnett, 2001). But with mounting pressure from San and global attention on the issue, CSIR’s Bio/Chemtek Unit entered into negotiations for a contractual agreement with San peoples. In June of 2001, negotiations between the two groups began with the Working Group of Indigenous Minorities in Southern Africa (WIMSA), a regional San-led governing organization, authorizing the South African San Council to negotiate on behalf of San peoples. Members of the South African San Council articulate different degrees and challenges of San participation within the negotiations. According to Wynberg et al. (2009), some San recall a strong sense of San autonomy during meetings and talks with CSIR officials, whereas others note a reliance on

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their lawyer, Roger Chennells, to assist with negotiations. After two years of talks between the two parties, they signed a memorandum of understanding in March of 2002 and a final agreement was signed in March of 2003. San–CSIR contractual relations empowered San peoples across Southern Africa, promising them much needed benefits. CSIR agreed to give San 6% of CSIR royalties and 8% of milestone payments (South African San Council and CSIR, 2003). CSIR also promised to assist San with obtaining educational scholarships and the two parties agreed to partner on future bio-prospecting collaborations committed to conserving biodiversity. The agreement was also symbolically important in recognizing indigenous San knowledge and heritage. The agreement valued San Hoodia knowledge not only for contributing to CSIR ways of knowing, but recognized it as an important form of Hoodia knowledge. Contractual benefitsharing also challenged the patenting of Hoodia by simultaneously recognizing both San and CSIR forms of knowledge production. Although Hoodia patent ownership valued CSIR over San ways of knowing, contractual benefit-sharing sought to re-order this epistemological privileging by contesting these hierarchies of knowledge production. Not only did San-CSIR contractual benefit-sharing promise tangible and intangible benefits, it also positioned San peoples as modern subjects. San political mobilization and negotiations signaled San as modern, political agents engaged in complex decision-making and practices of self-determination. San peoples made it clear they were ready and able to make demands for benefit-sharing against CSIR and any others, thus benefit-sharing became a pathway for enabling future San political action. The South African San Council, for instance, recently signed an additional benefit-sharing agreement involving Sceletium tortuosum (Chennells, 2013). Even though contractual benefit-sharing empowered San peoples as modern subjects, it also positioned them as fixed and nonmodern (Comaroff and Comaroff, 2009). Styles of governing in South Africa have shifted from colonial and apartheid domination of San peoples to a transformation politics emphasizing accountability for these violent pasts. Contractual benefit-sharing has been cast as a means towards recognition and protection for indigenous peoples as well as redress for past domination. Elizabeth Povinelli (2002) notes how indigenous peoples are gaining new forms of legal rights, but she argues that such protections remain within the narrow registers of the law, forcing indigenous peoples to assert themselves as simultaneously modern and traditional (pp. 48–57). In the case of Hoodia, San make strategic decisions to position themselves through logics of difference as rooted in the past to bolster demands for benefit-sharing within a new South African politic that emphasizes multi-cultural diversity. For instance, Petrus Vaalbooi, Chairman of the South African San Council, wore traditional “Bushman” dress at the signing ceremony and San articulate their ways of knowing as tied to ancestral pasts and linked to a former hunter–gatherer lifestyle. Although San reinforce themselves as traditional through these political moves, they simultaneously demonstrate San as modern, political subjects engaged in complex political

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and legal strategies for benefits. Such complex and contradictory positioning, as Povinelli (2002) suggests, provides a site of empowerment for indigenous peoples; however, it can also limit meaningful recognition of contemporary San lives and potential pathways for further political actions (pp. 56–57). Additionally, the benefit-sharing agreement limits San through the terms of the contract itself and its safeguarding of CSIR patent rights. The agreement recognized San peoples, but it also ensured that CSIR patent ownership remained intact, along with its binary assumptions of nature/culture. CSIR agreed to give benefits, but in return San acquiesced not to claim any co-ownership of the Hoodia patents and not to contest the validity of the patents themselves. The agreement therefore sustained logics of property by ensuring CSIR patents would go unchallenged in court. By securing CSIR’s patent rights, the contract strengthened CSIR’s scientific authority and knowledge of the plant in comparison to San ways of knowing. Furthermore, it hinged San benefits to the uncertainty of the market. The problem though is that when protection of vulnerable subjects is contingent upon the commercial success of the product at issue, then contractual benefit-sharing for social welfare purposes can easily fail to deliver, given the unpredictability of the market. In the case of Hoodia, Unilever terminated the project in late 2008 citing safety reasons, leaving San with little recourse. According to Wynberg et al. (2009), San-CSIR generated some 569,000R ($70,000) to San peoples through milestone payments, but now there was little hope that San would see more monies. Contractual benefit-sharing empowered indigenous San peoples as new liberal subjects with a stake in Hoodia commercialization, but denied them control over Hoodia production. San became recognized as indigenous peoples with claims to Hoodia knowledge, yet discourses of sharing become a new way to secure the privatization of knowledge and resources.

Promises and limitations of regulating benefit-sharing The South African government now regulates and requires entities involved in the commercial phase of bio-prospecting to obtain contractual benefit-sharing agreements from indigenous peoples in order to mitigate the exploitative implications of privatization and commercialization. San–CSIR benefit-sharing was negotiated as a private agreement in 2003 and at the time the South African government had little oversight over bio-prospecting and benefit-sharing. CSIR was able to begin commercialization of Hoodia and apply for patent rights without prior informed consent of indigenous San peoples or a benefit-sharing agreement in place. South Africa has since passed the Biodiversity Act (2004) mandating the protection of “indigenous biological resources”, which refers to “any living or dead animal, plant, or other organism of an indigenous species”, excluding human genetic material (National Environmental Management: Biodiversity Act, 2004, § 1(1), § 80(82)(b)). The Act requires entities engaged in research for “commercial or industrial exploitation” to obtain bio-prospecting permits with proof of benefitsharing with relevant indigenous peoples (§ 1(1)).

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The 2004 Biodiversity Act set forth the initial mandate requiring access and benefit-sharing, but the passing of the 2008 BABS Regulations provided further guidance. The latter required permits from entities engaged in both the discovery and commercialization phase of bio-prospecting research involving indigenous biological resources (Regulations on Bio-prospecting, Access and Benefit-sharing, 2008, p. § 4(1)). Commercialization was defined as involving the filing of a patent application, conducting of clinical trials, engaging in market research, or synthesizing material to produce a commercial product; it was therefore distinguished from the discovery phase where opportunities for commercialization of indigenous biological resources are less certain (§ 1(1)). The 2008 Regulations however have since been repealed and replaced with the Amendments to the Regulations on Bio-prospecting, Access, and Benefit-Sharing (2015) (“2015 BABS Regulations”). The 2015 BABS Regulations still require permits for entities engaged in both discovery and commercialization, but recognizing that these two phases often overlap the law no longer explicitly distinguishes these two phases. Entities engaged in either form of research must still apply for a bio-prospecting permit when their research involves indigenous biological resources. Both the 2008 and 2015 BABS Regulations however were similar in that they only govern biological resources that are “indigenous” to South Africa, meaning a species that has historically occurred “naturally” in the borders of the country and has not been introduced by human activity (National Environmental Management: Biodiversity Act, 2004, p. § 1(1)). The law therefore only protects indigenous species, not those considered non-native. The 2015 BABS Regulations are significant in their attempt to protect and include indigenous peoples within the early stages of bio-prospecting research by requiring prior informed consent and benefit-sharing. South Africa, unlike the United States, is at the forefront with countries such as India and Brazil in terms of requiring researchers to share benefits with indigenous peoples (Gross, 2014; Research and Information System of Developing Countries, 2014). If research involves any indigenous peoples’ knowledge or use of indigenous biological resources, then researchers applying for a permit must show they have entered into a contractual benefit-sharing agreement with the relevant indigenous community. Under the 2008 BABS Regulations an indigenous community was defined as “a community of people living or having rights or interests in a distinct geographical area within the Republic of South Africa with a leadership structure” (Regulations on Bio-prospecting, Access and Benefit-sharing, 2008, p. § 1(1)). In contrast, the 2015 BABS Regulations provide no such definition, which leaves the contours and difficulty of defining indigeneity to the communities and peoples themselves. Furthermore, under both the 2008 and 2015 BABS Regulations, indigenous communities must adopt a resolution consenting to the benefit-sharing agreement and authorizing their representatives to sign on their behalf. Entities engaged in bio-prospecting are then required to attach the resolution to their bio-prospecting permit applications. Private benefit-sharing therefore becomes publicly managed through a set of governmental regulations. The 2008 and 2015 BABS Regulations bring agreements

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into line, prescribing the appropriate standards and forms in which benefitsharing contracts must align. A list of possible monetary and non-monetary benefits is specified in the 2015 BABS Regulations to include, but not be limited to, sharing research data, grants for development and environmental education projects, facilitating ongoing communication of bio-prospecting objectives, training of local people, co-authoring publications, providing equipment and infrastructure support, co-ownership of intellectual property rights, allocating royalty payments, and apportioning milestone payments (Regulations on Bio-prospecting, Access and Benefit-sharing, 2015, p. Annexure 12). Sharing of monetary benefits is also systematized. Under both the 2008 and 2015 BABS Regulations, monetary benefits must now be paid into a centralized Bio-prospecting Trust Fund to be managed by government officials. Indigenous communities continue to receive the full amount of benefits awarded, but this added layer of bureaucracy generates additional burdens that reinforce paternalism over indigenous peoples. These new regulations provide a site for understanding how private contractual relations have become publicly regulated and how privatization of knowledge is being simultaneously disrupted and secured. Prior to the 2008 BABS Regulations, the law did not require contractual benefit-sharing and indigenous peoples had to politically mobilize against entities involved in bio-prospecting to pressure them into contractual negotiations. Public pressure likely bolstered the bargaining power of indigenous peoples entering into negotiations, but now indigenous peoples have the force of law to support their efforts. Entities are compelled to seek prior informed consent and benefit-sharing prior to applying for patent ownership. This creates space for indigenous peoples to challenge the privatization of knowledge by insisting on being named inventors or being co-owners of patents. It also generates new relationships between parties. Obtaining consent and negotiating contractual terms is a responsive process conducted over time and it requires building trust and developing relationships between researchers and indigenous peoples. The law thus challenges the privatization of knowledge by requiring scientists and scientific processes to inform indigenous peoples at the beginning of the commercialization process. Although South Africa is a leader in such governing processes, these regulations are still being implemented as government officials struggle with exclusions enacted by the law. One such exclusion is that indigenous peoples are forced to adopt styles of governance that may not be aligned with their own customary practices. The 2008 and 2015 BABS Regulations compel indigenous communities to organize and to generate formal resolutions in support of benefit-sharing. Indigenous peoples must therefore make strategic decisions on how to organize themselves to become intelligible to the law and to negotiate contractual benefit-sharing. In other words, in order to position themselves as modern, political subjects within the narrow parameters of the law, Shane Greene (2004) argues that indigenous peoples are forced to market themselves as “Indigenous Peoples Incorporated” (p. 223). In doing so, they create formally recognized leadership structures and treat their indigenous knowledge as intellectual property, but in a

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way that contests the Western logic of privatization (p. 223). Regulating benefitsharing through government management compels indigenous peoples to make these strategic decisions and to realign their governing structures accordingly. The 2008 and 2015 BABS Regulations are also limited in the ways in which they reinforce indigenous peoples as in need of training, rather than perhaps the scientists themselves. For instance, the 2008 and 2015 BABS Regulations list many alternative possibilities for what could be negotiated in terms of monetary and nonmonetary benefits. However, only indigenous peoples are assumed to be in need of benefits. This assumption recognizes asymmetries between the two groups; however, it denies the possibility for benefits to flow from indigenous peoples to scientists, a movement that would contest normative flows of scientific knowledge production often characterized as moving from “top to bottom”. San peoples for instance could be given the chance to provide training to CSIR researchers, educating them on San histories, languages, and heritage. Recent guidance by the South African Department of Environmental Affairs (DEA) seems to address this point by listing “training of scientists, technicians, and researchers” as a possible non-monetary benefit, but more attention is needed (Department of Environmental Affairs, 2012). Implementation of these regulations is still in the making. According to a government-sponsored report published in April of 2014, the DEA has received 77 permit applications concerning the commercialization phase of bio-prospecting (Sustento, 2014). Seventeen permits have been granted, the majority of which involve local South African companies and only one of which involves a foreign entity (p. 17). Of the approved permits, nine involve biotraders and two are pharmaceutical companies. Sixty permit applications were still under review, comprised of 30 pharmaceutical companies and 14 biotraders. The report also cites several key challenges of implementation that indicate lack of protections for indigenous peoples. Entities are now required by law to seek prior informed consent and enter into benefit-sharing agreements, but identification of holders of traditional knowledge can sometimes be unclear. The South African Traditional Medicines Research Unit at the University of Cape Town hosts an online Traditional Medicines Database, but there is no national system for verification. CSIR aims to create a national database to record, preserve, and protect indigenous knowledge in South Africa through a new National Recordal System, but it is still being developed and will likely not be free from conflict. Establishment of traditional knowledge databases in countries such as India, for example, has raised concerns in relation to indigenous and traditional knowledge (Fish, 2006). Additionally, a lack of human resource capacity within the DEA also means delays in processing permit applications, which still tend to be submitted with poor and incomplete documentation, despite DEA guidelines for applicants being made publicly available. The 2008 and 2015 BABS Regulations also serve to reinforce and secure processes of privatization. Indigenous peoples’ social movements globally have launched powerful campaigns against the patenting and commercialization of indigenous

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knowledge. Such movements challenge ongoing bio-prospecting projects that require access to indigenous peoples’ knowledge and biological resources. The 2008 and 2015 BABS Regulations challenge bio-prospecting in a different way by enrolling indigenous peoples as stakeholders within the commercialization process. The problem though is that even though the law requires prior informed consent and contractual benefit-sharing, it helps to ensure that access to indigenous knowledge and resources remain open to scientists, which keeps systems of power intact. Recognition and protection of indigenous peoples through government regulation of benefit-sharing can too easily become more about supporting private capital and nation-state innovation, rather than primarily indigenous peoples. Contractual negotiations are often conducted through unequal bargaining positions, with indigenous peoples holding less power than private commercial entities. Monetary benefits for indigenous peoples are also hinged to the commercial success of the developed product, thus indigenous peoples’ livelihoods are tied to the uncertainty of the market. If the product generates too little revenue, it means a smaller percentage of royalties for indigenous peoples, which makes negotiation for non-monetary benefits even more important. Government regulation of contractual benefit-sharing forces us to consider how even when a state becomes responsive to protecting indigenous peoples, such efforts may continue to protect private and nation-state interests. The 2008 and 2015 BABS Regulations may encourage more sustained engagement between scientists and indigenous peoples. In doing so, indigenous peoples may gain recognition as modern, political agents making demands for contracts that may produce monetary and non-monetary benefits. Yet, how do such changes foreclose a broader discussion of the fairness of benefit-sharing agreements? How do they obscure debate over how to address indigenous peoples’ notions of social justice into this new regulatory domain? The 2008 and 2015 BABS Regulations are embedded within values of biodiversity conservation, rather than indigenous peoples’ self-determination, and they are governed by the mandate of the Biodiversity Act (2004) from which they flow. The central goal of the Act is the conservation of indigenous plant material, not the self-determination of indigenous peoples. Implementation of the 2015 BABS Regulations is still in the early stages, but how might norms of conservation inform the regulations going forward? As benefit-sharing agreements become regulated and standardized critical attention must focus on how norms of conservation may come to supplant indigenous peoples’ rights of social justice and self-determination.

Conclusion Contemporary forms of privatization function through different modes of governing, informed by discourses of freedom and autonomy, rather than colonial domination. Nation-state power was enacted more through acts of physical violence and the explicit taking of lands and resources. Nation-state interests are now increasingly secured through less explicit practices, but nonetheless they can

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produce violence against indigenous peoples and enact the taking of their knowledge, land, and resources – thus still dominating, just by different means. Privatization of knowledge enables South African scientists to become producers of science, but patent ownership can prevent indigenous peoples’ access to resources and commit epistemological violence through the devaluing of their knowledge. Contractual benefit-sharing attempts to disrupt such modes of privatization, but can work to both empower and disempower indigenous peoples. In the case of San–CSIR benefit-sharing, San are recognized as modern, political agents through mobilization against the patenting of Hoodia properties, but such recognition depends upon San peoples positioning themselves as nonmodern. Understanding issues of privatization and vulnerability requires attention to how indigenous peoples make strategic decisions in their mobilization for legal rights, while navigating this contradictory terrain. Attending to the particularities of the nation-state also becomes important. South Africa aims to protect indigenous peoples through regulation of bio-prospecting and benefit-sharing, but such protections are limited as government officials balance ensuring benefits to indigenous communities, with meeting corporate interests in accessing resources. Attention to these contradictions and tensions becomes important for addressing questions of privatization, vulnerability, and social responsibility in specific ways.

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CREDIT COUNSELLING IN CANADA An empirical examination Stephanie Ben-Ishai 1 and Saul Schwartz2

I. Introduction When debt becomes unmanageable, two of the main options for a consumer debtor in Canada involve enlisting the services of either a bankruptcy trustee or a not-for-profit credit counselling agency.3 Each of these options is regulated differently and has public and private dimensions. At first glance, the existence of at least two options might seem to better serve the public. In this chapter, however, we argue, based on empirical research on the credit counselling industry and a historical understanding of how overindebtedness has been dealt with, that while the multiple options have the potential to facilitate debt relief in Canada, that potential has not yet been realized. The lines between public and private options have been blurred to the point where they are difficult to discern, and the consumer debtor is ultimately disadvantaged. Margaret Atwood’s (2008) recent and highly acclaimed non-fiction account of the nature of debt, Payback: Debt and the Shadow Side of Wealth, illustrates the confusion. The following passage is an example: Nowadays, those drowning in debt have a resource that wasn’t always available in the past: they can declare personal bankruptcy and more or less walk away from the whole mess. There are agencies that help you do this, for a cut. “Settle for less than you owe” coo the subway advertisements. True, there are drawbacks – your credit rating will be affected, and you’ll

1 Associate Professor, Osgoode Hall Law School, York University, Toronto. 2 Institute for the Study of Labor, Carleton University. 3 Among the other options are negotiating with individual creditors, signing up with a for-profit credit counselling agency, or “doing nothing”. These options will be described later in the paper.

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lose some of your flashier toys – but you won’t be thrown into a cold, dark dungeon where you’ll have to live on cheese rinds and moldering bread, and where the other prisoners will steal your silk handkerchief and your boots and your cuff buttons. Not usually. Not here. Not yet. (p. 132) Atwood’s description confuses the two main debt relief options. In a personal bankruptcy, private actors, called bankruptcy trustees, serve as the intermediaries between a consumer debtor and bankruptcy; trustees are regulated by the federal Office of the Superintendent of Bankruptcy (OSB). While bankruptcy trustees operate and work for private accounting firms, the fees they can charge are set by OSB regulations and are not a “cut”. Various requirements are placed on consumer bankrupts, and bankrupts do not “more or less walk away from the whole mess”. The subway advertisements Atwood describes push debtors toward a private process known as credit counselling. Credit counselling is a largely unregulated process that is deeply problematic from a consumer protection perspective, because debtors often make contributions towards a payment plan that offers no discharge of their debts and is often inferior to procedures available through the publicly regulated bankruptcy process. Even though this process is operated by private agencies and funded in part by private sector creditors, the agencies claim nonprofit status and thus receive a public subsidy in the form of tax relief. In reality, neither of the two main options for dealing with debt is fully private or fully public, and neither is easily accessible to low-income debtors. The result, contrary to what Atwood suggests, is a dearth of options for dealing with overindebtedness in Canada. And many people do live in a form of cold, dark debt dungeon – here and now. In the sections that follow, we document, first, the main private and public options for dealing with overindebtedness in Canada and describe how the lines between public and private have been blurred in each instance. We then detail our current understanding of the not-for-profit credit counselling industry and provide a brief history of that industry. Part III reports on mystery calls made to nonprofit credit counselling agencies that demonstrate the conflict between the agencies’ stated purpose and their role as agents of large creditors.4 In Part III, we also suggest that credit counselling agencies do not in fact offer a viable “private” alternative to community assistance or true credit counselling. Part IV concludes by sketching the changes to the regulation of each regime we would like to see: an accessible public bankruptcy system, not-for-profit credit counselling agencies held to a higher standard, and government support for nonprofit agencies that provide impartial debt advice.

4 We made calls only to the largest agencies. A number of far smaller agencies exist across Canada and our findings may not apply to them.

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II. The public and private sector debt relief options The multiple options available to Canadians seeking debt relief can be seen as a form of legal pluralism. Legal pluralists argue that it is not possible to understand regulation by merely studying formal legal relationships between the state and its citizens. In recent applications, legal pluralists have pointed to new forms of private law that complement, and sometimes even supplant, traditional forms of law. For example, corporate codes of conduct now influence how workers are treated and operate alongside traditional labour law. Similarly, private governance mechanisms, such as the “Smartwood” timber certification programme or the Fairtrade Labelling Organization coffee standards, operate alongside traditional environmental law. The hope is that these new forms of law or new behavioural norms can be developed from the ground up and have regulatory impacts at least as large as traditional legal reform. The private debt relief institutions – the not-for-profit credit counselling agencies foremost among them – are part of a more general pattern in North America. In Canada, as in the United States, private providers now commonly “furnish social services such as healthcare, and fulfill local government responsibilities such as waste collection and road repair; they also increasingly perform such traditionally public functions as prison management” (Freeman, 2000, p. 552). Following the same path as our American neighbours, but at a slower pace, the private for-profit and not-for profit sectors have become mechanisms for delivering government-funded services in Canada. These private providers are subject to private or “soft” regulation5 rather than the traditional regulation of the public sector. The regulation of these institutions has not developed as quickly as the institutions themselves. A recent Canadian example involves Ornge, a private air ambulance service that was awarded a major government contract in 2005 and is now under criminal investigation. The Ontario ombudsman claims his office received 17 complaints about Ornge – including an alleged misuse of funds – but did not have the authority to investigate them as a result of the private contract that had been entered into between the government and Ornge (Babbage, 2012). The focus on new and alternate legal spaces can conceal the crucial role of public regulation in these spheres. That is, the increase in private provision does not necessarily imply a reduction in government regulation (Ayres and Braithwaite, 1991). Given the commingling of the public and private spheres, attention needs to be paid to the conditions necessary to “sustain or curtail new conceptions of the public good” in a privatized market (Freeman, 2000, p. 549). How do these ideas apply to the debt relief institutions in Canada? We argue that the multiple debt relief options, described below, do not provide adequate

5 Jerry Mashaw (2006) defines “soft law” as consisting of “social accountability regimes” and being “infinitely negotiable, continuously revisable, often unspoken; oscillating between deep respect for individual choices and relentless social pressure to conform to group norms” (p. 125).

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protection to all debtors and are particularly ill adapted to the needs of debtors living on low incomes. Bankruptcy is one of two official and public legal processes by which Canadian debtors who are unable to repay their debts as they come due can obtain relief. A debtor who files for bankruptcy will be discharged from most debts (excluding, for example, spousal support and recent government-funded student loans) in exchange for any non-exempt assets that he or she holds (Bankruptcy and Insolvency Act, RSC, 1985). Trustees charge bankrupts a fee of approximately $1,500 that can be paid in installments over the period prior to discharge, and there is also a possibility to extend payments after the discharge. Discharge usually occurs after nine months, but debtors who have “surplus income” will not be discharged until 21 months after filing and will have to contribute a portion of their surplus income to their creditors. The second public process, known as a consumer proposal, is an agreement reached between debtors and their creditors to repay part of the debts owed. Consumer proposals typically require payments over a five-year period but often allow debtors to maintain control over some assets, usually including the family home. The trustee administering a consumer proposal will generally take a percentage of the monthly payment by the debtors as a fee, with most proposals costing in the range of $10,000 to $14,000. Both bankruptcies and consumer proposals are administered by bankruptcy trustees, private actors who are regulated and licensed by the OSB. Their activities are governed by the Bankruptcy and Insolvency Act (BIA) and by “soft” regulation in the form of professional codes of conduct applicable to accountants and to trustees. While it has proven difficult to estimate the number of debtors who are discouraged from filing because of the fee, several scholars, including ourselves, believe that the number is non-trivial; trustees believe otherwise (Ben Ishai and Schwartz, 2007). The current system once faced competition from an entirely public alternative. In 1972, at a time when the number of consumer bankruptcies began to rise in Canada and the supply of private bankruptcy trustees was limited, the OSB developed a publicly administered bankruptcy programme, known as the Federal Insolvency Trustee Agency (FITA), for debtors who could not afford a private bankruptcy trustee (Ramsay, 2003). Despite the fact that this programme was used by one-third to one-half of consumer bankrupts, the programme was abandoned in 1979, at the urging of the private trustee community. The impetus from the trustees to abolish the programme came from their realization that they could earn a profit on a consumer bankruptcy, even if the bankrupt had no assets. Ramsay quotes one trustee as stating, “[Trustees] realized that their fees did not depend on the assets of the bankrupt but they could get a very nice fee just out of income tax refunds and so on” (Ramsay, 2000, p. 408). Following the termination of the FITA, the OSB developed the Bankruptcy Assistance Programme (BAP), in which participating trustees agree to provide consumer bankruptcy services to those who cannot find a trustee willing to take

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their cases. Pursuant to this service, the OSB helps a debtor find a trustee if the debtor’s debts are mostly personal rather than business-related, and if the debtor can demonstrate that she or he has made at least two attempts to find a trustee (Ben Ishai and Schwartz, 2007). As we have demonstrated in an earlier study, BAP is not a low-cost bankruptcy programme. Rather, it is a rarely used and largely unknown programme that functions mainly as a trustee referral service. Credit counselling agencies (CCAs) are a private alternative to the regulated consumer bankruptcy and consumer proposal procedures. In essence, these agencies – whether organized on a for-profit or a not-for-profit basis – set up repayment plans for debtors that involve the debtor paying 100% of the balance owed at the start of the plan over a three- or four-year period.6 The creditors typically agree to lower or eliminate any future interest charges for as long as the plan is in force (Ben Ishai and Schwartz, 2011). The agencies receive a percentage (typically 10%) of what the debtors pay to the creditors from the debtors themselves and an additional percentage (typically about 20%) from the creditors (Ben Ishai and Schwartz, 2007). Non-profit agencies (and the creditors) characterize these payments as “voluntary contributions”. Compared to bankruptcy, where the first legislation dates back to the nineteenth century, CCAs have a much shorter history in Canada. Credit Counselling Services of Metropolitan Toronto (CCSMT), which opened in the summer of 1966, was the first not-for-profit CCA in Canada (Ben Ishai and Schwartz, 2007; Uribe and Tait, 2007). In the beginning, CCSMT’s only employees were its executive director, George E. Penfold, one counsellor, and a secretary. The fledgling agency had arisen from a committee formed by the Social Planning Council of Toronto in 1965. According to the Globe and Mail (1966), “The cost of the credit counselling service is borne by the credit-granting business community and the federal and provincial, governments.” From the mid-1960s until 1991, the provincial government generally subsidized 60% of the operating expenses of not-for-profit CCAs in Ontario, including CCSMT (Globe and Mail, 1980; Potter, 1985; Roseman, 1991). Most of these agencies were based in particular communities and grew rapidly in number to 10 in 1973, to 28 by 1978, and to 30 in 1991. In general, the federal government transferred money to the province to help with the provincial contribution, although the federal percentage varied over time. Ontario CCAs also received grants from the United Way. From the beginning, creditors played several important roles for the CCAs. First, they returned to the CCAs a small percentage – less than 10%, it seems – of the funds they received as a result of the activities of the CCAs. Second, staff from the creditors took up positions on the boards of directors of the CCAs. In addition, the employees of the CCAs had often held previous jobs in the credit-granting

6 CCAs consistently claim to provide a plethora of other services in addition to repayment plans. Evidence of those other services among the large CCAs is difficult to discern.

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community. For example, Penfold, the executive director of CCSMT from its inception until the mid-1980s, had previously worked for the Household Finance Corporation; the first CCSMT counsellor had previously been a “credit manager”. The tension between serving poor debtors and collecting outstanding debts for creditors arose almost immediately. This can be seen in an exchange of letters in the Globe and Mail between Moses McKay, a former CCSMT board member, and Penfold. On 20 May 1968, McKay wrote that “the taxpayers who pay over 80% through the federal and provincial taxes of the cost of running the Credit Counselling Service should know that this organization resembles a collection agency more than a debt counselling organization” (McKay, 1968). The issue that McKay raised was that the clients who were being referred to CCSMT were generally only those who had income beyond that deemed necessary to maintain a moderate standard of living and who agreed to use that “excess” income to repay their debts. Those who either did not have money enough to live on or who would require more than three years to repay their outstanding debts were not helped. In a 24 May 1968 letter responding to McKay, Penfold (1968) took issue with the characterization of CCSMT as a “collection agency”, citing a Social Planning Council of Toronto document that had concluded that the CCSMT was a “valuable and useful service”. The exchange ended with McKay writing back on 30 May 1968 that Penfold’s point was irrelevant as long as CCMST was refusing to help those who had no means to repay their debts. The exchange between McKay and Penfold has remained relevant to this day. We argue below that modern CCAs provide little help to those who are unable to enter a debt management plan (DMP). In the fall of 1991, the New Democratic Party government of Bob Rae announced that it was ending its subsidy of the CCAs. In the legislature, the Minister of Community and Social Services argued that creditors needed to play a larger role in financing credit counselling.7 This unexpected announcement forced the CCAs to either close or find other sources of funds. The identity of the “other source of funds” rapidly became clear as creditors took the place of the provincial government as the major source of revenue for the CCAs. The reliance on funding from creditors should have immediately raised questions about how the CCAs were to manage the now increased tension between serving the interests of clients – handling their debts in the most effective way – and serving the interests of its funders – collecting as much as possible on the debts owed. In retrospect, it seems naive for the minister to have believed that a major change in funding would not lead to a major change in the character of the CCAs. In 2005, the CCA landscape was greatly altered by the start up of InCharge Debt Solutions Canada (IDS), then a subsidiary of the Florida-based InCharge

7 See Ontario, Legislative Assembly, Official Report of Debates (Hansard), 35th Parl, 1st Sess, Vol A (19 December 1991) at 1450 (Hon Mrs Boyd): http://hansardindex.ontla.on.ca/hansardeissue/35 1/1102a.htm. The minister also pointed out that cuts to federal funding for social programs made the action necessary. In addition, she hoped that “the federal bankruptcy bill” would mandate creditor contributions.

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Debt Solutions. Following the “new school” US credit counselling model, IDS worked with clients almost exclusively over the telephone. By contrast, the Credit Counselling Service of Metropolitan Toronto (which now operates under the name of Credit Canada) runs several centres in the Greater Toronto Area (GTA) where clients can receive in-person counselling if they so choose. IDS operated out of a small office park in suburban Mississauga, from offices well equipped for telephone counselling but without much space for in-person counselling. In 2006, a second “new school” credit counsellor – Consolidated Credit Counseling Services of Canada (CCCS) – set up operations in the GTA. Where Credit Canada once had the GTA “market” to itself, it now faced two strong competitors who seemed heavily focused on setting up and administering DMPs, assigning other activities a secondary role. Neither IDS nor CCCS has any visible interaction with any GTA community; that is, they may be not-for-profits, but they are not community-based. One consequence of the increased competition has been an advertising battle waged on GTA buses and subways and on the Internet. CCCS reported spending $1.2 million on advertising, closely followed by IDS at $1.1 million and Credit Canada at $800,000. According to the forms that all registered charities are required to file with the Canada Revenue Agency, Credit Canada had fallen by 2010 to third position among Canadian not-for-profit CCAs. The biggest agency, as measured by the size of revenues, was CCCS, which listed revenues of $6.5 million for the fiscal year ending in October 2010. IDS was second, with reported revenues of $5.4 million at the end of calendar 2009. At the same time, Credit Canada reported revenues of $4.5 million. The merger of IDS and Credit Canada presumably relegates CCCS to second place. Outside Ontario, the industry developed more slowly. According to Margaret Johnson, one of its founders, the Credit Counselling Society of British Columbia (CCCSBC) arose in 1996 from the interest of the Credit Grantors Association of Vancouver in the credit counselling model that was then in place in Ontario.8 Johnson and Scott Hannah, who would later be appointed as the executive director of the new agency, were hired by the Credit Grantors Association to go to Toronto to observe the operations of CCCMT and to talk with two of its principals, Duke Streiger and Laurie Campbell. Armed with an initial contribution of $250,000 from the Credit Grantors Association, the Credit Counselling Society soon began operations. On 8 November 1996, the Vancouver Sun announced the opening of the first CCCSBC office. According to Scott Hannah, its first and only director, CCCSBC aimed to “complement government programmes and provide an alternative to private credit counselling services which may charge substantial fees” (Kane, 1996). The new

8 E-mail communication with Margaret Johnson, President, Solutions Credit Counselling Service, (10 July 2011).

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not-for-profit agency would receive “the bulk of its funding from banks, credit unions and credit card issuers”. Operationally, the Society was funded by a contribution of 25% of all money collected for the banks and 15% of all funds collected for finance companies, retailers, and other creditors. In addition, debtors using the services of the Society paid the Society 10% of all monies paid to their creditors, up to a maximum of $50 per month. Credit Counselling Services of Alberta (CCSA) was a not-for-profit organization established in 1997 with funding from the provincial government. The new service was to take over the operation of Albertas Orderly Payment of Debts (OPD) programme. By design, the province gradually removed its annual funding, and CCSA became self-sufficient, in part by charging for personalized financial counselling. The most recent development in this industry was a change in the method by which the major banks funded the CCAs. Under an agreement administered by the Canadian Bankers Association, the major banks had established a standard “fair share” percentage of debtor repayments that the creditors return to the CCAs (Ben Ishai and Schwartz, 2011). In the fall of 2009, the creditors decided to determine the percentage that they would return to the CCAs on a case-by-case basis. As the above history suggests, credit counselling agencies in Canada could once claim that they were “community-based” in the sense that debtors in a particular geographic area (e.g., Metropolitan Toronto, Hamilton, or Barrie) enrolled in agencies that were based in the same geographic area. With the entry of the agencies that had American ties, and with services being advertised on the Internet and provided over the telephone, any link there might have been between a local community and a particular credit counselling agency has become weaker. Nonetheless, part of the justification of the 10% fee that credit counselling agencies charge their customers is that “we are a community service and the fee helps us to exist”. For the large CCAs, the notion of “community” is an empty one – the debtor may well live far away from the physical location of the CCA and the debts are likely to be owed to a creditor located far away from the debtor or the CCA. The notion of a community solution to the overindebtedness of a community member has historical roots, but the historical solutions were very different from the reality of most interactions between debtors and credit counselling agencies. One idea of a community is that of a close-knit group that believes that it can deal with debt problems on its own. For example, in June 2012, Monroe Beachy, the sole proprietor of A&M Investments and a man known as the “Amish Madoff”, was sentenced to six and a half years in prison for defrauding investors of an estimated $16.8 million. In response to his earlier bankruptcy filing, Beachy’s Amish creditors filed a letter requesting that the Northern District of Ohio dismiss his bankruptcy filing and allow the “Plain Community Alternative” to operate. The Plain Community Alternative is described as follows: [T]he organizational techniques by which [the Plain Community Alternative] proposes to respond here have been developed over centuries, and now

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reflect routine practice within this church community when human failings or natural causes create practical needs. The Amish Church formed . . . [t]he A&M Trustee Committee [which] is responsible for designing and implementing an Amish Alternative Plan to Monroe Beachy’s bankruptcy that would enable the over 2,550 Amish and/or Plain Community Creditors of Monroe Beachy to protect their interests while not abridging their faith. (Re Monroe L. Beachy Debtors, 2012) As a number of recent historical monographs demonstrate, consumer lending and enforcement was once dealt with primarily by nonreligious communities – especially in the working-class context. To the extent that a public, state-based legal option was available for dealing with overindebtedness, it generally operated as a final threat or as the backdrop to true community-based solutions. For example, Sean O’Connell has written extensively on the debts of working-class families in the United Kingdom in the late nineteenth century. O’Connell (2009) documents the predominantly local nature of credit, extended by local moneylenders and cheque traders (who sold an early form of prepaid credit cards) and collected by tallymen, the historical counterpart to today’s “doorstep lenders”. One of O’Connell’s central points is that this system existed in part to avoid recourse to the court system, which was expensive for creditors and could lead to prison sentences for the debtors.

III. Mystery calls to credit counselling agencies One might think that nonprofit credit counselling agencies would be a source of help for low-income debtors who are unable to afford a trustee, especially given the elimination of the public trustee programme. After all, CCCS describes itself as “a registered charitable not-for-profit organization operating to help families end financial crisis and solve money management problems through education”.9 IDS, according to its most recent Revenue Canada filing, was a “social service agency established to educate and counsel the public in management of personal credit and problems of debt”.10 Credit Canada offers “[p]rograms to educate the public in the management of personal credit and to provide unbiased counselling in personal debt management and reduction, alternatives to bankruptcy and credit re-establishment.”11 Given the 2003 Congressional investigation of US nonprofit credit counselling agencies – which found widespread violations by CCAs of the rules surrounding

9 Canada, Canada Revenue Agency (2011a) Registered Charity Information Return for Consolidated Credit Counselling Services of Canada, (Ottawa, Canada Revenue Agency, 2011). 10 Canada, Canada Revenue Agency (2011b) Registered Charity Information Return for InCharge Debt Solutions Canada, (Ottawa, Canada Revenue Agency, 2011). 11 Canada, Canada Revenue Agency (2011c) Registered Charity Information Return for Credit Counselling Service of Toronto, (Ottawa, Canada Revenue Agency, 2011).

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the operation of nonprofit organizations – we think it would be unwise to accept such claims at face value (Ben Ishai and Schwartz, 2011). We therefore decided to do some “mystery shopping”. We created three personas for mystery callers, who would represent potential CCA clients. Our first hypothetical CCA client, “Tom”, was conceived as someone who would benefit financially from filing for bankruptcy. Tom is a 30-year-old single man working as a government employee and earning $3,400 per month, after taxes. His monthly expenses, without debt payments, are about $3,000. Tom has $3,000 in assets that might be lost in bankruptcy. Tom owes $20,000 in student loans, the amount remaining eight years after leaving school; by design, the student loan debt would be dischargeable in bankruptcy. Tom also has other dischargeable debts: two large credit card balances that total about $26,000. His monthly minimum payments on the credit card debts total about $600; he is not making payments on the student loans. Again by design, if Tom were to dramatically cut his expenditures, he could afford payments resulting either from a DMP formulated by a CCA or from a consumer proposal arranged by a bankruptcy trustee. Alternatively, he could file for bankruptcy and, after either nine or 21 months in bankruptcy, discharge all of his debts. “Nicole”, the second hypothetical debtor, has monthly expenses that far exceed her monthly income. With some thought, her expenses could be reduced but not by enough to make a DMP affordable. Her debts consist of a large outstanding line of credit and an overdraft balance at her bank. This debtor is a single mother, with two teenage daughters, who has substantial equity in her own home. Because of the imbalance between her income and expenses, however, she increased her mortgage last year in order to pay down her debts. By design, Nicole cannot afford payments required by either a DMP or a consumer proposal. In bankruptcy, she would lose her house and is reluctant to do so. She is in need of counselling to reduce her expenses so that she can stop spending more than she earns. “Annie” has a recent degree in environmental studies but is also qualified as a dental hygienist. At the moment, however, she has no current employment and no current income and is living with friends. Her debts include student loans and outstanding credit card balances. She needs advice about how to handle her debts in the short run and in the longer term, when she anticipates having a job. Overall, our research assistants made 12 calls to large nonprofit credit counselling agencies: Tom made five calls, Annie made four, and Nicole made three. All of the calls were recorded, and the recordings are available from the authors. The research we undertook was approved in advance by the Research Ethics Boards of our universities. The central question that motivated our investigation was whether the CCAs functioned as impartial providers of information about how best to handle their callers’ debt problems. That is, we wanted to get some insight into whether the statements in the forms filed with the Canada Revenue Agency represented the primary nature of the business in which the CCAs were engaged.

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From these calls, we can draw three provisional lessons related to our central question. Before identifying those lessons, we should note that not all the CCAs behaved in the same way. It was clear that the advice from one of the CCAs was particularly distant from its stated purpose, while that of another was much closer to the purpose provided to the Canada Revenue Agency. We are prevented by our ethics protocols, however, from publishing the identities of the specific agencies.

Lesson #1: The CCAs provide little in the way of meaningful budget counselling The main plank of the argument that CCAs provide counselling as a public service rests with their universal provision of a first counselling session, usually over the phone, but potentially occurring in person, and lasting about one hour. Both Tom and Nicole went through these first sessions. Roughly three-quarters of the conversations consisted of the counsellor working with the debtor to construct a list of monthly income and expenses and a list of assets and debts. Without a doubt, constructing a budget is a useful first step for any debtor to take, if they have not yet done so. Simply noting that buying lunch can easily cost $2,000 per year, or that smoking a pack of cigarettes every day will cost almost $4,000 per year, can be revelatory to some debtors. And admonishments to distinguish between “wants” and “needs” and to make a list before going grocery shopping may have some impact on the debtors’ behaviour. However, constructing a budget also serves as a way for the counsellor to ascertain whether the debtor is eligible for a DMP or whether some other option is more appropriate.

Tom In all of the calls made by Tom, the CCA counsellors first collected information from Tom about his income and expenditures. In three of the calls, the counsellors then moved quickly to convince Tom to agree to quite draconian cuts in his expenditures. In a fourth call, the counsellor decided that Tom should not use any insolvency procedure and needed only to dramatically reduce his spending in order to repay his debt. The counsellor conducting the fifth call recommended, after making less drastic cuts to Tom’s current budget, consulting a bankruptcy trustee immediately. The three counsellors who suggested drastic reductions to Tom’s budget were clearly trying to bring his budget into the “window” of qualification for their DMP. To enter that window, expenses must be reduced to a point where monthly income is sufficient to cover both reasonable living expenses and the required monthly payments to the creditors (including the monthly payment to the CCA). When a DMP is possible, as it was for Tom as long as the budget cuts were drastic enough, conversations about the initial budget arrived at a point like this, where Tom’s income is not enough to cover both his current monthly expenses and the required debt payment:

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COUNSELLOR T1:12 Your payment to us would be $960 and that is added to your monthly expenses. You are a bit short for our programme, you’re about $347 short. You’d be in the red so what we do in such a case is go back to your budget, see where we can do some trimming to your budget, OK? Tom and the counsellor then went through his previously constructed budget, item by item, looking to cut at least $347 per month from his expenses. After doing this, Counsellor T1 said: OK, that’s fine. So this looks good now. So, now, we have got you into the positive. If you stick with this budget, you will be eligible for our programme, the debt management programme. In the second call by Tom, the budget calculation yielded expenses that were $656 dollars less than his monthly income. The counsellor told Tom that the cost of paying off his debts (not including his student loan debt) would be $1,050, leaving a deficit of about $400 per month. The conversation then continued as follows: COUNSELLOR T2: This is where we start talking about the budget. Our fee is $105, included in [the required $1,050 payment]. You only have $656. So, if you have $1,050 . . . you need $394 more income or probably less expenses. So this is where trimming your budget comes in. You need to cut 400 bucks in order to even try to do our programme . . . this is where we have to change your spending. What would you change about this budget? After making further cuts, Counsellor T2 concluded this part of the session with: So now you have $1,075 and we need $1,050. So now you could do a programme with us. Note that the payment to the creditor was about $950 in both cases. The only difference was that this agency charges a fee of roughly 10% on top of the payment to the creditors. The third call by Tom followed a similar path. After constructing the initial budget, Counsellor T3 noted the gap between income and expenses and said: What we have to do now is we go through the budget and we say OK let’s see where we could adjust some spending to try and create a surplus into the budget.

12 We assigned each counselling session a letter (T, A, or N) and a number. Each letter corresponds to one of the persona. The number indicates the order of calling (e.g., T2 represents Tom’s second telephone counselling session).

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With no small effort – for example, when Tom said it would be difficult to stop smoking, the counsellors suggested that he could cut the cost of smoking by rolling his own cigarettes – the counsellors were able to create a surplus in the budget, allowing Tom to be eligible for a DMP. In these calls, very little attention was given to how Tom would actually implement the cuts to his spending. Counsellors TI and T3 suggested that Tom keep track of his food expenses to see where he could cut back, and Counsellor T2 suggested using the “envelope system”. Counsellor T3 suggested that Tom could reduce his clothing expenses by asking himself whether he needed or wanted the new clothes. No advice was given as to how to implement the required changes in other areas. Indeed, if we combine all the cuts that Tom agreed to with any one of the counsellors, he could cut his expenses by another $300 per month. Doing so, however, would imply that he was not in need of any concessions by his creditors, who would therefore refuse to agree to the plan and eliminate the need for the CCA as an intermediary. Crucially, all three of the counsellors stopped looking for savings when the DMP first became possible. The remaining two calls by Tom were quite different from those just described and quite different from each other. Counsellor T4 took the view that Tom did not need a DMP or any form of bankruptcy: COUNSELLOR T4: You don’t have a problem, except that you spend too much money. Counsellor T4 explained that any of the options offered by a CCA or a bankruptcy trustee would have an impact on Tom’s credit rating and seemed to view that as a very negative outcome. For example, she said: Technically, you can bankrupt your student loans right now and you can bankrupt your debts but that’s seven years of not being able to get any credit or you can get credit but you’re going to those [high interest] lenders and paying 34%, 38% interest and you don’t want to do that. Counsellor T4 offered to put Tom on an eight-week spending plan that would see him create two separate bank accounts, one for necessities (e.g., food, shelter, and debt service) and another for whatever was left over. The agency would then help Tom, in unspecified ways, to carry out the plan. Interestingly, this agency charges $25 for the initial counselling session and for the spending plan. However, it was the only call that offered fairly specific counselling – the eight-week spending plan – that might result in a more stable economic situation. The final call made by Tom resulted in what we viewed, a priori, as his best option. Of course, our view is only one of many possible outcomes, and what is “best” will depend on one’s normative views. In this fifth call, the counsellor first went through Tom’s current income. Then, in a less aggressive way than

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Counsellors T1–T3, he talked about each expenditure, asking Tom to specify by how much he could “realistically” reduce its cost. At the end of that process, Tom’s expenses were still too high to support the DMP. Rather than going back to reduce expenses even further, Counsellor T5 said that DMP was “not really an option that we would recommend”. Instead, he said: The next couple options that you might have, that I believe would be a recommendation for your circumstances, is basically talking to a trustee. A trustee would allow you go through a legal process of either exploring a consumer proposal or a bankruptcy. I think you might be able to go through a consumer proposal as opposed to a bankruptcy but the trustee would be able to tell which was better for your particular circumstance.

Nicole In Nicole’s case, Counsellor N1 mentioned two issues that were relevant to deciding whether a DMP would be appropriate for her. Noting that Nicole had substantial equity remaining in her home, the counsellor said: I’m not sure that our programme is the most appropriate programme for you. You do have equity in the property and if we were to try and send out a proposal to [the bank] asking them to stop charging interest and to accept a payment over approximately four years, they may question why you need a programme like ours if there’s an ability to make the payments . . . That’s the creditors, not credit counselling. Nicole’s income was about $4,000 per month and her expenses, without any debt service payments, were about $4,800. According to Counsellor N1, the payment required to pay off her debts would be about $550 per month for 48 months so that her budget would have to be cut by $1,350 per month, an unlikely possibility. Counsellor N1 thus told Nicole that “her programme”, the DMP, was not a good option. To her credit, Counsellor N1 spent 16 minutes and 40 seconds going through Nicole’s budget after ascertaining that the DMP would not be appropriate and suggested reductions in her spending that would make her expenses, not including her existing debt payments, equal to her income. In general, the procedure debtors follow in order to undertake credit counselling is to make a first call to the CCA. That call generally involves only the collection of basic contact information and the scheduling of a later counselling session. The second CCA that Nicole called, however, asked her financial questions during the initial call: COUNSELLOR N2:

Now what I can do for you right now is figure out what a monthly payment would look like.., so you’re owing about $19,000 so an

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estimated monthly payment through our programme would be approximately $438 per month. That would be for between three and a half or four years. Do you think that’s a payment you could afford? NICOLE: Uhh . . . not the way I’m going. COUNSELLOR: OK. Now, let’s see . . . if you can’t afford a credit counselling payment, a debt management payment, your next options would be a consumer proposal or a bankruptcy. This call lasted about eight minutes and did not result in a second counselling session. Having ascertained that Nicole was not a good candidate for a DMP, Counsellor N2 redirected Nicole to a bankruptcy trustee. Note that the first CCA that Nicole called could have performed the same upfront triage. Instead, the agency set up a free hour-long counselling session. In terms of resolving Nicole’s debt problems, the result was bound to be the same since, by design, Nicole’s expenses considerably exceeded her income, ruling out a DMP. Clearly, however, Counsellor N2 essentially “screens out” those who are unlikely to be able to afford a DMP before an hour’s worth of counselling is offered. Some of the calls turned out to be quite short. This was especially true for Annie, who was careful to tell each counsellor that she currently had no job and no income. One of the five calls – to the agency whose actions belied their stated purpose – lasted only three minutes. Annie was told that, “with what we do here, you’re going to need some kind of income coming in”, and the call ended. Two other calls ended quickly but concluded with the counsellors telling Annie that she was eligible for a free 30-minute assessment of her budget and advice about what to do about her debts when she had a source of income. The fourth call made by Annie – to the agency whose actions were more consistent with their statement to the Canada Revenue Agency – took close to 30 minutes, even after the counsellor was told that Annie had no current income. That counsellor provided a few pieces of useful information but ended the call, as did the previous two, with an offer to set up a more formal session when Annie had a more stable source of income.

Lesson #2: The various options for resolving the debtor’s financial problems are not presented in anything like a complete and impartial manner. In particular, personal bankruptcy is not presented as a viable option Tom’s persona was created in such a way that bankruptcy would convey substantial financial benefits. He had no assets, and his large debts would be dischargeable in bankruptcy. Nonetheless, Counsellor T1 never mentioned the word “bankruptcy”. Instead, she presented a consolidation loan as the only alternative to the DMP: COUNSELLOR TI:

[As an alternative to the DMP] I would recommend going for a consolidation loan, you know, paying all this off at a much lower rate than what you have been because let’s say a consolidation loan . . . I don’t even know what

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loans are nowadays, 6%, or 4, whatever . . . , you’re paying 20 on the CIBC credit card, 12 to CIBC overdraft . . . CIBC line of credit we’ve got 18, so all of those would be pretty well cut in half. You’d be paying a lot less interest and therefore paying off your principal sooner.

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When Counsellor T2 told Tom that bankruptcy was an alternative, he explicitly asked for a comparison of bankruptcy versus the DMP: TOM: The word bankruptcy makes my skin crawl . . . COUNSELLOR T2: I understand that, this is not a bankruptcy that we do. TOM: For sure, can you just for comparison, can you like tell me the “bad” of bank-

ruptcy versus . . . It’d be an R9 for seven years, it would cost you considerably more because you have what’s called surplus income.13 TOM: OK. COUNSELLOR: So it may not cost you as much as that but it would be quite a big penalty for you because you have extra money so it’s going to be a fairly expensive bankruptcy for you with a worse credit rating than what you have now. You do have money to pay back the debt, you will get a better credit rating and you’re going to get a credit card at the end of the programme.14 We’ll help you with the budgeting, every year I’m going to meet you, we’re going to go through your budget . . . you can track your expenses, I’m going to help you get on track. You’ll be much better at managing your money . . . , if you’re doing a bankruptcy, you don’t have that kind of help . . . talking about the budget, controlling the spending, learning how to manage your money better, that’s what we provide. COUNSELLOR:

Such a presentation of the costs of bankruptcy is quite misleading. While it is true that a straight bankruptcy would lead to an R9 rating appearing on Tom’s credit report for six to seven years depending on the province, this is not the case for a consumer proposal. For a consumer proposal, the information would be removed three years after the completion of the proposal. This is comparable to credit counselling, which would imply a negative credit rating that would be removed from the report two to three years after the debts are repaid. The bankruptcy would cost about $1,500 and, assuming his financial situation did not change, would be accompanied by surplus income payments of about $1,000 per month for 21 months before he would be entitled to an automatic discharge. However, all of Tom’s debts, including his student loans, would be

13 Credit ratings are assigned on a scale from R1 to R9 with R9 being the worst rating. Agreeing to a DMP results in a credit rating of R7 R9. A personal bankruptcy results in an R9 credit rating for seven years after the bankrupt’s discharge. See Office of Consumer Affairs, “Credit report, credit score and credit rating”: Industry Canada http://www.ic.gc.ca. 14 The counsellor has switched to talking about the DMP; she had previously mentioned that at the end of DMP, Tom’s bank would offer him a secured credit card, one that requires prepayment.

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discharged in a bankruptcy, and his surplus income payments would finish with his discharge from bankruptcy. On the DMP, Tom would pay $1,050 per month for 48 months, including $105 per month paid to the CCA as a service fee, and he would still have his student loans to repay. Another option for Tom would be a consumer proposal, with higher upfront fees but the possibility of completing the proposal in a shorter period of time and the ability to restore his credit rating sooner. Nicole had equity in a home plus a paid-off car and would lose the home (and possibly the car) if she were to go through bankruptcy. Like Tom, however, a consumer proposal, might be an option for her. In a bankruptcy, Nicole’s equity in her home would be treated as “property”, which vests in the trustee. If she does not live in a province with a homestead exemption or a monetary exemption level that is higher than the amount of the equity in her home, the trustee would sell Nicole’s home, pay back the secured creditor(s), and make the balance available for the benefit of her unsecured creditors. In a consumer proposal, as in a DMP, Nicole could negotiate an arrangement where she would pay her creditors over a period of time. She would not be required to sell her home, as the debtor’s property does not vest in the trustee, as is the case in a straight bankruptcy.

Lesson #3: The nature of the fees charged by the CCA is never highlighted and the contribution made by the creditors to the CCA is never mentioned Canadian CCAs have two main sources of revenue. The most important consists of payments – termed “voluntary contributions” – made by creditors (mainly the five largest chartered banks) as a function of the amounts collected for them by the CCAs. Until recently, most creditors made a “voluntary contribution” of 22% of the amounts forwarded to them by the CCAs. The second source of revenue is the fee paid by the debtors. Here, the CCAs vary. Some charge roughly 10%, some roughly 20%, and others a small fixed fee. None of the CCAs tell potential clients about the “voluntary contributions” that they receive from the credit industry. The CCA websites either do not contain that information or hide it well. The fee charged to the debtor by the CCA is evident in the agreement that the debtor is asked to sign and is mentioned in the counselling session.

Summary of mystery calls The description of the key lessons coming out of the mystery calls suggests that the large CCAs provide little in the way of meaningful budget counselling, and that they do not completely and impartially convey the various options open to debtors for the resolution of their financial problems – particularly consumer bankruptcy. In addition, CCAs fail to accurately explain the nature of the fees they charge or mention the contributions made by creditors. In a majority of cases, when the

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caller’s circumstances and scenario did not meet the required qualifications of the CCA, the call either ended without meaningful budget counselling, or an attempt was made to force the caller’s situation into the requirements of the CCAs programme, ignoring the more appropriate alternatives available to the caller. This is highlighted in particular by Tom’s case: despite his scenario being developed specifically to be appropriate for bankruptcy, only one of the CCAs presented bankruptcy in an accurate manner as a viable option in his circumstances. The focus of a majority of the CCAs appeared to be on fitting the caller into the requirements of their DMP. When this could not be achieved, the call often ended with little or no meaningful counselling, with the exception of a few instances when the counsellor continued the counselling session or offered an additional one. In regards to bankruptcy specifically, this alternative was often presented with a negative connotation and with the negative consequences emphasized, despite the possibility of it being the best alternative. In regards to the fees charged by CCAs, although the fees charged to the debtor are included in the agreement signed by the debtor and in the initial counselling session, the “voluntary contributions” received from creditors are not well communicated and are nonexistent or well hidden on the CCA websites. This demonstrates an unwillingness on the part of the CCAs to be open and honest about the entire fee structure of their organizations. The mystery calls also suggest that the majority of the CCAs are not operating in a manner that is consistent with the statements filed with the CRA. While all three of the CCA descriptions included the element of education, this seemed to be missing from the phone calls. The focus appeared to be very narrowly on presenting the DMPs offered by each CCA, rather than on educating each individual about the potential alternatives and solutions. Although claiming to do so, the large CCAs are not really operating as an alternative to the historical communitybased solutions to overindebtedness. In many cases, the CCAs fail to realize that fulfilling the roles outlined in their CRA descriptions, particularly as regards education, may often require that the options to which CCAs claim to be an alternative, bankruptcy in particular, be presented and encouraged as a viable alternative to DMPs. This of course presents a dilemma to the CCAs, which would need to suggest options and alternatives that are counter to their own interests.

IV. Conclusion The current legal orders available to Canadians to deal with overindebtedness are not satisfactory. The CCAs are a private, self-regulated system for resolving insolvency, but it is not possible to understand the contemporary credit counselling industry and its growth without considering the dominant and alternate public option: bankruptcy. Bankruptcy has been largely privatized over the years, and it is not as available in Canada as it might be and as it is in countries such as Australia and the United Kingdom. The upfront cost of bankruptcy, combined with widespread misunderstanding of its costs and benefits, has opened a space

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for the credit counselling agencies. Even though it is hard to see how the DMPs offered by credit counsellors to some debtors are superior to the public options of bankruptcy and consumer proposals, the industry has grown rapidly over the past ten years or so. We suspect this has to do with the way the CCAs represent themselves as community-based, debtor-friendly nonprofit organizations, whereas they are, more plausibly, debt collectors for the major banks. Bankruptcy and credit counselling are not well-understood legal frameworks for dealing with insolvency, though they offer debtors alternative ways to repay their debts. As a result, whether a debtor ends up with a credit counsellor or a bankruptcy trustee may have more to do with whose advertising has been most effective than with whose system best meets the needs of the debtors. Ultimately, the type of system we would like to see is one in which there are two or more transparent and efficient legal mechanisms for dealing with overindebtedness. Credit counsellors must be held to a higher standard of transparency and impartiality. As we have argued elsewhere, bankruptcy, too, needs to be reformed. In particular, it needs to be made more financially accessible to a wider range of debtors. A public system that offers low-income debtors low-cost access to bankruptcy could easily achieve that goal. Neither credit counselling nor bankruptcy currently serves the needs of low-income debtors. Therefore, the reformed system could be an improved version of the current private and public options offered by bankruptcy and CCAs. Given the complexity of modern debt contracts, it is doubtful that many debtors can fully comprehend the costs and benefits of the options open to them, either within the current system or under our hoped-for model. Some form of neutral debt advice is necessary. In our ideal model, the government would fund some form of advisory service that may go hand in hand with the current focus on financial literacy.

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9 PRIVATIZING AND CORPORATIZING THE UNIVERSITY A US and UK comparison Risa L. Lieberwitz1

I. Introduction The US and UK systems of higher education have significant structural differences. The US system is highly decentralized, relying heavily on private universities. US public universities are created and regulated by the states rather than the federal government. In contrast, the UK has a highly centralized national system of public universities. Do these different structures translate into substantive differences? In particular, what is the role of the state in each system? Despite their different national structures, the higher education systems in the US and UK appear to share the potential to act in the public interest. In the UK, where public universities are part of a centralized system, the state will play multiple roles, including certification of universities, public funder, and employer of faculty and staff. In representing the collective interest of the public, these roles could make the state broadly responsive to the needs of the public. In the US, even with its complex system of private and public universities, the state still plays a large regulatory and financing function. Further, all universities in the US, whether public or private, present themselves as fulfilling a public mission of education. Do the US and UK systems also share the potential for shifting their focus away from the public interest and the public mission of higher education? In the US, over the past three decades, university administrations have relied increasingly on a private for-profit corporate model in running public and private universities. This corporatization trend has affected all aspects of the university. In research, university administrators have sought closer ties with private industry. This relationship envisions corporations as “partners” in funding and even in evaluating academic research and in commercializing academic research results through 1 Professor, School of Industrial and Labor Relations, Cornell University.

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patenting and licensing. Universities have also imported the corporate model into their employment practices by reducing tenure-track positions, with corresponding increases in nontenure-track faculty positions. The shrinking of tenured positions restricts faculty academic freedom by reducing faculty autonomy over their work and limiting faculty power to engage in university governance. In the current context of neoliberalism and global corporate power, the potential becomes great for the spread of corporatizing trends from US universities to countries with strong systems of public universities. Over the last three decades, one pervasive structural change in the UK system of higher education is the state’s creation of the “Research Assessment Exercise” (RAE). Since 1986, the UK has used the RAE as a method of allocating public research funding to universities on the basis of faculty2 research quality, judged by national assessment panels of faculty appointed by the governmental Higher Education Funding Councils. Beginning in 2014, the RAE was replaced by the Research Excellence Framework (REF). The RAE/REF is a complex system with consequences that go well beyond the determination of how much public funding each university receives for academic research. Through the RAE/REF, the state has imported a top-down corporate model that regularizes, measures, and assesses faculty production in continual cycles of research evaluation by panels that report to the government. The REF encourages increasingly close relationships between universities and industry by measuring research “impact” outside academia. This impact criterion of the REF is part of a national policy of integrating business and university activities. As in the US, this policy is implemented by developing relationships between business and universities and by commercializing academic research. In both countries, universities have become market actors and industry partners through patenting and licensing public-funded research results, faculty consulting with businesses, creating spin-off corporations from university research projects, and seeking increased corporate funding of academic research. With rightward political shifts in the UK, corporatization of research has been accompanied by privatization of teaching functions through huge increases in public university tuition fees and cuts in public funding of teaching. This chapter addresses the broad and pervasive nature of university corporatization, while also delving more deeply into certain aspects of these trends. The chapter begins with a brief analysis of entrenched corporatized structures in US higher education, which pervade universities’ academic functions and employment models. It then analyzes in greater detail the ways that the UK national government has followed similar privatizing and corporatizing trends in the public university system through a complex web of government policies and practices in academic research assessments, tuition hikes, and university–industry relations. 2 In this paper, the term “faculty” is used to refer to academic staff engaged in teaching and research in colleges or universities. This use of the term is consistent with its meaning in the US, whereas in other countries the term “faculty” refers to the disciplinary group as a whole, such as the “faculty of law” in a university.

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This comparison lays the foundation to analyze the effects of corporatization on academic freedom and the public mission of higher education in both countries.

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II. A brief description of current threats to academic freedom in US universities Academic freedom in the US has its roots in the early part of the twentieth century, when university faculty engaged in collective action to form the American Association of University Professors (AAUP) to claim their rights of autonomy in teaching, research and public speech. To ensure the protection of academic freedom, the AAUP, 1915 Declaration of Principles of Academic Freedom and Academic Tenure calls for the lifetime job security of tenure, with due process rights prior to discipline or dismissal of a faculty member. The Declaration also makes the case for collective rights of academic freedom through faculty selfgovernance, including peer review to evaluate faculty competence and qualifications for hiring and promotion to a tenured status. The Declaration justifies these workplace demands as essential to fulfilling the public mission of the university, which requires disinterested and nonpartisan teaching and research. These goals, the Declaration asserts, can be achieved only if faculty are free from the influence or pressure of interested third parties, including administrators, trustees, politicians, or corporate donors. The AAUP’s demands for faculty academic freedom were largely successful. The AAUP’s 1940 Statement of Principles on Academic Freedom and Tenure, restating the basic principles of the 1915 Declaration, was endorsed by the Association of American Colleges and over subsequent decades by over 200 academic professional organizations and universities. The AAUP academic freedom principles have been internalized by the academic profession and academic institutions, as reflected in university policies and practices. Faculty members exercise rights of academic freedom in their research, in teaching a wide range of courses across the curriculum, in criticizing university policies, and in speaking out on local, national, and international issues. Faculty self-governance includes collective autonomy through the peer review process for tenure and through the deliberations of faculty senates over academic policy. Given the background legal norm of “employment at will”, the tenure process has been central to providing faculty with stability and freedom in their work through lifetime job security. Academic freedom has also been essential during times of political turmoil to protect faculty from coercive measures by the state to purge public universities of perceived subversive influences. Although there are examples of severe failures of academic freedom to protect leftist faculty from such purges by their university employers, there are important judicial statements that academic freedom protects faculty from punitive interrogations by legislative committees (Sweezy v New Hampshire, 1957). Over the past few decades, the greatest danger to academic freedom in the US has come from the increased corporatization of the universities – both public and private (Lieberwitz, 2007). Despite the traditional statement that public and

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private universities have a public mission, university administrations have relied increasingly on a private for-profit corporate model in running their universities. In research, university administrators have sought closer ties with private industry. This relationship includes university–industry partnerships in commercializing academic research results through patenting and licensing practices. Congress has actively supported this market model through federal legislation, the Bayh–Dole Act of 1980, which permits and encourages universities to privately patent and license results from research supported by public funding. This legislation led to an explosion of patent and licensing activity as university technology transfer offices encouraged faculty to apply for university-owned patents on publicly and privately funded academic research. These patents are then licensed for use, including exclusive and non-exclusive licenses to for-profit corporations. In 1979, before the Bayh–Dole Act, US universities obtained 264 patents, whereas in 1997, US universities obtained nearly ten times that number, at 2,436 patents (Rai and Eisenberg, 2003, p. 53). The Association of University Technology surveys of US universities in 1991 and 2000 show that new patent applications during that period increased by 238%, licensing agreements increased by 161%, and royalties increased by more than 520% (Thursby and Thursby, 2003). Between 1988 and 2003, US patents awarded to academic institutions quadrupled, from about 800 to more than 3,200 per year (Johnston, 2007, p. 162). Biomedical patents constitute close to 50% of university patent activity (Rai and Eisenberg, 2003, p. 54). Industry has become more directly involved in the university through corporate funding of academic research. Although federal funding remains the largest external source of academic research overall, at 60% compared to 6% from private sources, industry funding has increased dramatically (American Association of University Professors [AAUP], 2014, pp. 39–40). From 1970 to 2000, industry funding of academic research tripled, amounting to a tenfold increase (p. 39). Some universities depend heavily on industry funding, from 12% to as much as half of their research and development budgets (p. 40). Other forms of university– industry partnerships include “strategic corporate alliances”, which are large-scale industry research funding agreements that exchange corporate funds for exclusive licensing rights to university-owned patents (pp. 194–210). Corporatization developments have important implications for the institutional identity of the university and the professional identity of faculty. University expansion of private market activities in research creates tensions with its public mission, as expanded patenting and licensing activities restrict the public domain of academic research. Such market activities promote privatization through closer university–industry relations, increased corporate financing of research, and industry licensing of university patents. As Lita Nelson, Director of MIT’s technology licensing office, observed about strategic corporate alliances, their greatest significance is in strengthening relationships between business and the university (Lawler, 2003, p. 331). Such university–industry funding “partnerships” have brought academic and corporate interests closer together by inserting corporations into the academic research process and linking corporate funding to intellectual property rights.

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Individual faculty consulting for business has also increased. Faculty often enter into consulting arrangements with businesses while continuing their university teaching and research, with an estimate that about half of life sciences faculty act as consultants for industry (Blumenthal, 2002, p. 379). Since the mid-1980s, 21% to 28% of life sciences faculty have consistently received research support from industry (p. 378). Faculty consulting extends to fields such as information technology and financial services industries, although much of this has not been disclosed to the public (AAUP, 2014, pp. 43–44). Faculty also own businesses that are spinoffs from their academic research. About 7% to 8% of faculty report that they hold equity in a company related to their research (Blumenthal, 2002, p. 379). During the 1980s and 1990s, faculty participated in founding 24 Fortune 500 companies and over 600 non-Fortune 500 companies in the life sciences (p. 385). Commercialization of academic research affects faculty independence in multiple ways. Legislative and institutional policies encouraging faculty to engage in research with commercial potential will influence initial choices of research agendas and ongoing decisions about paths to follow during research projects (AAUP, 2014, pp. 69–71; Lieberwitz, 2007, pp. 301–302). Private research funding and patenting and licensing activities integrate the university administration and industry more closely into academic research programmes. “Strategic corporate alliance” agreements often bring corporate funders into the research process through participation in choosing research proposals and in reviewing research results prior to public release (pp. 194–200). Such intrusions on faculty independence affect individual academic freedom, which is based on norms that academic work is carried out as part of the university’s public mission rather than for private interests. Faculty engaged in commercially profitable research have a conflict of interests between the norms of the academic profession and their economic interests in the market. Privatizing academic research also affects collective aspects of academic freedom. Academic culture is based on communal values of sharing research methods and results with colleagues in informal settings and through publishing research results in the public domain. Increased patenting and licensing and closer university–industry relations have led to increased secrecy in research and delays in publishing research results (pp. 89–95). Universities have also imported the corporate model into their employment practices, undermining the independence of academic freedom and job security by reducing tenure-track positions, with corresponding increases in nontenuretrack faculty positions. Currently, nearly 40% of full-time faculty positions and 70% of all faculty positions in post-secondary institutions are nontenure-track (Benjamin, 2010, p. 4). Given the link between tenure and academic freedom, this upheaval in hiring and promotions practices reduces faculty autonomy over their work and lowers faculty power to engage in university governance.

III. The UK and the RAE/REF Is corporatization primarily a US phenomenon due to the dominance of private universities? Would a shift away from private universities to a system relying

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primarily on public universities provide greater potential for creating universities that are more responsive to the interests of the public, rather than to private corporate interests? Arguably, a democratic state would be most responsive to the public interest through a public system of universities with free tuition and vibrant research programmes. This potential, though, will be realized only if (at least) three conditions are met: the state must maintain a commitment to universities with a public mission; the state must respect the autonomy and independence of universities and faculty through strong rights of faculty academic freedom; and the state must enforce policies that maintain the separation of universities from third parties with conflicting interests, including private industry or private donors. With its national system of public universities, the UK presents the potential for the state’s use of its power as public funder and public employer to either expand or restrict universities’ independence and faculty autonomy. In a restrictive measure, the Thatcher administration abolished the tenure system in the 1988 Education Reform Act, although this legislation did provide that faculty have academic freedom (Karran, 2007, p. 197). Further, unlike the US, faculty in the UK generally enjoy job security within an employment law system that requires just cause for discharge. The Thatcher era also initiated the development of the RAE, which has created a powerful means for influencing the institutional identity of universities and the professional identity of university faculty. Since 1986, the UK has used the RAE as a method of allocating public research funding to universities on the basis of faculty research quality, judged by national review panels of faculty appointed by the governmental Higher Education Funding Council for England (HEFCE).3 There have been six rounds of the RAE, in 1986, 1989, 1992, 1996, 2001, and 2008. The RAE panels, representing different academic subjects (units of assessments or UOAs), evaluate the quality of publications submitted by each department in UK universities (Lucas, 2006, pp. 31–35). While HEFCE has made various changes to the RAE over these two decades, the key element has remained the same: a numerical rating system of research quality of universities’ UOAs as judged by faculty review panels. For example, the 2001 RAE ratings ranged from 1 (the most negative rating) to 5*, with 1 defined as “Quality that equates to attainable levels of national excellence in none, or virtually none, of the research activity submitted” and 5* defined as “Quality that equates to attainable levels of international excellence in more than half of the research activity submitted and attainable levels of national excellence in the remainder” (RAE2001, n.d., p. 5). In 2008, the RAE ratings ranged from Unclassified to 4*, with Unclassified defined as, “Quality that falls below the standard of nationally recognised work. Or work which does not meet the published definition of research for purposes of assessment”, and 3 There are four UK education funding bodies: HEFCE; the Higher Education Funding Council for Wales (HEFW); the Scottish Higher Education Funding Council; and the Department for Employment and Learning, Northern Ireland. For purposes of the RAE and REF, the four funding bodies act jointly, under the auspices of HEFCE.

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4 defined as, “Quality that is world-leading in terms of originality, significance and rigour” (RAE2008, n.d., Quality Profiles). The most recent reform of the RAE is the Research Excellence Framework (REF), which HEFCE implemented in the assessment round in 2014. Among the changes in the REF is the use of a system of “bibliometrics” as one element for judging quality in certain academic disciplines, particularly the medicine, science and engineering panels, and an emphasis on judging research “impact” outside of academia. In December 2014, HEFCE announced the assessment results based on the review of 191,150 “outputs” submitted by 154 higher education institutions (REF2014, n.d.). The RAE and its more recent iteration as the REF have had a profound effect on universities and faculty. The massive institutional structure of this top-down evaluation system regulates academic work by using a corporate model of controlling faculty time, influencing faculty work, and reducing faculty autonomy. Further, the RAE/REF affects the nature of key relationships: between the state and universities; between university administrations and faculty; among faculty colleagues; and between universities and industry. The discussion below examines key aspects of the RAE/REF and their links to the corporatization and privatization of the university.

A. Defining the goal(s) of the RAE HEFCE has described the RAE as a process to assess the quality of research in UK universities to determine the distribution of public funds provided for research and to improve the UK universities’ globally competitive standing in academic research (Roberts, 2003, p. 4). Underlying these goals is the assumption that distributing funds on a competitive basis will create an incentive to raise the quality of research. The REF states an explicit goal of fulfilling the state’s responsibility to ensure public accountability for the distribution and use of public funds for academic research (REF2014, 2011 March; REF2014, 2011 July, pp. 71–73). This links to the quantitative and qualitative assessments of the research standing of UK universities and faculty. As a quantitative measure, are faculty members adequately productive in publishing their research? Qualitatively, does faculty research meet high enough standards of excellence? In defining standards of excellence, the RAE has emphasized measuring research quality by both national and international standards. The REF places significant weight on assessing the “impact” of research outside the university, including the utility of research results to industry, the government, and the voluntary sector. Even taking these stated goals at face value raises thorny issues. Since 1996, the RAE has set a quantitative standard that requires each academic unit (department) to submit to the relevant RAE review panel the four best publications that each “research-active” faculty member has produced since the prior RAE round (Lucas, 2006, pp. 34–35). The specificity of this productivity standard raises obvious questions. Although HEFCE says that it specified this number to emphasize quality rather than quantity, issues of quantity remain. Concerns have been raised

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of whether this measure of productivity respects and reflects the diversity of academic work – accounting for disciplines that emphasize books as well as those that traditionally rely on journal articles (Miller, 2008). The ongoing cycles of preparing for the next RAE/REF round emphasizes results or “research outputs”, which can undermine support for research with long gestation periods. Academic commentary has raised concerns that the RAE discourages research that is on the “margins” of traditional research in seeking to push critique further, in providing unorthodox ideas, or in engaging in experiments with uncertain outcomes (Harley and Lee, 1997, pp. 1444–1456; Lucas, 2006, p. 43). The focus on RAE/REF ratings may encourage faculty to choose research projects that are more certain to yield at least four publications in the RAE/REF period in journals rated highly by the review panels. The addition of the impact factor in the REF further restrains experiments and other research by forcing researchers to speculate on the future application of an unknown research result. The focus on international standards of research is tied to the state’s interest in measuring the competitive position of UK university research in the global economy. “International” is widely understood to refer to standards of research and publication outlets in or favoured by the US. This attention to global competitiveness and the US academic research model could have some benefits in encouraging increased attention to a productive research agenda. At the same time, these standards raise warning flags in adopting an instrumentalist approach to research based on a market model of competition in the global economy. This model is reinforced by the influence of the US, where university corporatization has expanded and deepened. One could argue that these concerns are not significantly different from any other university system that assesses whether faculty meet quantitative and qualitative standards of research. To some extent, this is likely true – and thus examining the RAE and REF may help us to consider the pros and cons of other university systems’ goals and practices. One particular issue raised by the RAE/REF, though, is the way the state has been able to impose uniform goals and measures on a national public university system. I do not make this observation to argue against a national public university structure. To the contrary, I believe that free public education at all levels is an essential foundation to building a democratic society. Promoting that goal, however, will happen only with a state that is committed to democratic goals in its political and economic systems. In the UK, although the state has a strong commitment to public higher education, like other liberal states, it serves contradictory values in its support of private economic interests. The evolution over time in the goals of the RAE and the REF, along with the recent cuts in public funding and increases in tuition, provide insight into the way these contradictions are reflected in university goals, policies, and practices. The REF’s addition of “impact” assessment makes an explicit shift toward a privatization goal. The REF explains that the meaning of impact excludes the impact of research on the academic discipline (REF2014, 2011 July, pp. 71–72).

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Instead, the assessment is of research impact on third parties outside of academia. The 2014 REF accorded 20% of the assessment of research to impact, with plans to increase this to 25% in the future (REF2014, 2011 March). HEFCE has explained that this criterion of research quality could be measured based on impact not only on business, but also on the nonprofit and public sectors (REF2014, 2011 July, pp. 71–72). Concurrent UK national policy, though, reflects a primary focus of impact in terms of promoting “knowledge exchange” from academia to business, including multiple governmental reports creating plans for increased integration of industry and universities and expanded commercialization of university research results. The privatizing effect of these changes will be further explored in the sections below.

B. The RAE and REF’s instrumental view of research: Peer review panels The RAE and REF place the burden on universities to justify their use of public research funds. Such a justification could, theoretically, be fulfilled by stating that academic research is intrinsically valuable in contributing to the ever-expanding public domain of knowledge and inquiry. However, under the RAE (and REF), as Willmott (2003) observes, “The value of an academic’s knowledge (e.g. the contents of a publication) is increasingly assessed in terms of its contribution to corporate earning (is it a ‘5’ or does it have lesser income potential?) rather than its contribution to collective learning” (p. 135; Harvie, 2000; Lucas, 2006, p. 45). The RAE developed a system of academic peer review panels to assess the value of research submissions from the UOAs. On the surface, such peer review panels could appear to be part of the traditional process used in collective faculty governance to evaluate research quality for hiring, promotions and publication decisions. As an ideal, peer review states a principle of democratic self-governance and collective autonomy that maintains power in the faculty rather than in university administrators, boards of trustees, or governmental boards of regents. In practice, the flaws of peer review include abuse of power by some senior faculty denying promotions to their junior colleagues on inappropriate bases, and negative reviews of manuscripts that threaten a reviewer’s turf or that challenge the status quo. Peer review has also been described as a “self-policing” mechanism, which encourages faculty to be cautious in their hiring and promotions decisions to avoid interference by university administrators (Schrecker, 1983, pp. 25–27). Yet even with these flaws, traditional peer review is different from RAE/REF peer review panels. The RAE/REF review panels are made up of faculty who are experts in their discipline, chosen by HEFCE from nominations submitted by associations of academic disciplines, professional bodies, learned societies, and other organizations (Lucas, 2006, p. 33). There is a significant degree of transparency in the review panel’s work, as panel membership is made public and each panel publishes a report of its criteria and working methods (RAE2008, n.d., Panels). Still, RAE/

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REF review panels and traditional peer review differ in terms of who the panels are working for. In traditional peer review, faculty committees and reviewers make recommendations to their colleagues on behalf of their shared professional interests and standards. Certainly there are hierarchies involved, personal and political animosities that may inappropriately influence the process, and even good faith disagreements about the merit of academic work. But even when flawed, peer review in these traditional areas is carried out by colleagues as part of collective self-governance. In contrast, the state – through HEFCE – determines the goals of the RAE/ REF. The faculty appointed to review panels work for and report to HEFCE in developing and applying review standards within the parameters of the HEFCEdefined goals and numerical ratings (Harley and Lee, 1997, pp. 1429–1430, 1455– 1456; Lucas, 2006, p. 39; Willmott, 2003, pp. 129, 131–132, 137–139). The faculty panels are not engaged in collective self-governance. They are an arm of the state, which serves as their funder and employer. In devising its own system of faculty “peer review” for the RAE/REF, HEFCE appropriates the peer review process in service of its managerial interests, thereby reducing the autonomy of the faculty review panels. HEFCE’s role in selecting the peer review panels also creates the potential to coopt faculty critics by naming them to the panels. Further, the RAE and REF ratings affect internal university hiring and promotions processes, which consider candidates’ utility in RAE/REF assessments. This view of academic staff as valuable commodities has altered the labour market, with strategic hiring of faculty from another university in time to be beneficial for submissions to the next RAE/REF round (Broadbent, 2010, p. 20).

C. The REF impact factor: External value of academic research Other aspects of the commodification of academic research have been highlighted in the REF’s addition of two new criteria in assessing the quality of research. Both criteria have been extremely controversial, engendering much debate in the academic community and the media. First was HEFCE’s proposal to shift to a system of “bibliometrics” in the new REF as an objective measure of quality plus a “light-touch expert review”, rather than relying on subjective, time-consuming, and expensive panel reviews of publications (Richards, 2009). This proposal was met by strong criticism that the REF would be reduced to citation counting and narrow definitions of journal rankings (Corbyn, 2008; Donovan, 2009; Johnston, 2009, pp. 55–59). HEFCE retreated to using bibliometrics in the REF to inform and supplement the review by the medicine, science and economics panels, where it contends that bibliometric data are sufficiently robust as a measure of quality (REF2014, n.d., Bibliometrics pilot exercise ; REF2014, n.d., Process for gathering citation data). Another controversial change is HEFCE’s addition in the REF of an “impact” criterion of quality, defined as a publication’s impact outside of the academic discipline. This emphasis on the instrumental value of research is in tension with

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academic freedom in multiple ways. A primary value of academic research lies in faculty autonomy to pursue research without regard to its immediate or future utility. University and faculty independence from pressure to produce useful research has been viewed as essential to encouraging creative and innovative ideas that may lead to new and unanticipated lines of research questions and results. In opposing the addition of the impact factor, the University and College Union (2010) quoted Einstein, “If we knew what it was we were doing, it would not be called research, would it?” Ironically, the pressure to produce results that are useful in the short term may undermine faculty’s ability to pursue research that may ultimately become useful as the discipline develops (Fielding, 2003, p. 289, as cited in Colley, 2014, p. 667). University and faculty independence from third-party influence is related to ensuring the integrity of research. Researchers must be free from conflicts of interest that could compromise the trustworthiness or validity of the research results. The university’s public mission is fulfilled when faculty place their research results in the public domain, accessible to anyone who wishes to use it. By adding the “impact” element, though, the REF requires faculty to consider whether third parties will find their research useful. The university’s autonomy is affected as well by the participation on REF panels of “user members” from outside the university in the assessment of impact (Higher Education Funding Council of England [HEFCE], 2009, pp. 21–22; REF2014, 2011 March, p. 6). Critiques of the “impact” factor have warned that it could marginalize or suppress “conceptual, theoretical and critical ‘thorn-in-the-side’ research” in disciplines such as social work, given the REF’s assumption that impact will be shown by actual policy changes (Parker and Teijlingen, 2012, p. 48, as cited in Colley, 2014, p. 666). Colley (2014) argues that the impact criterion “is a crucial issue of academic freedom” as it creates a norm “shaped by political and administrative interests, not only pronouncing on the quality of research, but also deciding what research can be funded” (p. 676, citing Butler, 2006). These political interests supporting “impact” will disfavour academic research critical of neoliberal policies (Colley, 2014, p. 676). As the impact factor gains importance in the REF, it will also affect judgments of the quality of candidates in hiring and promotions decisions (Deer, 2003, p. 204, as cited in Colley, 2014, p. 676). The REF panels will evaluate the “positive impacts achieved by the unit as a whole”, including submissions by each academic unit of at least two “case studies”, with additional case studies for larger units (REF2014, 2011 March). HEFCE defines the “impact” element as: “an effect on, change or benefit to the economy, society, public policy or services, health, the environment or quality of life, beyond academia” (REF2014, 2011 July, p. 26). This statement makes the assumption that researchers should be required to demonstrate instrumental benefits of their academic research. An earlier HEFCE consultation report on the REF draws an equivalence between industry-related impact, such as “staff movement between academia and industry”, “research contracts and income from industry”, and “patents granted/licences awarded and brought to market”, and non-industry related

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impact such as “measures of improved public services” and “application of new ideas to improve social equity, inclusion or cohesion” (HEFCE, 2009, pp. 41–42). This ignores the potential negative impact of university-business relationships due to conflicts of interests between the public mission of the university and private economic interests of industry. In contrast, university research related to improving public services and social equity is consistent with the university’s public mission. Further, the government’s active pursuit of national policy, in addition to the REF, to support commercialization of academic research places a premium on the economic impact factor. These commercialization policies are examined in Sections IV and V of this chapter.

D. Effects of an industrial model: Regularizing production under the RAE/REF The RAE/REF rounds of research evaluation use a private industrial or corporate schedule of production. The university and the faculty are always working toward the next RAE (and now REF) round. As soon as one round is over, preparation for the next round must begin. This preparation will have multiple components, including appointing committees to prepare for the next round of the RAE/REF; deciphering the results of the last round to identify the elements that may predict success in the next; hiring faculty who will beef up the “research-active” faculty submissions in the next round; and individual faculty decisions about research agendas and publications that will qualify them for submission in the next round. Thus, the regularized system of the RAE/REF regularizes production in the university. Given this level of intrusion into the university, critiques of the RAE have described the state’s goals as having more to do with re-structuring universities than with raising the quality level of research (Willmott, 2003, pp. 139–140). This re-structuring brings the university into line with production expectations that are predictable and controllable, reducing faculty autonomy over their research schedules. Maintaining production of research that can be submitted for the RAE/ REF has shaped the research product, as the pressure to publish on a short timeline creates pressure to produce work that will be accepted by journals, which may lead to risk-averse writing (Colley, 2014; Harley and Lee, 1997; Lucas, 2006). Production criteria may also re-shape the goals of the university as the RAE/REF imposes standards of excellence determined externally by HEFCE, including the new criterion of research impact on third parties.

E. Consequences of the RAE/RAE: Changes in collegial relations As the RAE/REF affects the structure of university work, it necessarily affects relationships within the university. As noted above, faculty are now part of a strategic game of job market mobility in the RAE/REF high stakes competition among universities for research funds and reputation. University websites and brochures boast high ratings on the RAE/REF to advertise their position as a

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prestigious institution. Universities use high RAE/REF ratings to attract faculty who are highly productive as a mutually beneficial way to solidify the university’s RAE/REF rankings and provide a supportive context for the faculty member’s continued productivity. Perhaps these changes are evidence of the success of the RAE/REF (Lucas, 2006, p. 40). Still, questions should be explored about the fallout that may occur from this increased competitiveness among universities and individual faculty. The RAE/REF is not a rating of all faculty research activities. University department faculty committees and members of the administration decide which faculty to include in the unit’s RAE/REF submissions. This means an explicit division between so-called “research-active” faculty and other faculty, with the potential for increased stratification of faculty status and positions (Lucas, 2006, p. 44; Willmott, 2003, pp. 134–135). Faculty who are not included in the submissions for the RAE/REF may be expected to carry a heavier teaching load, with an accompanying lower status attached to the value of teaching (Lucas, 2006, p. 44; Willmott, 2003, p. 135). If the RAE/REF has encouraged growing inequalities among faculty members in terms of research and teaching loads and job status, this may deeply affect collegial relations that are central to communal values of academic freedom. There will also be effects on students if teaching and research duties are divided and if disproportionate value is placed on research faculty.

IV. Higher education as commerce: Teaching and learning as commodities Privatization has hit UK university students hard through the Conservative government’s imposition of large increases in public university tuition fees. The white paper Higher Education: Students at the Heart of the System was issued in June 2011 by Vince Cable, the Secretary of State for Business, Innovation and Skills, and David Willetts, Minister for Universities and Science. A key element of the white paper is the re-structuring of funding for universities through a dramatic increase in tuition along with an expanded system of student loans. The white paper promotes this as a means to increase revenue to universities to compensate for budget cuts in public funding from HEFCE for teaching (Cable and Willetts, 2011, p. 8). Public funding will continue to support only certain subjects, “such as Medicine, Science, and Engineering” (p. 8). This new system is presented as a benefit to students in a “pay as you earn system”, enabling students to repay their loans on a sliding scale based on their post-graduate earnings. The white paper justifies this tuition system as “put[ting] financial power in the hands of learners” (p. 5). The foreword to the white paper places the commodification of education front and centre, stating: “But our reforms are not just financial . . . We will oversee a new regulatory framework with the Higher Education Funding Council for England (HEFCE) taking on a major new role as a consumer champion.” The white paper applies a corporate model for curricular development: “We expect new courses to

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offer increased value for money, as they will be delivered by a range of providers with different business models” (p. 7). In responding to the white paper, the University and College Union (2011, p. 1) explained its opposition to “the overall strategy in the White Paper which seeks ultimately to privatise higher education by shifting its funding from the state to individual students and their families. This represents an impoverished view of the purposes of higher education and poses a fundamental threat to its ability to meet the wider social, cultural and economic needs of the country.” The government’s white paper also integrates a market model of university research into its vision of re-structuring higher education, stating: “We also want our universities to look again at how they work with business across their teaching and research activities, to promote better teaching, employer sponsorship, innovation and enterprise. We have asked Professor Sir Tim Wilson, former vicechancellor of the University of Hertfordshire, to undertake a review into how we make the UK the best place in the world for university–industry collaboration” (Cable and Willetts, 2011, p. 6). The subsequent Wilson report, “A Review of Business University Collaboration” (2012), aims at recognizing and developing “[u]niversities [as] an integral part of the supply chain to business – a supply chain that has the capability to support business growth and therefore economic prosperity” (p. 2). The Wilson Review presents 30 recommendations aimed at creating a multi-dimensional web of relationships and collaboration “to achieve optimal university performance in business support”, through academic curriculum, undergraduate and graduate student internships, student careers in business, “employee upskilling”, academic research agendas and technology transfer, and leaves for academic researchers to work in businesses and for business employees to work in university research departments (pp. 3, 5–9).

V. Higher education as commerce: Encouraging university–industry integration The privatization trends in the UK higher education are evidenced in the government’s focus on increasing the ties between industry and university research. The government-commissioned “Lambert Review of Business-University Collaboration” in 2003 and the Treasury’s 2004 response to the review agreed that the UK had not adequately exploited the potential for knowledge transfer from universities to private sector businesses (HM Treasury, 2004, pp. 162–163). Both reports cite with approval use of government funding to support increased university efforts to expand technology transfer, such as increased personnel dedicated solely to building university–industry relations (pp. 170–171). The Lambert and Treasury reports recommend several routes to achieving closer university–industry relations. The reports seek not only ties between universities and businesses, but an integrated relationship of the two spheres (Lambert, 2003, p. 12). The Treasury Report concludes, “Universities have an important partnership role to play in the innovation system” (HM Treasury, 2004, p. 151).

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The report quotes a description of the university as part of a system in which “[t]echnology transfer looks more like a soccer game in which the university is a member of a team. To score, it [the innovation system] needs the aid of all its team mates. The ball is passed back and forth among the players who may include business people, venture capitalists . . .” (Gibbons et al., 1994, as cited in HM Treasury, 2004, p. 151). Accomplishing this, they agree, entails a change in university culture to embrace the role of faculty in providing academic research results to business for commercialization (Lambert, 2003, p. 14). The Lambert review strikes a hopeful note in observing a “marked culture change” in universities seeking to engage in knowledge transfer since the mid-1990s (pp. 1, 3). The Lambert review recommends government policies to encourage further technology transfer, for example through increases in the Higher Education Innovation Fund to invest in fundamental science research that businesses can then commercialize for products in the market (p. 6; HM Treasury, 2004, pp. 151–154). The Treasury report urges the government to take on a management function to push universities toward increased technology transfer: In addition to funding, the government also has an important role to play in managing the national research system to deliver effectively and sustainably over the medium term. The key actors in the science base are universities who are charities and are free to make their own decisions about how they use institutional funding . . . The individual decisions of these organisations may not work to the benefit of the system as a whole . . . (p. 154) The Lambert and Treasury reports make clear a preference for the model of commercialization in which the university serves industry needs for research that can be developed into market products. Universities may do this through various types of relationships with industry, including consulting, research contracts, licensing of patents, and directly transferring research results to businesses (Lambert, 2003, pp. 34–49). The reports contrast this approach with universities engaging in marketing activities such as creating spinoff corporations based on academic research with commercial potential. In fact, the reports state that universities have engaged in too many spinoff activities (pp. 5, 50; HM Treasury, 2004, p. 173). The Lambert and Treasury reports recommend that the UK look to the US as a model of successful commercialization of academic research (p. 172). One of the lessons to be learned, they note, is that most university technology transfer yields little revenue for the universities. Rather than focusing on university–industry relationships as a means to bring private profits to the university, the reports recommend that universities focus on knowledge transfer to business as part of their mission to serve the public good (Lambert, 2003, p. 4). In line with this approach, the reports recommend that the UK reject the aspect of the US model that enables universities to retain ownership of patents on university research, whether publicly or privately funded. Instead, the reports recommend that the government should

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facilitate industry access to academic research by expanding businesses’ rights to ownership of the patents, rather than simply gaining exclusive or non-exclusive licensing rights to university-owned patents (p. 5). The Lambert and Treasury reports’ recommendation for increased governmental financial support for knowledge exchange has been carried out through funding rounds from HEFCE’s Higher Education Innovation Fund (HEIF). In the period 2000 to 2008, £700 million in knowledge exchange funding was provided to universities; in the period 2008 to 2011, £350 million was provided (Moore, Ulrichsen, and Hughes, 2010, p. 1); the total allocated for 2011 to 2015 was £601 million (p. 8; HEFCE, What We Do). To qualify for funding, universities submit strategic plans for knowledge exchange. As of 2007, 95% of higher education institutions had fully developed strategic plans (Moore et al., 2010, p. 8). University administrations reflect the importance of university–business relations. New senior positions have been created, such as University College London’s Vice Provost for Enterprise and Imperial College London’s Pro-Rector for Public and Corporate Affairs (p. 7). Research Councils UK (RCUK), established in 2002 as “the strategic partnership of the UK’s seven Research Councils”, encourages businesses to benefit from the annual £3 billion in public funds that the seven Research Councils distribute to academic research (Research Councils UK [RCUK], n.d., Home). The Research Councils award funds to academic research proposals that are evaluated through the peer review process. The RCUK’s booklet, Research and Business: a productive partnership, promotes the ways that businesses can profit from using university research facilities, getting access to university researchers and academic research data, collaborating on academic research projects, having student researchers spend time in the business and as future employees, and ensuring that business needs shape RCUK “strategy and decision making”. All of this, the booklet assures, will “HELP YOUR BUSINESS GROW” (RCUK, n.d., Research and Business, pp. 4, 5, 9). Governmental efforts to increase commercialization of academic research are integrated with the goals of the RAE and REF. The Treasury report notes that the RAE ratings show a “dramatic” improvement in the quality of research, which creates a strong foundation for knowledge transfer (HM Treasury, 2004, p. 153). As the Treasury report states, “For companies seeking to develop technological advantage it is natural that they want to work with the best quality departments” (p. 152). The report cites approvingly HEFCE’s commitment that “membership of panels and sub-panels [of the 2008 RAE] will include people with experience of commissioning and using research, including industry and commerce” (p. 174). The emphasis on universities serving business interests suggests, as well, that the REF’s definition of impact is more concerned with the economic impact of academic research on business, rather than the impact on the public or nonprofit sectors. As the Treasury report states, “Government funding for the science base must fully recognise applied and business-relevant research as it does basic research” (p. 156). Further, a 2010 report commissioned by HEFCE notes with approval:

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“There is some evidence to suggest that HEIs [higher education institutions] are beginning to alter their recruitment criteria, either explicitly or implicitly, and are starting to recruit candidates with stronger industrial credentials in addition to academic qualities” (Moore et al., 2010, p. 9).

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VI. Higher education, corporatization, and the liberal state The privatization trends in the US and UK bring us face to face with the question of the relationship of the liberal state and higher education. The higher education systems in the US and UK are structured differently – most notably in the dominance of public universities in the UK and private universities in the US. Yet, universities in both the US and UK have traditionally defined their mission as “public”, whether the universities were private or public. In both countries, global privatization trends have altered this public mission through re-structuring of university form and functions based on a private corporate model. The combined effect of the multiple institutional changes in the US and UK provides a picture of similar corporatization trends. In some areas, the means used are different. For example, in the US, the corporate employment model has been used to decimate the tenure system by shifting to hiring nontenure-track faculty. This change has increased the stratification in the faculty between nontenure-track teaching faculty and an elite tenured teaching/research faculty. It also gives university administrations total control over nontenure-track faculty and undermines the collective power of the shrinking tenured faculty to resist further pressures from the administration for post-tenure reviews of faculty productivity. In the UK similar results have occurred under the RAE/REF, which has been imposed through the government’s regulatory power over the national system of public universities. The RAE/REF has created a top-down model of assessment that emphasizes a predictable, regularized schedule of productivity by “research-active” faculty. Without the protection of tenure, faculty who dissent from this vision of research may be viewed as counter-productive or redundant (Willmott, 2003, p. 139). What is striking about corporatization trends in the US and UK is the pervasive nature of the infusion of the corporate model in all aspects of the university. The corporate vision of higher education has been carried through to the commodification of teaching and the commercialization of academic research. Teaching is a commodity for students who can make consumer demands for the most value for their tuition. Faculty positions are stratified based on tenure/tenure-track or nontenure-track status in the US and between research active and non-research active status in the UK, with accompanying differences in power and privilege. Communal norms of academic freedom are weakened as faculty struggle to compete against each other to rise to the top of a multi-tiered system. In this more individualistic context, faculty lose the will and ability to exercise collective governance power to resist the re-structuring of the university. All these changes fit hand in glove with university–industry integration, where academic teaching and research serve private corporate interests. In the US and

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UK, national policy has been implemented to encourage, promote, and even require universities to develop academic research that can be “transferred” seamlessly to business for commercialization. In the US, federal legislation and corporate partnerships promote the development of academic research designed for commercial exploitation. In the UK, the REF emphasizes the economic “impact” of academic research. Other government programmes create financial incentives and requirements for universities to create plans for greater “knowledge exchange” to business. Privatization and corporatization of academic research and teaching promotes a goal of integrating universities and industry. This goal has so pervaded the university that teaching, research, and employment structures fit together like pieces of a puzzle creating the picture of the “entrepreneurial” university. Ultimately, there is a danger that the corporate vision of education may have so altered the university’s identity that it can no longer be recognized as a public institution with a public mission.

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PART III

Privatization of public services

The third section of this book examines particular instances of privatization of public services in Sweden and Uganda, and the history of such privatization in the US. Through analysis of these cases, the authors demonstrate the usefulness of vulnerability analysis in identifying disconnections between policy goals, the means used to achieve them, and their eventual results. Mirjam Katzin’s piece, “Freedom of choice over equality as objective for the Swedish welfare state? The latest debate on choice in education”, uses school choice policy in Sweden to illustrate that values of equality and freedom of choice are often at odds. Katzin argues that moving to a market or consumer rationality for social welfare programmes makes inequalities easier to accept and shifts the focus of regulation from the collective to the individual. She reminds us that social welfare policies were once seen as solutions to problems created by the market, not problems for the market to solve. Mimi Abramovitz and Jennifer Zelnick’s piece, “Privatization in the human services: The impact on the front lines and the ground floor”, focuses on privatization as a key neoliberal strategy that exacerbated vulnerability for individuals as well as organizations. They show that privatization is not new, but rather has always been embedded in the US welfare state. They classify the different phases that human services privatization has gone through, and examine how the current phase, managerialism, has affected service provision, practice relationships and working conditions in human service organizations. Helene Brodin’s chapter, “Still a responsive state? Marketization and inequalities in Swedish aged care”, challenges the traditional characterization of all Nordic countries as universal welfare states. Brodin argues that privatization aimed at creating “customer choice” does not benefit all elderly subgroups equally, and has weakened the capacity of the Swedish state to provide resilience towards old age.

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She further argues that the marketization of social services for the elderly creates institutional vulnerability that cannot easily be remedied by regulation. Titti Mattsson’s piece, “E-government for the distribution of public services in Sweden: Privatization, vulnerability and social responsibility reshaped”, looks at how the increasing use of technology, particularly online services, in the delivery of social services affects who benefits from those services. Using social welfare e-services for the elderly as an example, Mattsson finds that e-services expose individuals to contractual ordering and thus to contractual law and an intermixing between public and private relationships. She argues that this blurs the line between public and private law, and that stronger legislative awareness and proactive legislative efforts are needed in order to fulfill the obligations of a responsive state. Finally, Harriet Diana Musoke’s chapter, “What does privatization mean for women in Uganda? ” examines privatization reforms in Uganda and their impact on women’s access to health services. Musoke argues that despite the Ugandan government’s commitment to ensure increased and efficient service delivery to women, that goal has not been attainable because the privatization process was rushed and the gender implications of the policy were never considered. Instead, Ugandan women face increased prices and reduced transparency and accountability from their government.

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10 FREEDOM OF CHOICE OVER EQUALITY AS OBJECTIVE FOR THE SWEDISH WELFARE STATE? THE LATEST DEBATE ON CHOICE IN EDUCATION Mirjam Katzin1

Introduction In recent decades, welfare services have increasingly been marketized. More private producers of welfare services have entered the scene, and the relationship between citizens and welfare providers, whether private or public, has become more customer-oriented. One example of the trend towards marketization reforms can be observed in the introduction of voucher systems in schools, which gives parents and pupils the option to choose schools. Sweden is one of many countries in which such a system has been introduced, incorporating such programmes in 1992. Other Swedish welfare systems have also been marketized, in comparable manners, for example the elder care sector, which Helene Brodin studies in her chapter in this volume. The Scandinavian welfare model rests on the principle of equal opportunity to take part in equally high quality welfare services (Hjort and Panican, 2011). Equal access to free and high-quality education has been central to furthering Sweden’s welfare goals; however, education reform is also used to compensate for other structural injustices. For instance, this can be seen in the Swedish Education Act (2010:800), which states as a declared aim that everyone should, independent of geographical location and social and economic condition, have equal access to education (Ch. 1, para. 8) and that the education should take into account the different needs of pupils, and compensate for differences in children’s opportunities to get a good education (Ch. 1, para. 4). Though egalitarian ideals are still highly relevant, and public responsibility is still the ground stone of the system, the Swedish school system has seen a significant transition in the last decade. Decentralization and the so-called freedom of choice reforms of the 1990s have 1 Lund University, Sweden.

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clearly impacted the education system. While the trend toward marketization and competition in school systems is global, Sweden is one of the countries that has progressed furthest in the marketization aspect and could therefore serve as a case of changes happening elsewhere too (National Education Agency [NEA], 2012a). As I will develop below, the privatization of welfare can be described as a multidimensional process, with responsibility, production, and financing of welfare services moving from the public sector to private actors (Meagher and Szebehely, 2010). An important part is the marketization of services, and the thereto connected introduction of freedom of choice, as part of a neoliberal agenda resting on ideas derived from economics. Marketization and competition are expected to increase the efficiency and quality of welfare services, as well as increase opportunities for a better adjustment to individual needs and desires. However, freedom of choice also means greater responsibility for the citizen to make the right choices for themselves and their family (Hjort and Panican, 2011). There exist different narratives of this recent welfare state development towards marketization. Is it the result of a legitimate critique of a paternalistic, ineffective, and bureaucratic welfare state? Or rather of a neoliberal society with greater leeway for capitalism and less for politics and democracy? Some scientists and politicians believe that the citizens, particularly the middle class, increasingly desire welfare service diversification, while others believe that this development is politically driven by economic interests that benefit from marketization (Anttonen, Häikö, Stefánsson, and Sipilä, 2012). What these different perspectives reveal is that there has been a change in discourse. Key words are now freedom of choice, individualism and decentralization, reflecting changes in government in favour of competition and marketization. This change implies a challenge to the system’s universalism. In Sweden, the debate over freedom of choice in schools has been reawakened, following reports of decreasing results and increasing inequalities. A conflict over the future of the welfare state seems to exist in this very question: should freedom of choice in the welfare sector be increased, even though it might increase inequalities between individuals and groups of people? These two lines could both be seen in the discourse on freedom of choice in the educational system.

Background Since 1992, when the opportunity to choose which school to send your children to was first established in Swedish education regulation, an increasing number of families make an active choice of school for their children. A majority of parents are in favour of having the opportunity to choose schools (NEA, 2003). However, this opportunity might at the same time be said to challenge the previously central values of universalism and egalitarianism in the Scandinavian welfare model and lead to increasing inequalities (Blomqvist and Rothstein, 2008). There seem to be potential distributive effects of the school choice system attributable to the risk that individual families with more resources benefit from choice more than

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those with less. Larger differences between different schools could now also be seen, making the active choice more important to secure high-quality education for one’s children (NEA, 2012b). The reform has led to an increasing number of private actors in the school sector (Jordahl, 2013). In 2013, around 15% of pupils in primary education went to a private school (NEA, 2014). According to OECD’s international comparative study, Programmeme for International Student Assessment (PISA), the Swedish school system is among the best performing in the world. However, performances in mathematics, reading, and science have deteriorated at a steady pace since 2003 according to the PISA test scores (OECD, 2014). The Swedish National Education Agency (NEA) as well as the PISA report state that the equality between schools has declined over the last decade, which correlates with the drop in results. The relationship between the socio-economic background of the pupil and their results is significant and has increased in recent years, as have the disadvantages relating to being born outside of Sweden (NEA, 2012b). The freedom of choice reform was established through a voucher system based on public funding. A ‘voucher’ is an allowance that follows from the right to a certain welfare activity, where the recipient themselves can control who performs the operation. This idea, developed by Milton Friedman, has been instrumental in the introduction of market-based management of welfare services, especially in the Swedish welfare system, where funding has largely remained public (Nordgren, 2003). The choice reforms introduced what, in Hirschman’s (1970) terminology, is called the “exit” option in the system – the opportunity to leave an unsatisfactory provider. This is supposed to increase the quality of the services through the aggregated choices of better providers over worse. Exit is an alternative to “voice” functions, where users of services express dissatisfaction to the managing authorities while staying with the actor, increasing quality by engaging in operations. However, some groups are more active in choosing schools than others. Factors such as socio-economic status, immigration, gender, geography, and education history seem to play a large role in how active families are choosing schools for their children (NEA, 2012a). As NEA (2003, p. 12, author’s translation) states, “freedom of choice is a social project primarily for the well-educated in the larger cities”. This leads to increasing segregation and differentiation amongst schools and therefore inequalities increase, even though the political goal of education on equal terms remains (Blomqvist and Rothstein, 2008).

Purpose, method, and material The purpose of this chapter is to investigate the current political debate on the school choice system in Swedish education, as a case of a greater conflict over the future of the welfare state, which is of a global nature. To this end, I will describe the historical and legal background of this debate and trace the different ideals and presuppositions in the question as it is viewed in the political system today. Furthermore, I will explain increased inequalities in terms of universalism and

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privatization and examine how this plays out in the discourses surrounding the welfare state. How do choice systems tie in with previously established egalitarian principles? The chapter also, through a vulnerability analysis, challenges underlying ideals and presumptions inherent in the school choice legislation and connects these with the increasing inequalities in the system. The chapter will give the background to and analyze the amendments of the Education Act of 1992, when the school choice system was introduced. However, focus will be on the current political debate. To that end, I will analyze a 2013 government investigation on independent schools, as well as 2014 parliamentary motions and debates concerning this question. I have limited the study to the regulation and debate over the nine years of compulsory education. I use a critical discourse analysis approach to approach the questions. A discourse is defined as a total of more or less coherent statements and concepts, approaches to problems, formulations of arguments, questions, and problems in a specific area (Brännström, 2009, p. 36). A critical discourse analysis approach, which I employ, implies a contextual analysis of language, which includes an analysis of the social processes by which meaning is created, the processes at work “behind” the production of meaning, as well as the power structures of these processes. By studying how social practices, such as how choice is represented in the educational system, relate to underlying presumptions about citizens and freedom of choice, the constructions and changes of a social order can be highlighted (Bergström and Boréus, 2005). In the reading of political processes, the critical discourse analysis investigates how policy, regulation, and government are developed by looking at how problems are framed, how solutions are formulated, and how values and ideologies are represented in discourse. By then placing this reading in the social context outside of the texts, the processes that dictate the discourse are visualized as well as the effects of the discourse on how society is governed (Tollin, 2011).

Universalism and privatization – concepts to understand the changes of the welfare state Universalism as a central ideal to the Scandinavian welfare model The notion of universalism can be said to be an ideal or logic, as well as an analytical concept (Anttonen et al., 2012). To spell out the defining aspects of this concept facilitates tracking changes to the welfare system. Various definitions of welfare state universalism exist (see e.g. Anttonen, 2002; Anttonen et al., 2012; Blomqvist and Rothstein, 2008; Vabø and Szebehely, 2012), but often named and significant factors include the following: (1) Equal access to services, regardless of need; (2) Equal treatment;

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(3) (4) (5) (6)

Equal quality throughout the system; High quality, at a level where it is deemed attractive to most citizens; Based on social rights rather than voluntary commitments; Publicly funded and financed primarily through taxation.

Universalism is rights-based in the sense that it is defined by your position in the life cycle, rather than by your economic or social position. It is built on an abstracted solidarity as well as on the ideal of individual autonomy in relation to the family, the workplace, or other means of meeting needs (Anttonen et al., 2012). Universalism requires that services are not only formally accessible to all groups, but also affordable, as well as desired, by all social groups. This requires generous funding. When the welfare service budget is tightened, the groups considered most in need are prioritized and the overall quality of services decreases; as a result, members of more privileged groups turn to private alternatives. Because an increasing number of individuals are seeking alternatives to public welfare services, it might lead to a falling confidence in the system as a whole (Vabø and Szebehely, 2012). A common critique of universalism points to how systems are often not as universal as they are portrayed, but in reality privilege certain patterns of life or positions. Institutions or rules that assume that all citizens are equal might miss structural differences and thereby contribute to already marginalized groups gaining less access to the system (Anttonen et al., 2012). However, a sophisticated form of universalism could also be sensitive to diversity. For example, by allowing elements of particularism and recognizing the different needs and wishes of different social groups, a universal approach can be effectively comprehensive (Vabø and Szebehely, 2012). The Nordic countries have been described as social-democratic welfare states resting on universalism as a distributional principle, by Esping-Andersen (1990) amongst other authors, in his well-known welfare state typology. The socialdemocratic welfare model is also based on the idea that the state should actively try to reach common goals for the community through public governance and by rectifying social inequalities in the distribution of political and social resources (Anttonen and Sipilä, 2012). These ideals have been particularly prevalent in the educational system, as education has been seen as one of the primary links to achieving a more equal society. Therefore, the goal for the school system to give equal opportunities for all reflects the high ambitions of the social-democratic welfare state. Societies in Nordic countries are expected to compensate individuals and groups through the school system, so that factors such as gender, class, and race or ethnicity do not disadvantage pupils (NEA, 2003). The PISA report states that even though Swedish schools are deteriorating in equity, they still make up one of the most equal school systems in the world. The report also shows a correlation between less use of grouping and selection and more motivated and better performing students (OECD, 2014).

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Anttonen rightly points out that although universalism has been a central ideal of the Nordic welfare systems, it has never been fully realized. Anttonen claims that the Nordic countries still have had “the most advanced welfare systems in terms of safeguarding citizens’ social rights” (Anttonen, 2002, p. 72). Blomqvist points out that what is specific to the Swedish welfare state is not the size of the welfare expenses as much as “the way in which it has institutionalized the values of universalism and social egalitarianism” through a standardized and generous public system of welfare services (Blomqvist, 2004, p. 140). The model has been characterized by the notion that equality requires that social services be equal for all, an objective that has led to uniformity. The ideal of “the high quality standard solution” might, if it is not f lexible, lead to a lack of pluralism that might be needed to encompass diversity (Blomqvist and Rothstein, 2008).

The different forms of privatization of the welfare state Privatization of welfare is often named, but not always defined. I see privatization as consisting of mainly four different possible processes (see e.g. Blomqvist, 2004): (1) Privatization of responsibility. Where does the principal responsibility lay, as defined by law or legal practice, on the public or on private actors, such as the individuals, families, or the civic sector? (2) Privatization of financing. This form of privatization is often, but not always, connected to the first one. It encompasses when the price for the needed service is paid for by the one in need or by another private entity, instead of by the public. (3) Privatization of production. When responsibility and financing are still placed within the public sphere but the production moves from public entities, such as state or municipal services, to private companies. (4) Marketization. This is defined as the processes and policies that convert areas of social life to markets, and transform objects, behaviours, and institutions to commodities, as well as move the motivation for production from a non-commercial public ethic to profit maximization and market rationales (Somers, 2008, p. 81). Neoliberalism views the market as an ethic in itself, which can be used to govern almost every aspect of human activity. Following that, competition is seen as a central value and where markets do not naturally emerge, government is expected to intervene to create them (Harvey, 2005). Marketization does not require the other types of privatization, although it often implies the involvement of private actors in the provision of services (Meagher and Szebehely, 2013). Blomqvist (2004) describes the privatization tendencies in the Swedish welfare system as happening in three phases. First, decentralization and deregulation

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changed the organizational structures during the late 1980s and early 1990s. Then, in the 1990s, voucher systems and so-called quasi-markets were being developed in several important public service sectors. This did not have a strong direct influence, since there still were few private actors on the scene. During the third phase, contracting out service provision became a well-used method for state and municipalities trying to make their services more efficient. I would also like to add a fourth phase, where there has been a great boom in private actors taking market shares through voucher systems. They have a greater influence now than when they were first established, partly due to the creation of strong private market actors through the contracting-out system. Privatization of production is the form of privatization that has most clearly occurred in Scandinavia, but there are signs of other forms of privatizations as well. However, Jordahl (2013) points out that Sweden is still the country in the world with the second highest portion of GDP going to tax-financed services directed to individuals, and that still only about 15% of this is produced privately. Voucher systems as a marketization technique often lead to an increased number of private actors in the sector, as well a larger share being privately produced (Jordahl, 2013). Vouchers introduce elements of competition and choice in new spheres. A central point of a choice system is that there should exist different alternatives and that quality differences should increase competition and thereby efficiency. As a choice system, vouchers tend to introduce both diversity and selectivity in sectors that were often previously uniform. When it comes to privatization of financing, it is often stated that this has not been changed in the Swedish education system, since the school choice model is voucher based. However, a parallel development has also occurred, where a private market for homework assistance has been established. Through the so-called RUT deduction, hiring of in-home services is supported by a tax reduction. The reduction is positively connected to income, meaning that the state subsidizes the buying of services for the well-off. There have been claims that this might lead to a form of privatized financing of education, which thereby increases existing inequalities (Vlachos, 2012).

Evaluating the changes of the Swedish educational system An important question is how the development of systems of choice ties in with the previously established ideals of equality, and if changes can be said to have altered the social policy objectives and not merely its tools. Several authors point to how changes of the recent decades towards privatization and marketization have in fact affected the degree of universalism in the system. Anttonen and Sipilä (2012) state that universalism has been reformulated and given lower priority in the Nordic countries due to reduced public budgets, a strong emphasis on work and merits, a declining sense of solidarity, and an individuation and diversification of services. Anttonen states that universalism has been on decline since the 1990s

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when significant downsizing occurred, politically motivated by and through economic crises and a neoliberal agenda: In a situation with less public money for social spending, it is universal benefits and services that are of the cut first. The new liberal ideology of social policy emphasizes earnings-related benefits: you earn what you have paid for. It also stresses residualism instead of universalism: only the poorest should be assisted with public money. Universalism does not fit well with the rhetoric of new liberalism and individualism. (Anttonen, 2002, p. 79) Blomqvist and Rothstein (2008) point to how freedom of choice systems might lead to unequal distribution and segregating effects. Furthermore, it seems as though the quality of services has been decreasing in the last decades, despite claims of the voucher system’s ability to increase efficiency and quality. Blomqvist (2004) notes that one of the initial ideas behind publicly financed welfare was to protect this sector against market forces, with the aim to increase social equality, but that these values are much weaker in current Swedish social policy. Instead, values of consumer sovereignty, economic efficiency, and private initiatives are at the forefront. Welfare is now seen less as an equalizer of social conditions or a tool to create greater equity and more as a service provision with the aim to satisfy the needs of citizens at the lowest possible costs. To sum up the developments in terms of the aspects of universalism in the Swedish educational system, see table 10.1. I have chosen the year 1990 as a reference point, as this is around the time before the development took off. The table is to be seen as an approximation to make the changes clearer. Looking at the table, it becomes evident that the move towards different forms of privatization, especially marketization and the school choice system, has affected the level of universalism in the Swedish educational system. This is also stated by the NEA, claiming that “taken together, freedom of choice is challenging many of the interim objectives contained in the equity goal. The most serious threat is the segregating effects that directly challenge the goal of a communal school open to all” (NEA, 2003, p. 159, author’s translation). TABLE 10.1

Aspects of universalism

1990

2015

Equal access to services Equal treatment Equal quality High quality Rights-based Tax-based and publicly financed

Yes, but with problems Yes, but with problems Yes Yes Yes Yes

Not to the same extent Yes, but with (greater) problems Not to the same extent Not to the same extent Yes Yes, with elements of private funding

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A theoretical backdrop to the conflict on the future of the welfare state The conflict between the egalitarian ideal of Swedish welfare and the values and effects of the school choice system could better be explained by means of a theoretical lens. Through the vulnerability theory, as developed by Martha A. Fineman (2008), three aspects of this situation could be highlighted: how choice is made in an embedded situation, how the citizenship ideal is based on either an autonomous or a vulnerable legal subject, and how the private/public distinction as a social construction generates our understanding of political issues. These three aspects will be discussed below from a vulnerability perspective.

Freedom of choice in an embedded and embodied context Martha Fineman (2004) points out several flaws in the general description of individual choice or personal responsibility. She points out that we are born into certain social conditions that, at least partly, form our life path and the choices that we make. Furthermore, we, as embedded creatures, always make choices within social contexts. Choices of welfare services can, therefore, not only be determined by market forces or rational choice, but are always formed by institutional and other social conditions. The barriers to making an informed choice are greater for some than for others, and the result of that is that children of parents with less time, interest or active engagement might suffer from this in an unjust way (Fineman, 2009). Fineman (2008) describes the differences in abilities to make choice as being a question of resilience, of which assets that we have at hand in choosing and pursuing our life paths or in dealing with the downfalls of life. People are in general actively trying to manage the risks of life. However, those with greater assets will more effectively find ways to meet their needs, due to the advantages they possess. The promotion of values such as freedom of choice therefore risks enhancing the benefits for the already resourceful citizens who can use their economic, institutional, social, cultural, bodily and other assets to ensure that they get the most out of the welfare state. It seems evident from the secondary empirical material that the opportunities to make active choices for education are dependent on the assets that we have at hand: your parents’ level of education, the Swedish language, functionality and abilities, gender and geography (see e.g. NEA, 2003; NEA, 2014). If the informal barriers are significantly higher for some users than for others, the access to choice cannot be considered equal. As Hjort and Panican (2011) point out, choice is also often governed by factors other than quality or other values internal to the education – such as by what is expected in a specific social group, by status or identification. Furthermore, a certain level of knowledge of the system is needed in order to make good choices when it comes to education. Such knowledge includes the existence of an opportunity to choose among different pedagogical alternatives and about different available schools. In conclusion, it seems like freedom of choice might act as a selective mechanism that consolidates and reinforces social patterns and segregation.

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The autonomous or vulnerable legal subject The legal material analyzed below reveals conflicting norms in the legal system and its reforms. These norms represent different ideologies and interests; and therefore, it is of importance to see on which premises regulations are built and rebuilt. Fineman (2008) points out two conflicting ideas of the legal subject that inform Western legislation: the liberal and autonomous, self-preserving subject, and the embedded and embodied vulnerable subject. The freedom of choice reforms presume a citizenship with a so-called “active” dimension, which means individuals are responsible for their own wellbeing and that they should protect themselves against risks by exercising choice in relation to the market. The market is central to this idea and represents a place where individuals can act independently, freely, and according to their own interests, which will indirectly lead to the outcome that is best for everybody (Hvinden and Johansson, 2007). The individuals are presumed to be autonomous. They, as citizens in liberal democracies, have the right to make choices and the right to contract, but they lack strong social rights that respond to their inherent vulnerability or temporary dependency. The idea of autonomy presupposes a healthy adult that possesses sufficient capabilities and competencies to be able to live independently of subventions and support from others. However, this state is neither attainable nor desirable – “we want and need the webs of economic and social relationships that sustain us” (Fineman, 2004, p. 28). Furthermore, as Fineman (2011) shows and as is also evident in what is stated above about different social groups’ ability or tendency to make choices, the general description of the autonomous subject fits better with certain privileged positions than with others. The relationships we are in, or create, whether they are social, economic, or familial, do not operate according to the ideal of the free market and the contract situation in which we are all assumed to have the same bargaining power. Rather, the idealization of the contract and of individual choices hides the structural inequalities that exist on a societal level and thus assists in consolidating them. Instead, by having shared vulnerability – the universal and inevitable aspect of the human condition – as a starting point for legislation, the need for a more responsive and encompassing state becomes apparent (Fineman, 2008).

The private/public distinction The critique of the autonomous subject as an ideal is also connected to a third point: an analysis of the construction of the dividing line between the public, political sphere and the private, supposedly apolitical sphere. When a responsibility for the family to choose a good quality education for their children is introduced, and in part replaces the public responsibility to provide a high quality education for all, the line between public and private responsibility is redefined (Fineman, 2009). A legal regulation that assumes an anti-interventionist policy will ignore the unequal patterns that characterize the private sphere and regard human vulnerability and dependency as something that should be handled privately. This discourse also breeds images of independence, self-sufficiency, and agency while explaining

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individual failures as weaknesses or inabilities. The division between public and private spheres means that problems facing individuals will be regarded not as a responsibility to society, but as belonging to a different domain (Fineman, 2008). Furthermore, this defines a high quality education to be a private good rather than a public good, meaning that the gains to the whole of society of its citizens receiving a good education on equal terms are missed out on. The relationship of the individual to a private good is also different to that of a public good, to which the individual relates as a citizen. Through that perspective, it is instead of relevance that all schools are good, as the interest in high quality is independent of the private consumption (Hirschman, 1970). In a freedom of choice system, the quality of education is assumed to be partly an individual responsibility through the individual choice of leaving a bad school for a better one. This notion of the citizen as an active, rational customer distorts the reality of the educational situation and moves the problems to a private sphere. This means that potential inequalities in relation to choice are made invisible and possible problems are a private matter (Hjort and Panican, 2011). According to this logic, individual differences in, for example, access to, and quality of, education, becomes naturalized, since the outcome relates to individual preferences as well as to personal responsibility (Anttonen et al., 2012). This is rationalized by a discourse justifying and normalizing market entry in all aspects of social life, based on a description of reality bound by certain economic laws of nature (Somers, 2008).

The school choice system in the discourse With the help of these theoretical perspectives and understandings, I will in the following look thoroughly at the earlier and more recent debate on school choice systems in the Swedish educational system. Thereby, I hope to show aspects and patterns of a more general discourse on the questions of marketization and equality in welfare services.

The reform of 1992 During the 1990s in Sweden, a series of school reforms replaced detailed regulation with performance management. The goal of the reforms was a school system based more on diversity and individualism and less on uniformity. Here, the independent schools reform of 1992 that introduced the voucher system was central (Hjort and Panican, 2011). Through a change in the older Education Act (1985:1100), the Swedish right-wing government at the time gave independent schools the right to receive funding from the public for every pupil they took on. They were, however, not allowed to collect student fees for education, a regulation that still holds (Government Bill, 1991/92:95). It is only within the past decade that the numbers of students who choose independent schools have taken off. There is no limit on how much profit school enterprises can make from education, and therefore factors such as profit margins and competition between different schools have become increasingly important in the education system in the last decade (Hjort and Panican, 2011).

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The government bill enacting the change in regulation states three different motives in introducing a voucher system in education. The first one is the inherent value in having freedom of choice. “The right and the opportunity to choose school and to choose your children’s education are important in a free society” (Government Bill, 1991/92:95, p. 8, author’s translation). This point is not further elaborated on or problematized, but seems central to the values underlying the government proposition. The second objective that is raised is the need for diversity in education and pedagogy. The bill states that the future will need a greater variation and flexibility in education and that a uniform system will not be able to provide this. “Increased diversity in the education sector enables multiple interests to be satisfied” (Government Bill, 1991/92:95, p. 9, author’s translation). What is most elaborated on and underlined is the third point: the positive aspects that are expected to follow from competition and bolster the whole educational system. Competition is supposed to increase the parents’ commitment to their children’s education as well as encourage greater responsiveness from the public school to the desires of pupils and parents (Government Bill, 1991/92:95, p. 8). Furthermore, the quality of the whole school sector is assumed to increase by “a stimulating competition”, and so is the efficiency, through the development of new and improved working methods (Government Bill, 1991/92:95, p. 9, author’s translation). These expectations could be recognized as the neoliberal ideas on marketization and “exit” as ways to make the public sector more efficient by introducing private alternatives. Equality and equivalence in the school system are only touched on briefly and appear only in the context of student fees. The bill states that through prohibiting fees, schools do not risk becoming socially and economically segregated, making this strictly a question of economic resources (Government Bill, 1991/92:95, pp. 16–17).

2013 investigation on independent schools A parliamentary committee on independent schools presented a governmental investigation in 2013 (SOU, 2013:56). The investigation proposes a number of changes to the regulation of independent schools, such as raising the bar for the establishment of private schools, higher transparency, better protection for whistleblowers, and stricter penalties for quality deficiencies (SOU, 2013:56, pp. 17–20). However, the committee also states that the opportunity to choose between schools is of great value, “both for the individual pupil and to stimulate the development of the school system” (SOU, 2013:56, p. 15, author’s translation). The investigation notes that competition does not seem to have led to higher cost-efficiency in public schools, as was expected, but rather to increased costs. Public schools claim that the increased costs come from specializations and other investments that they have to make in order to compete for students, including marketing. They have also experienced cost due to difficulties in planning for long-term investments as the number of pupils can fluctuate unpredictably (SOU, 2013:56, p. 88).

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The investigating committee however, despite this increase in costs, continuously supports choice as a competition mechanism, because of how schools’ incentives to improve are reinforced when they have to compete for students. The development of successful pedagogical approaches and school organizations are supposed to be stimulated and spread (SOU, 2013:56, p. 89). According to the investigation, the reason that efficiency has not increased as expected is not that marketization of education is not functioning, but that the market has not functioned well enough: That pupils have the right to choose a school, and that this choice determines the allocation of economic resources, are two prerequisites for the mechanisms that will lead to more efficient working methods and higher quality in the school system. The idea is that schools which do not measure up are abandoned by the pupils and thus not able to continue. The schools cannot compete for pupils through pricing, because the public is the financier and the price is fixed. Schools can, however, compete by improving the quality and adapting supply and design of educational programmes to students’ and parents’ wishes. For free competition to be quality enforcing, it is however required that the customer can make rational choices based on facts. (SOU, 2013:56, p. 90, author’s translation) The lack of good information, the complexity of the good, the difficulties in fully knowing the quality until after you have made the choice, and the cost of switching, are all described as barriers to a well-functioning market in the education sector (SOU, 2013:56, p. 90). It is noticeable how the investigation describes education as a private good and pupils as rational customers in relation to their choice of schools. This discourse is underlined by the statement that “the free school choice and the fact that more and more profit-seeking companies are operating in the school sector has contributed to the fact that this question also must be viewed from a business perspective” (SOU, 2013:56, p. 86, author’s translation). The market is thus portrayed as a way to solve political problems, but also as a value in itself. The questions of equality and segregation are not mentioned in the report, besides the statement that it is unacceptable for schools to provide education at different quality levels. Under the headline, “On equal terms”, the conditions for the different actors providing education on the school markets are discussed, not the situation for the pupils (SOU, 2013:56, pp. 57–58).

2014 parliamentary debate on school choice During the parliamentary year of 2013–14, the Swedish government issued a bill on education that partly dealt with the question of equality, through proposing a changed resource allocation system, which to a higher degree should take the different needs

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of pupils into account (Government Bill, 2013/14:148). In reaction to the independent schools investigation and the bill, the parliamentary opposition raised several motions concerning equality and freedom of choice in education.2 The government bill and the motions were debated as part of a larger debate on the educational system. To study these interventions is to make visible the conflicting discourses on this subject and therefore I will give an account of these parliamentary actions below.

Government bill The government bill proposes an amendment to the Education Act, stating a municipal responsibility to allocate resources according to different preconditions and needs of pupils, and not only proportionally per child. The government underlines the right to an equal education as a cornerstone in the Swedish educational system and states that effort should be made to compensate for differences in pupils’ capacity to benefit from education (Government Bill, 2013/14:148, pp. 15–16). An allocation of resources that takes this into account will therefore be an important tool in securing a high level of equality in education and express the compensatory task of the educational system (Government Bill, 2013/14:148, p 19). The government briefly refers to the PISA report’s statements on the correlation between differences in results between schools and students and the socioeconomic background of the children (Government Bill, 2013/14:148, p. 17). It does not further elaborate on different aspects of equality. It also explicitly declines to give more detailed instruction on the principles according to which the municipalities should reallocate resources, or which aspects should be taken into account (Government Bill, 2013/14:148, p. 20). Thereby, specific structural and institutional barriers to education equality are not recognized or spelled out.

Motions from the opposition The largest oppositional party, the Social Democratic Workers’ Party (SAP), has in two parliamentary motions developed their current educational politics. One of the main problems of the current system, according to SAP, is the declining equality in education. The increasing differences and segregation as well as the falling results mentioned in the PISA report are central to their description of the problem, and they state that these issues are correlated: “Educational policies need to be developed to counter the increasing segregation in the Swedish school, where children are divided into different schools according to their background and where the pupil’s social and possible foreign background has a very large impact on educational attainment” (Swedish Motion, 2013/14:Ub567). The measures that SAP wants to adopt to combat the identified problem include a reallocation of resources, with a special investment in the worst performing schools. They also wish to abolish the possibility of making homework 2 http://www.riksdagen.se/en/How-the-Riksdag-works.

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assistance tax deductible and instead improve the possibility to get assistance in school (Swedish Motion, 2013/14:Ub567). Furthermore, they aspire to legally establish a goal of broadened recruitment, saying that amongst the principal’s task should be to achieve a heterogeneous school composition in terms of gender and social and ethnic background, and for the authority deciding on the establishment of new private schools to take into the account the risk of segregation in the decision (Motion, 2013/14: Ub569). Noteworthy is that choice in education is not depicted as either part of the problem or the solution, according to SAP. The Green Party also acknowledges the increasing segregation and inequality in their educational policy motion and states that it correlates with the decreasing results. They claim that segregation risks reinforcing already negative impacts of certain backgrounds, where students who end up in “unfavourable environments” risk falling behind. To counteract this development, they suggest targeting resources according to socio-economic conditions. When it comes to school choice, they see it as a possible instrument to use against segregation, rather than as part of the problem. By placing attractive profile education in project neighbourhoods, pupils from socio-economically privileged areas might be attracted to these schools, thus mixing up the student group (Motion, 2013/14: Ub565). The Left Party’s primary reaction to the investigation and the bill was that the problem with education companies making large profits out of the school industry was not tackled in a sufficient manner. The question of the free choice system was also raised, and portrayed as a reason for declining inequality, which in turn is depicted as the main problem in the current situation. The motion states that equity in the Swedish compulsory school is decreasing and that this is related to the free choice system. The problem, according to the motion, is connected to structural factors, such as socio-economic and ethnic background and the level of education in the family. “There is a strong correlation between a pupil’s socio-economic background and their results in school. Students from rich families do better than students from working class families or metropolitan suburbs” (Motion, 2012/14: Ub396, author’s translation). Following this statement, three proposals are made. The first one is to change the resource allocation from a voucher system to a system where schools receive resources according to need. The second proposal is to reinstate the proximity principle in allocation of pupils, thereby limiting free choice of schools, though not entirely abolishing it. Thirdly, the party wants to abolish the tax reduction for homework assistance, as the opportunities to get education should not be related to family income (Motion, 2012/14: Ub396, author’s translation).

Parliamentary debates The question of school choice and equality was addressed during two different debate sessions in parliament throughout the 2013–14 parliamentary year. I will briefly review the positions that were raised during these debates. The Social Democrats start the first debate off by bringing up the increasing inequalities in schools. They state that “the socio-economic effects are great in our

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school system today” and that the parents’ level of education is the most deciding factor. They further identify the consequences of inequalities as exclusion and income support dependence, because of the close relationship between a good education and socio-economic positioning (The Riksdag Protocol, 2014-02-20, statement 92). The Green Party fills in and welcomes the government’s changed position on the question of resource allocation (RP, 2014-02-20, stmt 93). The Left Party claims that it is primarily the choice reform in the Swedish school system that is to blame for the increasing inequalities and segregation and the decreasing results (RP, 2014-02-20, stmt 95). The Moderate Party, representing government opinion, states that the reforms have in fact been successful. The government believes that the problem with decreasing results should instead be remedied by raising salaries and status for teachers, increasing their competence, and raising the expectations of students (RP, 2014-02-20, stmt 96). The Left Party explains their position on what has happened during the right-wing government, claiming that the responsibility for education increasingly has been transferred to the student and the family. “It is at home you should fix school by, for those who can, buying private tuition to be able to get a good education for your children” (RP, 2014-02-20, stmt 101, author’s translation). An MP from the government Christian Democratic Party wants again to highlight the personal responsibility, which she does by pointing to the countries that have improved most in the PISA report. They are also the countries where education is the only way from a poor situation to a good life and therefore to a higher degree valued by families. Her conclusion is that the attitude of families and children must change towards prioritizing education (RP, 2014-02-20, stmt 111). In the second debate, the Social Democratic MP starts out by accusing the government of having a market approach to the school system and thereby losing the specific values of education (The Riksdag Protocol, 2014-05-05, statement 116). The government does not reply by addressing the marketization, but rather by highlighting the importance of a school that gives everyone the opportunity to succeed. “We must not lose any student along the way, neither the really clever students who may have received a very special talent. It is a group that is often forgotten but that also needs to develop and flourish” (RP, 2014-05-05, stmt 118, author’s translation). The government Centre Party emphasizes the significance of equality while demonstrating the centrality of opportunities to get as far as possible, which is why they believe entrepreneurial skills should be taught at school (RP, 2014-05-05, stmt 124). The right-wing Liberal Party defends the freedom of choice system and the independent schools and wants focus for education policies to be on quality and results, rather than on public and private ownership (RP, 2014-05-05, stmt 123).

Summary of school choice discourse In the government bill of 1992, three primary motifs for introducing choice were raised: the inherent value of choice, the need for diversity, and the positive aspects following the introduction of competition. The current debate continues to cite

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freedom of choice and diversity as important values, although they are not as strongly highlighted. The investigation of 2013 argues along economic lines for increased competition and a better functioning market. Here, the neoliberal discourse of rational citizens acting as customers and education as a private good is very apparent. However, this discourse is not as prevalent in the parliamentary handling of the question, where competition is not at all raised as an important aspect of school choice. This could either depend on the limited success of competition, measured in terms of the expectations that were attributed to it in 1992, or on the fact that choice is barely questioned in the political debate. Only the Left Party wants to limit freedom of choice, which is surprising though the opposition raises sharp critique against the government’s market approach, and against the earlier school reforms, supported by research and reports pointing to the apparent correlation between the choice reform and increased segregation. The political debate focuses on increasing inequalities in education, renewing the view of education as a compensatory mechanism. Regarding the question of another system for allocating resources, the government has changed its position in recent years and now agrees on the need for a voucher system that takes different needs and preconditions into account; however, the size and principles for this reallocation is defined in different ways. The meaning of equality is, in this sense, substantive equality, where limits in opportunities due to lack of assets should be compensated for in the school system by curbing segregation and by allocating resources according to need instead of proportionally. Although both the government and the opposition acknowledge the problem of increasing inequalities, the problem is framed and explained in different ways. The parties in opposition repeatedly give structural explanations of the inequalities, mentioning aspects such as class and ethnicity as deciding factors. These aspects are not central to the government’s explanation of the situation. Instead, representatives of the government point out how talented students are at risk of falling behind in the current system. The problem of inequality does not seem as central to the parties in government, as they rather put focus on the quality of education and the success of students. These different starting points lead to different political solutions. The opposition wants to target inequalities via public policies of broadened recruitment and reallocated resources. The more radical Left Party wants to limit choice, whilst the social liberal Green Party still sees it as a possible tool to battle segregation. The government majority wants instead to put more focus on private responsibility, changing attitudes in families, and increasing opportunities for individual success.

Conclusions and further reflections Getting back to the description of the question of school choice as existing in a context of a conflict over the future of the welfare state, several general clashing points of view could be spotted in the Swedish discourse surrounding this question. Universalism is still upheld as a central value; on the other hand, this

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welfare state ideal is threatened by conflicting interests that get their support from neoliberal values. While the discourse seems to have shifted to acknowledging inequalities as a problem in the education system of Sweden, freedom of choice and marketization still seem to be generally unquestioned. A main discursive clash that could be spotted in this issue is that of equality and freedom of choice. Several studies point to the correlation between school choice and segregation, which, in turn, is connected to increasing inequalities in the access to high-quality education and decreasing results for the whole educational system. The compensatory ideology that has been central to education regulation has meant that inequalities previously have been seen as unjustifiable. However, freedom of choice rotates the Swedish education system towards a market or customer rationale, in which inequalities become easier to accept. Freedom of choice and equality are values that in many ways act as opposites and are in turn connected with other dichotomies: selectivism instead of universalism, regulation based on the individual rather than on the collective, private rather than public responsibility for welfare, and individual explanatory models rather than structural. School choice means a slide towards the latter stages in these dualisms. As the partial marketization of education can be seen as a movement from universalism to privatization, citizens are reconstructed as “customers”. The individual choice of school is driven by mechanisms other than the political choice of how education should be organized and distributed. Towards what is regarded as private goods, we act as customers with our personal utility maximization in focus; towards public goods we act as citizens, on the basis of principles of solidarity and the common good. In turn, this will mean that criticism of the content or quality of education will be considered as customer complaints rather than as political criticism, which is also an implication of privatization. These points on the Swedish debate on school choice might in turn give insight into conflicts surrounding welfare states both similar to and different from the Scandinavian countries, demonstrating how marketization can shift the rationale of the system. By steadily degrading the public realm and political influence on people’s social conditions, welfare marketization changes the basis of citizenship from social and universal to contractual and conditional. This could be understood through Martha Fineman’s theory of the autonomous subject as the basis of the liberal system. Privatization of welfare rests on ideas of individual autonomy and self-sufficiency – especially so marketization, which presumes the market to be a place for free interaction between equals rather than a social sphere where societal structures are at play. In this way, school choice can be understood as an expression of privatization discourse that reformulates the problems of education from public to private. This individualization discourse will, in turn, decontextualize education and conceal conditions and effects that are linked to structural inequalities. Furthermore, the weakened universalism in the perceived distribution of high quality education, might mean that the middle class instead demands or prefers freedom of choice and a model in which obligatory education can be supplemented

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and improved by privately financed education, through homework assistance subsidized by tax reductions, which, in practice, can primarily be used by high or middle income earners. A higher degree of private schools in the system might also be a threat to universalism. Some scholars argue that the diversification of welfare services is, to an increasing extent, desired by welfare citizens, namely those who are members of the middle class. Universal solidarity has lost ground to ideas about individualization and freedom of choice. Such a development means that the vulnerable subject as a starting point for the organization and regulation of welfare has given way to the ideal of the autonomous subject. Marketization and voucher systems are techniques that encourage other forms of privatization. By allowing for different actors to exist in a welfare service sector, that sector is opened up to corporations and private profit-seeking interests. Through developing an acceptance towards inequalities and differences within the systems, it will be easier to argue for private funding and a smaller public financial responsibility. In the long run, this will mean a lesser degree of redistribution mechanisms within the state, a development that will benefit the well-to-do over the less so. In this way, it becomes apparent that marketization is an important aspect of privatization and is supported by defined interests. One of the initial ideas behind publicly financed universal welfare was to protect citizens against market forces, with the aim to increase social equality. However, these values seem to be weaker in current social policy, and instead values of freedom of choice and individualization are at the forefront. The increased responsibility on the individual can be described as a political capitulation to market forces. Welfare policy was once seen as a solution to the social problems that were created by the market; now the market is positioned to solve the problems of the welfare state. In a neoliberal driven New Public Management, developments in public services in the Scandinavian countries, including voucher systems and changes in the formulation of public commitments and public expectations, have shifted the relationship between the public and the citizen such that citizens are being increasingly expected to be active and promote their own interests. This pattern could be generalized to a global development of weakened welfare states. Through applying a vulnerability perspective, the threat to equality that this development entails could be understood and challenged.

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PRIVATIZATION IN THE HUMAN SERVICES The impact on the front lines and the ground floor Mimi Abramovitz1 and Jennifer Zelnick2

I. Introduction Human service agencies are well known for the quality of services they provide to individuals, families, and communities. However, during the last three decades in both the US and Europe neoliberal social and economic policies have restructured the delivery of human services in ways that affect the wellbeing of clients and the capacity of both human service organizations and workers to deliver services. Scholars from various disciplines and many countries have studied the impact of neoliberalism on the scale and scope of social welfare programmes, the hollowing out of the welfare state, and the slow-down of the economy. Others have examined its impact on human vulnerability (Fineman, 2012) especially the poor, low-wage workers and agency clients/service users.3 Yet only a few researchers have looked at the impact of the current paradigm on institutions such as human service organizations whose programmes address basic human needs and have the potential to decrease vulnerability. This chapter focuses on privatization as a key neoliberal strategy that increased vulnerability for individuals as well as organizations. However, the following historical overview reveals that privatization is not especially new. Rather, it has always been embedded in the US welfare state – albeit in different forms in different historic periods. Part I of this chapter sets the stage by describing the social,

1 DSW, Berth Capen Reynolds Professor of Social Policy, Silberman School of Social Work at Hunter College, CUNY and The CUNY Graduate Center, New York. 2 ScD, Associate Professor of Social Policy, Graduate School of Social Work, Touro College, New York. 3 There is international and sector-based variation and debate about which terms should be used to refer to those who participate in human services. We have generally not addressed that debate specifically here, and use the terms “client” and “service user” because of their common use in the human services sector.

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economic, and political functions of the welfare state. Part II describes three historical phases of privatization. Part III presents a review of the literature on how managerialism – the current phase of privatization – has affected service provision, practice relationships and working conditions in human service organizations.

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II. Three key welfare state functions The history of privatization in the welfare state is grounded in the complex set of social, political and economic functions that taken together have mediated poverty, enhanced profits, and muted social unrest. The social functions of the welfare state focus on providing a minimum level of income below which no one is expected to live and social services to help with daily functioning. Along with needed benefits and services, social welfare programmes also regulate the lives of recipients by requiring them to conform to white middle-class norms about “proper” work and family life to receive aid. The political functions of the welfare state help to maintain social and political stability. In addition to enforcing work and family norms and otherwise regulating daily behaviour, the provision of benefits also counteracts the discontent or protests that result when market inequality threatens the economic security of the average household or the democratic promise of fair treatment for all. The economic functions of the welfare state refer to benefits provided to business, industry, and the overall economy. Cash benefits (1) stimulate the economy in hard times; (2) create the purchasing power needed to buy the goods and services produced by business; (3) press wages down since low benefits increase the supply of people looking for low wage jobs; and (4) generally supply employers with healthy and educated workers at taxpayers’ expense (Abramovitz, 2004/2005).

III. Three stages of privatization While carrying out these at times conflicting functions the welfare state consistently maintained a dynamic relationship with the private or market economy, although the nature of this relationship and the character of privatization efforts changed over time. This paper identifies three stages of privatization in the US welfare state and, uniquely, treats them as a single historical trend: (1) marketization (the delivery of publicly financed benefits and services through the market); (2) managerialism (importing business principles into the management of human service agencies); and (3) financialization (importing investment principles into the financing and growth of human services).

The rise of the US welfare state Contrary to popular opinion, the US welfare state did not arise exclusively from a humanitarian impulse. Rather, it is best understood as a governmental response to the collapse of the economy in the 1930s – the first economic crisis of the

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twentieth century. This crisis led the nation’s leaders to conclude that they needed new structures to restore the functions of the state: individual wellbeing, profitable economic growth, and political stability. Departing from the past practice of blaming economic woes on individual behaviour, business and government pointed to the failures of the market and asked the federal government to step in. The resulting New Deal ushered in a paradigm shift by calling for a redistribution of income downwards from the haves to the have-nots and an expanded role for the state. The strategy countered the prevailing laissez-faire approach by: (1) strengthening the role of the federal government; (2) creating a welfare state and an entitlement to support; (3) subsidizing business, farmers, and workers and families; (4) underwriting family maintenance; and (5) quieting the massive social unrest sparked by mounting inequality (Abramovitz, 2004). However, the emerging welfare state did not stand “outside” the market. Rather, from the outset in 1935, the US welfare state programmes were “marketized”, acting in tandem with the private market. Marketization included an income support and a service strategy (Abramovitz, 2014).

Marketization The Income Support Strategy (New Deal to mid-1970s): The welfare state arose to provide a minimum level of income below which no one should live and to supply human services needed for full functioning in the family, community, and workplace. It carried out these social functions by helping to mediate the excesses of the market economy associated with lack of income, poor living conditions, and limited opportunities for success. At the same time, the welfare state’s economic and political functions tied it more directly to the market economy. Access to benefits transformed recipients into “consumers” equipped to buy the goods and services produced by business and industry, subsidized low wages, and enforced mainstream work and family norms (Abramovitz, 1996). At the same time, by addressing basic needs the programme helped to quiet social unrest (Piven and Cloward, 1971). In short, the welfare state not only helped to create the conditions for wellbeing but also profitable economic activity. The “marketized” welfare state expanded from 1945 to the mid-1970s due to population growth, the emergence of new needs, and increased federal funding. The ongoing demands of the trade union, civil rights, women’s liberation, and other social movements for more robust cash assistance as well as social services also played a key role. All told, Federal spending on individuals rose significantly from 3.5% of the GDP in 1948 to 9.5% of the GDP in 1975 (White House, 2014). The Service Strategy (early 1960s to mid-1970s): The second phase of Marketization – the service strategy – continued the expansion of the welfare state through new measures that authorized funding social services provided by private nonprofit human service agencies. In the 1930s, Harry Hopkins, the head of the Federal Emergency Relief Administration and largely credited with drafting the New Deal, famously required that relief be furnished directly to applicants by a public agency

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and prohibited turning over federal funds to private organizations (Cohen and Ball, 1962; Zunz, 2012, p. 127). The ban on funding private agencies reflected the New Dealer’s distrust of the nonprofit agencies due to their religious auspices, limited capacity during the depression, and their moralistic views about people and assistance (Lubove, 1968; Salamon, 1999). Instead the nonprofits (also known as voluntary agencies) historically relied on private charities and the United Way. By the early 1960s Congress recognized that people needed social services as well as cash assistance to achieve a minimum standard of living and to maximize personal functioning (Derthick, 1976; Rosenthal, 2000). The 1962 Public Welfare Amendments to the Social Security Act lifted the 30-year ban on public funding of private agencies. According to the Social Security Administration this new policy was “the most important change to the Social Security Act in that Act’s history” (Cohen and Ball, 1962). The 1963 Economic Opportunity Act further authorized the federal government to purchase services from a wide variety of community-based health, legal, employment, social, and other nonprofit service agencies using grants and contracts (Salamon, 1993). The 1967 Social Security Amendments increased the stream of federal funding to nonprofits by allowing the states to match federal funds with private dollars and not limiting the amount of federal dollars the states spent on contracted services (Martin and Frahm, 2010). The purchase of service or contracting-out arrangement dramatically altered the relationship between the welfare state and nonprofit human service organizations. The changes established a model of public–private partnership in which the government directed rather than provided services to individuals and families (Healy, 2002). Over the next decade, the agencies within the nonprofit human service sector expanded greatly in size and number and became known as “providers”. The share of services that the government purchased from nonprofit providers jumped from 25% in 1971 to 55% in 1979. By 1979 the nonprofits were delivering a larger share of government-financed human services than all levels of government combined. This federal spending outdistanced charitable donations by almost two-to-one (Salamon, 2012). During this time the government also began to contract with for-profit firms to provide services in areas where the nonprofits had traditionally prevailed, such as nursing homes and child care centres (Salamon, 1999). Providers were reimbursed for their costs and generally fulfilled their contracts by reporting the number of activities and persons served. The new public–private partnership became the core of the human service delivery system. It thrived until the mid-1970s when another economic crisis led the nation’s leaders to further privatize the welfare state.

The contraction of the US welfare state The expansion of the welfare state suffered a major shock in the mid-1970s in response to the second major economic crisis of the twentieth century. Unlike the crisis of the 1930s, this time leaders in business and government blamed their financial woes on “big government” – especially welfare state spending – and

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sought to restore profits by undoing the New Deal and the Great Society. Variously referred to as Reaganomics, Supply Side Economics, or Neoliberalism, the resulting u-turn in public policy emphasized redistributing income upward and downsizing the state. The pro-market policies included the now familiar (1) tax cuts, (2) programme retrenchment, (3) devolution, (4) privatization, (5) weakening social movements, and (5) support for traditional “family values” and a colourblind social order (Abramovitz, 2014). The shift to a pro-market model ushered in a dramatic restructuring of service provision and paved the way for “managerialism”, the second phase of privatization.

Managerialism As marketization moved human service consumers and providers into the market, managerialism/New Public Management (NPM)4 introduced a broader and deeper penetration of market principles into the fabric of nonprofit organizations. Managerialism/NPM assumes that government should be “run as a business” and is based on a set of “interrelated principles, applied to reduce the costs of government by encouraging privatization and managed competition” (Kearney and Hays, 1998; Weikart, 2001). NPM was first introduced as a public sector reform in the UK under Prime Minister Tony Blair. With the growth of contracting in both the UK and the US, managerialsim/NPM was variously applied to nonprofit organizations leading to a series of changes including less government support, a shift from directly funding agencies to directly subsidizing service users, greater reliance on commercial income, increased competition with nonprofits, and intensified pressures for accountability (Andrisani, Hakim, and Savas, 2002).

Reduced funding The nonprofit embrace of a business model was driven in part by reduced government funding. From 1980 to 2000, federal spending on entitlement programmes fluctuated between 8.7% to 10.1% of GDP. In sharp contrast, non-defence, non-discretionary funding – the major source of government funds for human services – dropped from 5.1% of GDP in 1980 to 3.1% of GDP in 2000 (United States Congress, Congressional Budget Office, 2014). During this time Congress increasingly transferred federal funds to the states in the form of capped and earmarked block grants (also known as devolution) (Social Security Administration, n.d.). Examples of devolution include the 1975 Amendments to the Social Security Act (Title XX Social Service Block Grant), which consolidated existing federal social service assistance to the states into a capped single revenue stream (Martin and Frahm, 2010), and the 1996 welfare reform (the Personal Responsibility

4 The terms “managerialism” and “NPM” are used to refer to processes occurring in both the nonprofit and public sectors of the US welfare state.

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and Work Opportunity Act – PRWORA), which converted Aid to Families with Dependent Children (AFDC) from an entitlement programme with guaranteed federal funding for eligible families into a state-run block grant with limited funding that was not responsive to changing needs. Funding limits imposed by block grants did not create a major problem during the economic boom of the late 1990s. But by 1998 the real value of federal support for nonprofit social service providers (outside of healthcare) dropped. While the number of grants and contracts to nonprofits increased, the actual dollar value of the awards fell 11% below its 1980 level (Salamon, 1999), in part because contracts increasingly restricted spending, especially on overhead costs (Gronbjerg, 1991). Cutbacks continued into the 2000s due to the post-9/11 focus on homeland security, “across the board” tax cuts (2001–12), the Great Recession (2007–08), and the slow or jobless recovery (2009–today). The loss of funding forced nonprofit providers to cut programmes, reduce staff, lower wages, draw down reserves and increase borrowing (Linden, 2013) all of which intensified their reliance on private sector/business models. Meanwhile, rising poverty and unemployment rates increased the demand for cash assistance and social services.

Commercial income Faced with significant public and private funding shortfalls and rising costs, human service agencies developed independent sources of commercial income and began to actively compete with each other for their market share of public and private funds and clients. Many agencies began to pursue business ventures that yielded added income or profit, such as fee for service programmes, direct marketing of products and services, and more endowments, among other profit-generating activities (Salamon, 2012). For example, from 1977 to 1997, income from fees charged by human service providers jumped over 500%. Fee-generated income accounted for 35% of nonprofit human service provider income growth from 1977 to 1997, and 40% of the growth from 1997 to 2007 (Salamon, 2012). The need for commercial income, in turn, created incentives for nonprofits to “brand” their product, develop a “market niche”, market their services to better paying customers, and otherwise emulate competitive business models. These efforts changed the nature of spending, decision-making, and management in nonprofit provider agencies (Martin, 2000).

Consumer subsidies Managerialism also emphasized the business principle of consumer choice and was associated with a shift from funding service providers to funding “consumers” using vouchers (e.g., rent and food vouchers) and tax credits (e.g., child care and healthcare) and other forms of consumer subsidies. For example, instead of issuing grants directly to childcare providers, the 1990 Childcare and Development Block Grant (expanded in 1996) allowed states to channel $5 billion in federal childcare funds to eligible families who then could “choose” a healthcare programme in

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the open market (Salamon, 2012). More flexible Medicare/Medicaid5 rules also supported the individualized consumption of a wide range of health and social services (Smith, 2012). These changes forced nonprofits to compete with each other but also with a growing number of for-profits for “customers”, revenues, and market share. Competition among providers favoured the skill set of the CEO over the traditional nonprofit executive director, threatened collaboration in the community, and created a potential chasm between business and service goals.

More for-profits Paradoxically, once the nonprofits had proved the viability of government contracts and commercial returns, the for-profits rushed in. Prior to the 1960s, nonprofit social welfare agencies faced little direct competition for funds or clients from for-profit agencies. Due to their historic relationship with the welfare state, nonprofit providers essentially had monopoly control of services in their areas. With increased federal funding for health and social services, for-profit firms began to view the human services as a new, robust market opportunity (Salamon, 1999). From playing a major role in just two areas (nursing homes and day-care centres), for-profit firms gradually moved into many service arenas including those once the near-exclusive domain of the nonprofits. While the absolute number of nonprofit providers continued to grow, the for-profit growth rate outpaced them (Salamon, 2012). According to US Census Bureau, from 1977 to 1997, the number of for-profit providers increased by 202% compared to 125% for the nonprofits. During this same period overall social service employment grew by 163%. However, the for-profit share of this pool rose from 21% in 1977 to 30% in 1997 (Salamon, 2012; Smith, 2012). Most notably, passage of the 1996 welfare reform legislation brought large for-profit firms into the nonprofit arena. Maximus, Inc., America Works, Electronic Data Systems, Curtis and Associates, Inc. and other large companies secured contracts to manage welfare-to-work programmes and, in some instances, entire state social service departments (Nightingale and Pindus, 1997; Smith, 2012). The for-profits gained market share due to their organizational capacity, access to capital and technology, and, most importantly, their ability to provide services at the lowest cost (but not necessarily the highest quality), thus making themselves attractive in the competitive contracting process at the state level (Hasenfeld and Garrow, 2007).

Intensified accountability As the managerial model gained ground in the US, more public and private funders pressed nonprofit providers to adopt management arrangements that emphasized

5 Medicare and Medicaid are essentially voucher programmes since consumers choose the provider they wish and the government then reimburses the provider for the cost.

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market principles of efficiency, productivity, competition, and, most of all, accountability (Richmond and Shields, 2004). Today many contracts between government and nonprofit providers tie reimbursement to meeting specific, standardized, performance-based outcome measures (Martin, 2000) that effectively shift financial risk to providers who only get paid when they successfully complete assignments on a fixed-rate basis (Eikenberry and Kluver, 2004; Ryan, 2002). Thus an agency’s ability to demonstrate accountability along with efficiency and effectiveness may ultimately determine its relative share of human services funds (Martin and Kettner, 1997). A 2010 Urban Institute study reported that 90% of the nonprofit organizations in a national sample had government contracts or grants that required them to report results or outcomes of their programmes and services, and 17% of contracts were paid on a pay-for-performance basis (Boris et al., 2010). Some fear that the new measurement-driven accountability environment may penalize smaller agencies (who lack capacity to track outcomes) or substitute short-term performance measures for long-term service goals (Salamon, 2012). Like consumer subsidies, performance contracts may increase nonprofit revenues, but they constitute more uncertain and fragile revenue streams than annual or multiyear grants and contracts with public agencies (Gronbjerg, 1991). Kettner and Martin (1998) trace the changing nature of the accountability movement. During “the formative years” (1968–79) (which corresponds to Marketization Part II), funding from Title XX of the Social Security Act and Social Services Block Grant required agencies to provide information about inputs such as the number of qualified staff, necessary facilities, and equipment, and the volume of clients served. During the “maturing years” (1980s), accountability called for standardized measures of outputs, and quantified measurement of service. “The performance years” (1990s to today) focus on outcomes that typically correspond to preset benchmarks. Instead of simply counting the number of service users, providers were contractually obligated to report outcomes (e.g., the number of meals-on-wheels that arrive “hot” or the number of students who scored 85% or higher on the final exam). In addition to evidence of measurable results, the press for performance measures reflects the new “social impact investment” approach to grant making that favours investments in client outcomes rather than individual programmes or organizations and a more active hand by funders in determining the content and goals of human service intervention (Hasenfeld and Garrow, 2007). The “performance years” described by Kettner & Martin coincided with the “reinventing government” movement often linked to US Vice President Al Gore, the Government Performance & Results Act of 1993, and the Government Management Reform Act of 1994. The 1994 Act declared: “To be successful in the future, government must, like the private sector, adopt modern management methods, utilize meaningful programme performance measures, increase workforce incentives and flexibility without sacrificing accountability, provide for humane downsizing opportunities and harness computers and other technology to strengthen service delivery” (Nightingale and Pindus, 1997, p. 2). In an era when “modern management methods” often included downsizing and

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outsourcing, others feared for the impact on job quality and security (Fabricant and Fisher, 2012). Once trusted by the public and funders because they were nonprofit and inherently worthy, nonprofits now have to prove themselves on all fronts (Hasenfeld and Garrow, 2012; Hood, 1995; Richmond and Shields, 2004).

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Financialization The third nascent stage of privatization in human services, financialization, promotes human services as an investment opportunity. As marketization moved services from the public to the private sector and managerialism brought business principles into human service organizations, financialization seeks to bypass or “disrupt” previous arrangements to solve social problems (America Forward, 2014) and produce profits by attracting investment into the human services sector, a process dubbed “venture philanthropy”. The use of the term “financialization” in this chapter is meant to mirror the growth of the economy’s financial sector as the prime source of business profits. Termed the “great financialization” (Levitt, 2008), since the 1970s, the economic “centre of gravity” and source of profits has moved from manufacturing to finance, insurance and real estate (FIRE). During the last 50 years, manufacturing fell from 27% of the GDP (1957) to 12% (2008), then rose slightly to a still low 18% (2012). Meanwhile the financial sector’s share of GDP grew steadily, from 2.8% in 1950 to 8.4% in 2014 (WSJ, 2014). At the same time, despite the post2008 losses the share of all profits from FIRE rose from 13% (1957) to 20% (2008) to 21% (2012) (Foster, 2010; US Census, 2012). These shifts in the economy and confidence in the investment model for economic growth have persisted despite the destructive impact of economic bubbles, the confrontational federal bailout of US-based financial institutions, and the leading role played by the financial sector in the 2008 economic crisis. Given that the US nonprofit sector amounts to about 5% of the GDP (Borris et al., 2010), it is increasingly viewed as an untapped and potentially lucrative source of profits. New investment/consulting firms point to a potential $120 billion market in social impact investing (Knowledge@Wharton, 2012). With a projected market of $788.7 billion in 2015, others have recently dubbed K-12 public education as “the next Starbucks” (Fang, 2014). By introducing a model that can attract profit-yielding investments, financialization completes the operationalization of privatization by expanding the market for new investments in human services.

Financialization in the human services: Early form Still in their infancy, financialization and social investment programmes have gained considerable traction in the US and other nations (Butler, Bloom, and Rudd, 2013; McKay, 2014; Schram, 2014). Unlike investment by large private companies in welfare to work programmes or the increase of commodification and business practices healthcare (Brannon, 1996; Zelnick, 2010), the new private

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investors think of themselves as “venture philanthropists” whose government contracts should yield a return on investment. Referred to as social impact investment, social innovation, social enterprise, venture philanthropy, or pay for success, financialization promises to achieve the “double bottom line” – financial returns on investments coupled with quantifiable social benefits (Buffett, 2013; Costa, Shah, and Ungar, 2012). One increasingly popular investment model, the social impact bond (SIB) uses an intermediary organization to oversee a contract between government and private investors and specifies performance outcomes and a series of benchmarks that determine the rate of return on investments. This contracting arrangement requires third party evaluators (whose complex evaluation plan typically must identify a control group) and other technical assistants to measure programme effectiveness via targeting performance outcomes. Human service agencies implement the contracts using specified evidence-based practice models that have been linked to particular outcomes (e.g., reduced recidivism, reduced use of special education, increased literacy). As of September 2014, there were 19 SIB projects in Europe and the UK, four in the US, two in Australia, and one in Canada – though new projects are rapidly emerging in such areas as juvenile justice, youth employment, pre-kindergarten, and public health (Rockefeller, 2014). In Fall 2014, the US Congress introduced a bill supporting SIBs, with rare bipartisan support. Introduced in the UK, the first SIB was funded through private charity (philanthropy) and aimed at reducing recidivism at Peterborough prison. The Peterborough SIB has served as an international exemplar. New York City adapted the Peterborough SIB as a model for a programme to reduce recidivism among juvenile offenders. However city officials solicited investors from the Wall Street firm GoldmanSachs rather than private charities, a practice that has since typified the US SIB approach (Cohen, 2014a; Scaglione, 2012). Increasingly SIBs also pair financial sector investment with backing funds from nonprofit foundations, another practice pioneered in the NYC SIB. SIBs typically use a pay-for-success (PFS) mechanism to reward investors. A second PFS contracting model is driven by government funding, in which government contracts help to leverage private investments that are repaid under PFS terms. While pay-for-performance or success contracting also exists as an independent phenomenon (contracts based on performance measures and specific client outcomes), the Obama administration’s social innovation fund uses this model to incentivize private investment through federal government social innovation grants. For example, in 2012 Massachusetts Governor Deval Patrick created a social innovation trust fund that could accept federal dollars provided they were matched by private investment. This project was enabled by the Obama administration’s Social Innovation Fund (SIF). Launched in 2009, the SIF seeks to combine public and private resources to bring “proven to work” programmes to scale (Shah and Costa, 2013; White House, 2014). As of 2012, $95 million in federal dollars had leveraged $250 million from private foundations, including partnerships with 95 private philanthropies (Corporation for National and Community Service, 2014).

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Financialization in the human services: Early debates The backers of financialization argue that they are well – if not best – positioned for a major role in human service programmes based on their capacity to bring resources beyond those provided by philanthropy and government. According to proponents, while philanthropy can identify effective pilot programmes and interventions that work for small numbers of people, it cannot bring them to the “scale” needed to “solve” social problems. The backers of “venture philanthropy” posit that despite large expenditures government programmes do not prevent or “solve” social problems. They further argue that government programmes are too absorbed in “deep-end”, “safety-net”, and “costly remediation services” (Social Finance, 2012) or spread too thin across too many programmes to risk undertaking preventative programmes (Butler et al., 2013). Financialization has a preponderance of “yay-sayers” among privatization advocates, private and philanthropic investors, and nonprofit providers who welcome the cash infusion. However, it also has “nay-sayers”, as well as observers who advise agencies to approach SIBs with caution. Critics question the assumption that existing human service agencies and workers have been ineffective and need to be retrofitted with new ways of doing things (Knowledge@Wharton, 2012). Others worry that with SIBs government will cede responsibility for vulnerable populations to profit-seeking private investors (Rosenman, 2011). In a recent federal hearing on SIBs, one Republican congressman called SIBs a “fancy form of outsourcing” (Hume, 2014). Still others warn that social impact investment may not save money at all due to the costs of added personnel (e.g., intermediaries, evaluators, etc.). Indeed evaluators cite these added costs as a reason why the UK partially cancelled the Peterborough SIB and instead launched the Transforming Rehabilitation project, which continued aspects of the Peterborough service model but with government rather than private funds (Cohen, 2014a). Many nonprofits and foundations tentatively support SIBs and urge experimentation to establish the “proof of concept” needed to further the model. Others recommend caution on the grounds that the costs of repaying PFS or SIB loans might exceed traditional government bonds, that evaluators might ignore outcomes that do not trigger repayments or that these programmes will create perverse incentives such as “creaming” (AFSCME, 2014; Lower-Basch, 2014). While the final evaluation of the SIBs awaits the implementation of more projects, early outcomes and concerns have raised questions about the for-profit model for the human services. Rick Cohen of the Non-Profit Quarterly asks, “How much are SIBs aimed at solving social problems versus finding new opportunities for private investors to profit from the largesse of taxpayers?” (Cohen, 2014a).

The impact of managerialism on the frontlines: A review of the literature 1985–2014 In preparation for conducting a large survey of the human service workforce in New York City, we reviewed the conceptual and empirical literature to better

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understand how managerialism has been implemented and operationalized on the front lines. As the following section indicates, an examination of some 180 articles6 suggests that managerialism and the imposition of market discipline has profoundly affected service provision (i.e. organization and delivery), daily practice (i.e. relationship between service workers and service users), working conditions (i.e. work organization and basic conditions of employment), as well as outcomes and adaptations by agencies, workers, and clients/service users. While more than a few researchers report that human service professionals embrace managerialism, many more remained hesitant and concerned (Berzin, 2012; Fawcett and Hanlon, 2009; Germak, 2012; Martin, 2011).

Service delivery The managerial/NPM phase of privatization has changed the nature of service provision on the front lines as public and private funders require agencies to do “more with less” while pressing for greater accountability.

Cutbacks To maximize efficiency governments and foundations seek to achieve the best outcomes while investing less and less in the human services. A 2010 randomized survey of US nonprofit agencies found that they responded to ongoing grant reductions by cutting back. They closed offices, reduced services, laid off workers, froze salaries (Boris, de Leon, Roeger, and Nikolova, 2010), replaced paid professionals with volunteers or less credentialed staff (Baines, 2004a; Morgen, 2001). Faced with both the loss of co-workers and available services plus mounting demands for help, the remaining practitioners struggled to do even more with even less (Fabricant and Fisher, 2002; Human Services Council, 2012; Krauskopf, Blum, Litwin, Hughes, and Browne, 2009; Stark, 2010).

Commercialization As managerialism transformed the administrative culture of both public and nonprofit providers from a service to an entrepreneurial model (Hasenfeld and Garrow, 2007; Lindgren, 2001) commercialization of service increased. Following the logic of the market (Stark, 2010), agencies have developed sustainable business

6 We searched electronic databases using a combination of key terms including “new public management,” “human service workforce,” “privatization,” “managerialism,” and “accountability.” We considered both conceptual articles and empirical studies. The same methods were used for online searches of journals published by non-profits, labour unions, and policy centers. Secondary searches were conducted on topics identified through our initial review of the literature. We catalogued and reviewed all articles related to our topic and that included discussion or data about privatization in human services and/or its impacts.

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plans (Germak, 2012) and imported business techniques and principles into their organizations (Alexander, 1999, 2000; Eikenberry and Kluver, 2004). In support of this new business culture agencies increasingly incorporated the language and style of business management into their operations (Clark, Leslie, and O’Brien, 2010). Nonprofit providers retitled their executive directors as CEOs to help raise revenue, treat their service users as “customers” or “consumers” (who, according to neo-classical economic theory, individualistically seek to maximize their own self-interest in the selection of services), introduced “lean and mean” management techniques, and regarded human service work as “an enterprise” (Box, 1999; Foster and Hoggett, 1999; O’Sullivan, Considine, and Lewis, 2009). Some agencies have reduced the size of their boards, sought new members from the business community, and substituted corporate for community-based models where financial accountability superseded accountability to the community (Salamon, 2012). The agencies also generated new revenues by greater reliance on charging fees for services, selling products, and establishing for-profit subsidiaries (Eikenberry and Kluver, 2004; Salamon, 2012).

Competition Funding shortfalls have also led nonprofit agencies to compete with each other for clients, contracts, and market share (Alexander, 2000), as well as with the growing number of for-profit firms now operating in the sector (Salamon, 1993). Competition tends to favour the large multi-purpose, nonprofit agencies and the highly capitalized for-profit providers that are better equipped than their smaller, more narrowly focused counterparts to absorb the cost of new programmes, accounting procedures, and evaluation requirements (Alexander, 1999; Chen and Krauskopf, 2009).

Greater accountability Seeking both financial and social returns and the biggest “bang for their buck” (Knowledge@Wharton), performance-based or pay-for-success contracts increasingly call for performance measures and outcomes, rather than harder-to-measure long-term outcomes that rely on qualitative and longitudinal data (Benjamin and Misra, 2006; Chen and Krauskopf, 2009). As often as not, these new requirements lead providers to restructure services to ensure that their programmes meet these new standards of excellence. The demands for accountability and quantifiable performance measurements embedded in this shift from a process-oriented to an outcome-oriented approach requires a degree of standardization and routinization in service delivery that challenges traditional service provision. The resulting standardization of service has affected not only the nature of service provision but also the practice relationship between frontline practitioners and service users (Baines, 2006; Chen and Krauskopf, 2009).

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Practice: The practitioner–service user relationship

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The growing standardization of service delivery and the ensuing routinization of practice has also affected the crux of the “service” provided by human services practitioners, namely, professional autonomy and the ability to develop and sustain caring relationships (Alexander, 1999; Baines, 2004a; England, Eakin, Gastaldo, and McKeever, 2007).

Professional autonomy Professional autonomy is founded on discretion, clinical judgment, and a highly developed skill set. Prior to the advent of managerialism/NPM, professional autonomy drew on all of the above. However, a range of studies suggests that while the collection of uniform data and the use of evidence-based treatment models have valuably increased knowledge of what works, the downside might be a resulting standardization that can jeopardize professional autonomy (Duffy, 2011). That is, scholars and practitioners worry that the expanded contract-driven reliance on prescribed inputs, outputs, and outcomes; stringent performance targets; tightly quantified/time-limited services; and outcome-driven evaluations are making human service work more repetitive, mechanistic, and routinized (Baines, 2004b, 2009; Carey, 2006; Fabricant and Fisher, 2002; Hjörne, Juhila, and van Nijnatten, 2010; White, Hall, and Peckover, 2009). The question arises, is managerialism putting the “craft element” of human service work at risk (Fabricant, 1985)?

The caring relationship Human service workers strongly embrace an ethic of social caring. This ability to help others is the major reason why many practitioners continue to work in the field despite demanding jobs, long hours of work, low wages, and high stress (Baines, 2004a). The work also offers them unique rewards as social citizens and moral individuals. In contrast, Baines (2009), Brodkin (2011), Fabricant (1985), and Postle (2002), found that standardization has limited the worker’s ability to establish rapport, to fully respond to service users, and to build effective caring relationships. Studies associate increased use of computers in practice sessions and IT-driven case management with an erosion of service user confidentiality (Lonne, McDonald, and Fox, 2004). Some practitioners have also linked evidence-based treatment to narrower services, stricter eligibility requirements, “cherry picking” clients, and other barriers that undermine the worker–client relationship (Aronson and Smith, 2010; Dustin, 2012). Commenting on managerialism, a worker interviewed by Baines (2006) claimed that the changes had “stripped the care out of social work”.

Working conditions Managerialism has also become a key managerial strategy to speed up work, increase productivity, and otherwise control the workforce (Baines, 2006). The

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reorganization of work to maximize both efficiency and standardization draws on Total Quality Management (TQM) and the lean production models originally designed by auto manufactures to make Toyota and General Motors more efficient and globally competitive (Gordon and Schnall, 2009). Based on Japanese lean work organization models, TQM intensifies work, institutes a smaller and often less-skilled workforce, requires greater flexibility in the deployment of remaining staff, uses technology to monitor workers in real time, and more actively regulates the work force (Dustin, 2012; Richmond and Shields, 2004). Despite rich data that links neoliberal restructuring of the workplace to declining quality of working conditions (Landsbergis, Cahill, and Schnall, 1999), many human service organizations have imported these management approaches (Aronson and Smith, 2010; Chen and Krauskopf, 2009). The changes have altered basic, day-to-day working conditions, (e.g., nature of job tasks, staff skill mix, training and supervision, use of technology), as well as the basic conditions of employment (wages, hours, jobsecurity, and benefits). Routinization of job tasks: Some researchers describe routinization dictated by electronic data collection and prescribed evidence-based practices as “assembly line social services” (Baines, 2004b; Fabricant, 1985). Practices that routinize jobs include increased management control over work processes, and dividing jobs into standardized, manageable tasks and deskilling workers (Baines, 2004b; Carey, 2006; Foster and Hoggett, 1999; Sawyer, Green, Moran, and Brett, 2009; Segal, 1999). Such standardization and partialization of tasks was a chief insight of Taylorism, an approach to the organization of work developed in the early twentieth century by Frederick W. Taylor to improve the efficiency and productivity of labour and to reduce employer costs. The resulting separation of a job into discrete tasks and increased management oversight of workers was closely associated with the rise of mass production methods in factories and created the basis for the assembly line, as noted earlier. In the current economic climate human service organizations combine Tayloristic divisions of job tasks with lean work organization to reduce labour costs and to find new ways to control quality in human service organizations (Baines, 2004b; Landsbergis et al., 1999; The Urban Institute, 2010). Wages, hours and benefits: Overall, budget demands and scant resources have led to job loss, benefit reductions, frozen salaries, and staff cuts in the human service sector (Human Services Council, 2012; Krauskopf et al., 2009; Postle, 2009). These pressures squeeze the already low salaries and benefits available to most human service workers, many of whom accept low compensation in exchange for flexible scheduling policies and an understanding workplace (Lonne et al., 2004; Webb, 2001). Agencies also lower their wage bill by hiring more part-time, casual, and contract workers; paying them by the hour and not providing vacation time; health insurance, or other fringe benefits (Schacter, 2012; Webb, 2001). While not necessarily attributable just to NPM, these working conditions reduce the likelihood workers will be in a position to resist or object to NPM practices. Thin staffing: The use of attrition and other deliberate strategies to reduce the size of the workforce makes it more difficult for workers to fit more responsibilities

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into ever-tighter schedules (Baines, 2004b; Krauskopf et al., 2009). In the context of high pressure work environments, thin staffing leaves overburdened programme managers with less time for staff supervision (the cornerstone of good practice) and may undermine existing education and career ladders (Foster and Hoggett, 1999). Thin staffing often means working alone in ways that can pose a risk to worker safety such as assigning a single worker to cover a group home or requiring solo home visits by child protective services workers (Zelnick, 2014). In the long run thin staffing translates into poor quality services (Sawyer et al., 2009). At the same time that agencies trim staff, the pace of work has increased due, in part, to greater demand for help from service users with increasingly complex problems associated with mounting economic insecurity (Human Service Council, 2012). As the need to produce specific performance measures narrows service options, programmes are less equipped to address complex needs. Increased documentation: Growing documentation requirements increase practitioner and agency workloads. Already time-pressed due to high caseloads and staff shortages, workers experience demands for documentation as intensification and “speed-up” of work (Foster and Hoggett, 1999; Morgen, 2001; Webb, 2001). For example, pay-for-performance contracting that depends on worker productivity and service-user outcomes has vastly increased the reporting and documentation demands on frontline workers, supervisors and agency directors (Callahan, 2012; Scaglione, 2010; Soss, Fording, and Schram, 2011). Often assisted by computer “dashboards”, this work, prioritized and monitored by management, takes time away from service provision. At the same time, agencies complain that insurance companies rarely reimburse for time spent on reporting. Clinical staff who have been redeployed as contracted workers also expressed similar concerns (Schacter, 2012). Some studies find workers worrying about losing their job if they fare poorly on performance measures used to competitively rank staff often in real time (e.g., supervisors watch computer entry screens that report time spent with each client) (Soss et al., 2011). Many studies found that overburdened staff and reduced support from the agencies adversely affects workers’ sense of purpose, effectiveness, and morale (Boris et al., 2010).

Outcomes: Agency, workforce and client Agency outcomes: A large body of research affirms the centrality of mission (valuesbased statements of agency goals) in nonprofit work, buffering the impact of poor wages and working conditions and offering workers opportunities to “live their values” on the job (Baines, 2009). Yet at the agency level, the human service mission has become one of the biggest causalities of managerialism/NPM. A critical debate centres on the compatibility of the “logic of the market” that drives managerialism/NPM and the “logic of human service work” (Stark, 2010). The NPM measures of efficiency, effectiveness, flexibility, measurement, and outputs rarely include normative human service ideals of equality, common good, and justice (Besosa, 2007). Social justice agencies often report that business values conflict

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with their mission focus on equity and meeting human needs (Healy, 2002; Lindgren, 2001). Some researchers argue that the growing dominance of the business model risks limiting the field’s commitment to the poor, reduces motivation to challenge the state, and stands in the way of advocacy for social rights (Fabricant, 1985; Hasenfeld and Garrow 2012). Such “mission drift” especially affects smaller agencies ill-equipped to meet the data collection and analysis requirements of pay-for-performance contracts (Alexander, 1999). Mission drift arises for larger or multipurpose agencies that often stretch their mission by attracting multiple sources of funding for new programmes and services regardless of mission relevance. Consolidation of the human service field into fewer, larger agencies can result in a loss of capacity to meet the needs of all clients/service users (Chen and Krauskopf, 2009). Workforce outcomes: Few human services studies have focused explicitly on workplace stress. However, a wide variety of the above-noted practices and working conditions associated with managerialism/NPM, especially lean production, have been studied in other sectors and are associated with stress-related outcomes including increased mortality and heart disease, high blood pressure, cardiovascular disease, depression, and substance abuse (Kivimaki, Vahtera, Pentti, and Ferrie, 2000; Siegrist et al., 2005). Researchers have also associated the sea change in human service delivery, practice relationships and working conditions wrought by managerialism/NPM with social and psychological outcomes such as burn-out, low morale, loss of hope, and the exodus of credentialed and experienced human service workers. The studies further link high staff turnover to the growing demands for new more quantitative and multi-tasking skill sets (Chen and Krauskopf, 2009) and the simultaneous devaluation of traditional ones (Baines, 2004b). In one study, a largely female workforce also felt exploited when, faced with funding and service cuts, they voluntarily spent their own time and resources to properly serve clients (Baines, 2004a). Programme managers responsible for overseeing reporting, implementing new workforce practices, and otherwise managing human service programmes report that some of their NPM-based work responsibilities threaten or violate their personal integrity, that they are often “caught in the middle” between line workers and the administration (Aronson and Smith, 2010) and that NPM whistle-blowers fear coming forward (Lonne et al., 2004). Client outcomes: There is a strong link between job quality and service quality in the human services (Fabricant and Fisher, 2002; Krauskopf et al., 2009; Postle, 2002). Ironically, the NPM focus on performance measurement itself frequently produces adverse programme and service user outcomes, which are not typically included among the measures of “performance”. These problematic outcomes include more superficial services due to high caseloads and less time with staff; reduced quality services by practitioners suffering work-related illness, stress, or burnout; and the unmet needs of service users beyond those addressed by narrowed services and interventions (Fabricant and Fisher, 2002; Krauskopf et al., 2009; Postle, 2002).

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Beyond the loss of service quality, turning citizens or clients into consumers and commodifying human services has also constrained client engagement and advocacy efforts (Heffernan, 2006; McLaughlin, 2009). In the past, the social justice dimension of human service work encouraged service users to advocate for their rights to services and benefits and to press for social change. While treating clients as passive recipients of commodified services or targets for interventions might facilitate achieving favourable performance outcomes, an undue emphasis on efficiency and accountability risks constraining advocacy and political engagement (Hasenfeld and Garrow, 2007, 2012). Likewise, stressed and burnt-out workers who are “doing more with less” and “just happy to have a job” are less likely to engage in social justice and advocacy for themselves, their agencies, and service users (Pollack and Rossiter, 2010).

Adaptations: Perverse consequences As agencies and staff cope with changes wrought by NPM, they adapt themselves individually and organizationally to the new work requirements, often with perverse consequences. Individually, some programme managers resist new productivity demands by faking statistics and time motion studies to lower benchmarks, conducting work slow-downs, refusing to comply with paperwork demands, and consciously lowering performance to prevent heightened expectations. In some cases they have admitted to fabricating required data that they lacked time to collect. This often occurred in response to the introduction of competitive methods such as “scorecards” or “star rating” systems that contracting agencies used to evaluate workers and programmes (Gallina, 2008; O’Sullivan et al., 2009). Managers have also rationed resources and tried to cut costs in response to budget cuts (Lonne et al., 2004). Individual workers have resisted NPM demands by “protecting” clients from harsh programme rules, by turning a blind eye to eligibility requirements or by providing caring services that could not be measured as programme outcomes (Baines, 2004a). Still other workers devoted their unpaid time to meet the needs of service users as a form of resistance. In contrast, some staff responded to the new environment by blaming service users for not being able to achieve specific outcomes or creating new categories of “deserving” and “undeserving” clients (Baines, 2009; Lonne et al., 2004). Changes wrought by managerialism/NPM have led to still other perverse consequences. Several studies noted that divisions among workers who do and do not support NPM have led to new workplace competition and conflict (Baines, 2006). To meet the demand for high performance outcomes with shrinking funds, providers have been known to favour easier to serve clients (“cherry picking”) and to provide those with more complex problems with minimal services (i.e., cycling them in and out of temporary jobs) sometimes called “parking” (Aronson and Smith, 2010; O’Sullivan et al., 2009; Salamon, 1993).

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Conclusion Managerialism is subject to considerable debate. Supporters say that the builtin preference for quantifiable goals benefits organizations by clarifying mission, informing decision-making, motivating employees, increasing responsiveness to “customers” and taxpayers, and otherwise improving efficiency and results. Critics worry that the combination of declining resources and a greater reliance on performance measures will downplay the complex social contexts that affect client outcomes but over which neither agencies nor workers have control (i.e., living in a resource-poor neighbourhood, the condition of housing and labour markets, the impact of mass incarceration, and so forth). They fear that managerialism will reduce the capacity of human service workers and agencies to ensure high quality care to those who come to them for help. In the final analysis, human service workers want to be consulted. Despite their location on the frontlines many human service agency staff complain that public and private funders rarely solicit their input when identifying service goals, designing performance measures, or otherwise introducing organizational change (Chen and Krauskopf, 2009; Foster and Hoggett, 1999; Soss et al., 2011). This chapter provides background for a study that seeks to fill this gap. Entitled “Your Voice Is Needed: The Human Service Workforce Study”, this survey has been completed by almost 2,500 human service workers in New York City. Their willingness to complete a long questionnaire and to provide extensive comments suggests that we hit a nerve! Human service workers are eager to tell their side of the still-unfolding story of privatization.

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STILL A RESPONSIVE STATE? Marketization and inequalities in Swedish aged care Helene Brodin1

Introduction In comparative studies the Nordic countries are often categorized as universal welfare states (e.g. Esping-Andersen, 1990). Universalism in the Nordic context is strongly associated with post-war social democratic politics and the development of comprehensive social insurance schemes, which were established to break with the stigma associated with the traditional poor relief. Further, to promote equality and solidarity between social classes and between men and women, general access to education as well as to health and social care services was included in the development of universal welfare programmes (Anttonen, Häikiö, and Stefánsson, 2012). Since the late 1950s, aged care has, therefore, been an integrated part of the Swedish welfare system. As such, aged care in Sweden has been characterized by wide-ranging and mainly publicly financed and provided services of high quality, accessible for all citizens on the basis of need and not the ability to pay. In addition, the same services have been available to and used by all social groups (Sipilä, 1997). As in other mature welfare states, the provision of aged care in Sweden has, however, been greatly influenced since the 1980s by the global wave of New Public Management (NPM) (Meagher and Szebehely, 2013). This reform movement has favoured practices of the private business sector as a solution to a wide range of perceived problems of public sector service provision. As a consequence, market-steering principles have been introduced into publicly financed aged care, including the use of competition and the promotion of private enterprises. In Sweden, the share of private providers within publicly funded aged care has increased from less than 3% in the beginning of the 1990s to 24% in 2013 (Meagher and 1 Senior Lecturer in Social Work, Stockholm University, Sweden.

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Szebehely, 2013; NBHW, 2014). Still, there are great local differences in the mix of public and private provision of care services for older adults. Whereas the public sector is the only provider in more than half of Swedish municipalities, approximately 69% of the homecare for older adults is delivered by private providers in the city of Stockholm (NBHW, 2014). In general, policies promoting market principles and private providers in aged care have been based on arguments about empowering users, improving quality through increased competition, and offering more diverse forms of care adapted to an ever more diverse older population (Anttonen et al., 2012; Meagher and Szebehely, 2013). In Sweden the customer choice model has emerged as the most recent symbol of these ambitions. The legislation introducing customer choice in Swedish aged care, the Act on System of Choice (LOV), is founded on strong hopes that older people’s right to choose – and choose again if not satisfied – will strengthen the users’ voice and increase the quality of care (Government Bill, 2008/09:29). Diversification has been linked to the idea that services should be adapted to the individual needs of all older people. The diversity of providers is guaranteed as small care enterprises are enabled to enter the care market. The emergence of care companies with specific linguistic and ethnic profiles has also been considered a positive effect of the choice model and its endorsement of diversity (SOU, 2008:15). However, introducing market principles, such as customer choice, into publicly funded care services presents several dilemmas. For example, how should the interests of private care enterprises on one hand and the rights of older adults on the other be balanced? Moreover, how should the quality of services be controlled? Finally, how should the tension between supervision of the providers and flexibility in the care work, which is crucial when it comes to experiences of quality care, be resolved? The aim of this chapter is to discuss what significance the introduction of market principles into publicly funded aged care in Sweden has for older adults who are in need of care services. The chapter focuses on the consequences of customer choice and the tendencies to transform service users to consumers or customers. The discussion is organized around three main questions. First, how does the introduction of market principles affect the institutional responsibility for aged care services in Sweden? Second, what perceptions of older adults’ capacities to implement their rights as consumers of care is the Swedish marketization discourse based on? Third and last, which groups of older adults are most likely to benefit from the marketization process and which groups are disadvantaged? The chapter proceeds as follows. First it introduces the theoretical perspectives and the concepts, methods, and data informing the analysis of this chapter. After that, it presents the main findings, which are organized around the themes of institutional changes in Swedish aged care, from recipient to consumer and privileged and disadvantaged groups. A discussion and summary of the results is presented at the end of the chapter.

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Theoretical framework The analytical framework of this chapter is inspired by vulnerability theory and intersectional methodologies. Contrary to mainstream Western political and philosophical thought that draws on the assumption of the autonomous individual, the vulnerability theory formulated by Fineman (2004) sets out from the perception that the human condition is fundamentally characterized by vulnerability. However, even though vulnerability is universal for all human beings, it is also particular in that sense that the lived experience of vulnerability differs depending on individuals’ abilities and resources. Thus, at the individual level resilience towards vulnerability is not equally provided for. A vulnerability analysis therefore focuses on the institutions of society, as these provide individuals with resilience over the life course and also enable people to take advantage of opportunities (Fineman, 2013). According to Fineman (2010), the responsive state promotes equality by actively strengthening the resilience of individuals as well as groups through public bodies, policies and laws. From the vulnerability approach, it also follows that institutions are themselves vulnerable and constantly at the risk of destruction, corruption or distortion. A responsive state therefore requires structures that enable monitoring and correction of its institutions to prevent unwarrantable allocation of resources. The Nordic welfare model corresponds in several ways to Fineman’s definition of the responsive state. For instance, the Nordic social insurance system provides its citizens with resilience towards vulnerability over the life course through programmes such as unemployment, pregnancy, illness, disability, and retirement (Esping-Andersen, 1990). General access and generous provision of care services also strengthen women’s personal autonomy and economic independence (Anttonen et al., 2012). In recent decades, however, the responsiveness of the Swedish state seems to have deviated in areas aimed at providing resilience towards vulnerability connected to old age. Individuals are increasingly expected to take more personal responsibility for both retirement pensions and provision of aged care services. There are also indications that changes in the mix of public and private responsibility for retirement pensions and provision of care services will increase the poverty rates among older adults and reinforce dependency on relatives, particularly among women with lower levels of education and migrants (Andersson and Öberg, 2012; Ulmanen and Szebehely, 2015). To analyze if and how the introduction of market principles in Swedish aged care privileges some older people and marginalizes others, this chapter will draw on intersectional methodologies. Similar to Fineman (2013), many intersectional theorists stress the importance of the state and its institutions in upholding or tackling inequalities (e.g. Anthias, 2013; Yuval-Davies, 2011). Institutions tend to create boundaries that marginalize or exclude some individuals or groups at the same time as they privilege others on grounds such as gender, race or social class. These institutional processes of boundary-making are also intersectional, as divisions are played out in spatial and temporal contexts structured by complex relations of

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power (Anthias, 2013). In this chapter, I will focus on the institutional aspects of intersectionality. Rather than present an analysis of how age intersects with other categories in Swedish aged care, I will discuss how older adults living at the intersection of axes of inequalities are affected by the introduction of market principles. Before proceeding with the analysis, I will however first shortly present the concepts and empirical evidence to which this chapter refers.

Marketization The globalization of policies and the transformation of the public sector caused by NPM have been defined in many ways in the social sciences. Following Meagher and Szebehely (2013, p. 16), I will use the term marketization to define the changes of aged care services in Sweden. The main reason for choosing this concept rather than privatization is that even though aged care in Sweden has changed profoundly in relation to organization and provision of services, aged care services are still publicly funded and thus still part of the public sector. According to Meagher and Szebehely (2013), marketization is a two-dimensional process consisting of (1) the use of market practices and market logics in the organization of services; and (2) the involvement of private actors, notably for-profit companies, in the provision of services. Marketization is thus both about the introduction of private sector rationalities and practices in the public sector and forcing public providers to compete with private providers, either through outsourcing or customer choice. Whilst outsourcing implies that the local authorities choose among the providers, for example by competitive tendering, customer choice involves the users choosing the providers, typically from a list of providers authorized by local authorities. Competition and choice are thus central to marketized social care models as these principles become embedded in the organization of service provision.

Methods and data collection Empirically, this chapter builds upon an unpublished review of inequalities in Swedish aged care (Brodin, 2012) commissioned by the Swedish Association of Local Authorities and Regions (SALAR). The review includes studies on inequalities in Swedish aged care published from 2005 to 2012 and is based on three types of sources; (1) research, such as peer-reviewed articles, dissertations, and books; (2) national investigations, mappings, reviews, and reports published by the government or national authorities; and (3) regional and local investigations, mappings, and reports published by regional and local research and development departments. Databases used for identifying research were PubMed, Web of Science, and Google Scholar. National investigations were identified through the national search service LIBRIS provided by the National Library of Sweden and through the websites of the National Board of Health and Welfare (NBHW) and the Swedish

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government. Regional and local studies were identified through the websites of local and regional research and development departments. In all three cases, the search included combinations of the words aged care and inequalities, discrimination, gender, disability, migrants, ethnicity, class, sexuality, homecare, residential living, health, poverty, living conditions, and abuse.2 No meta-analysis was conducted, primarily because no randomized study on inequalities in Swedish aged care was identified. Instead, inequalities were most of the times touched upon or emphasized as unexpected outcomes. Several of the identified studies were also in-depth or interview studies, from which follows that they emphasized inequalities from phenomenological or post-structural perspectives. Therefore it was not relevant to use statistical or quantitative methods to analyze the results of the review. As a replacement for the meta-analysis, the review used a narrative approach (Dixon-Woods et al., 2007) to organize, synthesize, and conceptualize the results. This chapter presents the main findings of the review. In addition, as the review does not contain studies published after 2012, recent research focusing on inequalities in aged care has been added to this chapter.

Institutional changes in Swedish aged care The overall responsibility for aged care in Sweden, both publicly and privately provided, lies with politicians in local councils. Services are granted following needs assessment by the local authorities, which in Sweden correspond to the municipalities. The municipalities’ responsibilities and the procedures of the needs-assessment are regulated by the Social Services Act (2001:453), which came into force in 1982 and was amended in 2001. This Act prescribes that local authorities shall support older adults’ independency and shall provide homecare or other services, such as residential care, when this is needed. The Act also requires the municipalities to provide services of good quality. However, the Social Services Act is comparatively modest when it comes to the ambitions of the support (Szebehely and Trydegård, 2014). The Social Services Act not only regulates support to older people but also to children and youth, people with mental health disabilities, people who abuse drugs or alcohol, and other entitlements to social assistance. Regardless of which category the person applying for services belongs to, the Social Services Act requires that the support shall enable “a reasonable standard of living” (chap. 4, § 1). However, what is included in “reasonable standard of living” is not specified further than that the support shall strengthen the possibility of independency. This is problematic, as in practice the municipalities are very much free to establish their own interpretations

2 The search process was conducted and compiled by Sonia Slavik, research assistant at the local research and development department for the care of older and disabled adults in Järfälla, a municipality situated northwest of Stockholm.

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of “reasonable standard of living” (Szebehely and Trydegård, 2014).3 As a consequence, the standards and levels of support to older adults in need of care services vary across the municipalities and have done so for a long period of time. Trydegård and Thorslund (2010) therefore argue that when it comes to aged care, it is more reasonable to speak of a multitude of municipal welfare models than one national Swedish model. Local variations in the provision of aged care services also relates to the principle of local self-government, which is enshrined in the Constitution as an integral part of democratic government in Sweden (Mattsson, 2016). Principally, it is therefore not the state but the local authorities that decide whether or not to introduce market principles, such as competition and customer choice, in Swedish aged care.

The context: Organization and resources Even though the legal ambitions of support to older adults have remained more or less unchanged over the last 30 years, the Swedish aged care system has been reorganized thoroughly during this period. The first systematic transformation occurred in the beginning of the 1990s, when the responsibility for providing long-term care services to older adults was transferred from the healthcare sector under the responsibility of the regional public providers (the county councils) to the local public providers (the municipalities). The main reason for this reform was to streamline planning and financial responsibility for all services to older adults and to integrate social and medical care. Another motive was to reduce residential care and replace this with home-based forms of care services. Both goals were generally thought to improve the living conditions of older people (Brodin, 2005). The reorganization of long-term care services is generally described as successful, although several problems remain unsolved. For example, the division of responsibilities between regional and local providers remains unclear, and there is still a considerable lack of physicians participating in residential aged care (Annell, Glenngård, and Merkur, 2012). This is critical, as lack of cooperation between the providers of health and social care affects older adults’ opportunities to maintain their independency, in particular in situations such as rehabilitation after hospitalization. Declining resources is another trend that has greatly impacted the Swedish aged care system. Though Sweden is ranked as one of the most generous countries when it comes to spending on aged care (OECD, 2013) public resources have not been adjusted to meet the needs of the aging population. Instead, Swedish aged care has been characterized by declining resources in the last decades (Szebehely and Trydegård, 2012). Since the year 2000, the decline is not only relative, but

3 Municipal deviations from national standards are also problematic in relation to other groups entitled to services and support according to the Social Services Act (Pettersson, 2014).

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resources have also deteriorated in absolute figures (NBHW, 2011a). As a consequence, resources in aged care have become reserved only for those older adults most in need of care services at the same time as older people with less extensive care needs are increasingly left without help and support (Johansson, Long, and Parker, 2011). This trend of declining aged care services is illustrated in figure 12.1. Although figure 12.1 shows a rather drastic decline in the total share of older adults receiving aged care services, it does not fully capture the complexity of the changing composition of aged care services. From 2000 to 2013, the number of beds in residential care was reduced by approximately 25% (Ulmanen and Szebehely, 2015). The heavy decline in residential care implies that even very fragile and severely ill older adults are being assisted by homecare instead of receiving a bed in residential care. As a consequence, most of the publicly funded homecare is reserved for those who have very extensive care needs. This also indicates that even though the hours of provided homecare services increases, the help is concentrated to those who are severely ill. In addition, the reduction of beds in residential care has been paralleled by an increase in thresholds to be entitled to move to a residential care facility (Szebehely and Trydegård, 2012). Extensive care needs and multiple diseases, often dementia in combination with severe physical impairments, are required before older adults are entitled to move to residential care facilities. In this context, a national study by the NBHW (2012) shows that 22% of those who moved to a residential care facility died after one year and after three years more than 60% had died. Thus, residential care has more or less been

Total

Homecare

Residenal care

30 25 20 15 10 5 0 1985

1900

1995

2000

2005

2010

2013

FIGURE 12.1 Percentage of older adults (65+) in Sweden, who have been granted needs assessed homecare and residential care services from 1985 to 2013.

Note: Figure 12.1 should be interpreted with caution because statistics on aged care services have been changed several times since 1985. This is particularly true for comparisons of homecare services before and after 2007, when additional household services that had not been defined as homecare previously (e.g. meals on wheels) were included in the statistics on homecare. Source: Brodin (2005); NBHW (2006, 2011b, 2014); SCB (2014).

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transformed to hospice for older people; however, often without the necessary medical and nursing staffing and competences required for providing palliative care (Brännström, Hägglund, Fürst, and Boman, 2012). Declining resources in Swedish aged care in combination with raised thresholds to be entitled to services has resulted in an increasing number of older adults being helped by relatives or buying domestic services from private producers (NBHW, 2012; Ulmanen and Szebehely, 2015). However, help from relatives and privately paid household services are not equally distributed among social groups. In 2009–10, 23% of older adults with higher education bought domestic services compared to 12–14% of the older population who only had primary education. In the same years 70% of older adults with primary education received help from relatives, compared to 45% of older people with higher education (Ulmanen and Szebehely, 2015). Even though help from relatives is still much more common among older people with only primary education, help from relatives has in fact increased among all groups of older adults since the year 2000 (Ulmanen and Szebehely, 2015). This development is related to the combination of raised thresholds to become entitled to care and the heavy reduction of beds in residential care.

The first phase of marketization policies: In favour of big business The reorganization of residential care and the trend of declining resources have occurred in tandem with a series of regulatory changes aiming at marketization of service provision.4 Marketization policies in Swedish aged care have come in two phases, which at least at the rhetoric level differ to some degree. The first phase of marketization policies started in 1991, when a new Local Government Act (1991:900) enabled Swedish municipalities to outsource the provision of aged care and other welfare services to for-profit as well as not-for-profit producers. A key piece of legislation in this process was the Public Procurement Act (LOU) introduced in 1992 (1992:1598) and amended in 2007 (2007:1091). The Public Procurement Act requires that if the local authorities decide to outsource aged care services to private producers they must follow a process consisting of competitive tendering and confidential bidding. Still, the local authorities remain responsible for funding and regulation of the services, and it is therefore only the provision of services that is being outsourced (Erlandsson et al., 2013, p. 29). The Public Procurement Act does not include any criteria that the providers must fulfill to win the tender. These are instead set by the municipality. Usually, the local authorities use a combination of price and quality criteria, and the winner is selected on the basis of how well the bid corresponds to both criteria. Municipalities can either choose to award a contract to the provider winning the

4 For a detailed description of institutional changes in Swedish aged care, see Erlandsson, Storm, Stranz, Szebehely, and Trydegård (2013).

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bids or to enter a framework agreement with one or more providers. In the latter case, providers are not guaranteed any volume of work; instead the purpose is to establish terms for later awards of contracts. In a framework agreement, private providers of residential care services can also own facilities and sell beds to the local authority (Erlandsson et al., 2013, p. 28). The Public Procurement Act sets the maximum length of a contract with a winning provider to four years. Thus, after four years the local authorities have to launch a new public procurement process and the winner of the former tender has to participate in the new competitive tendering process to be awarded a new contract or to be included in a new framework agreement. As noted by Erlandsson et al. (2013, p. 28), Sweden has chosen a much more detailed regulation of public procurements than what is required of member states in the European Union. The EU Procurement Directive 2004/18/EC does not require that “services of general interest” be included in public procurements. Nevertheless, Sweden has preferred to include welfare services, such as aged care, in the Public Procurement Act. Moreover, though local authorities often include quality in the criteria, price has tended to win over quality if the tendering process has included both. Outsourcing of aged care services according to the Public Procurement Act has, therefore, favoured large private for-profit companies, which both have resources to invest in the time-consuming activities of competitive tendering and the capacity to use comparative advantages of economies of scale to drive down the price. As a consequence, privately provided homecare in Sweden has developed into a branch dominated by a few large – and mainly internationally owned – companies. Though the profitability to some degree has declined since 2011, the publicly funded care market in Sweden continues to attract international investors, probably because in a comparative perspective Sweden has one of the least regulated welfare sectors (Erlandsson et al., 2013, p. 55).

The second phase of marketization policies: Favouring older adults or small care enterprises The Act on System of Choice (LOV) (2008:962) was introduced in 2009. This Act was an attempt to both break the oligopoly of the homecare market and strengthen the position of the users (Government Bill, 2008/09:29). At least rhetorically, the Act on System of Choice therefore indicates a new phase of marketization policies in Swedish aged care. The Act facilitates the introduction of customer choice in primary health and social care services; however, customer choice is mandatory in primary healthcare, but only optional in social care. Customer choice in the context of aged care implies that the older adult service user can choose an authorized provider to conduct services after a needs assessment. In relation to the needs assessment, the local authorities are also required to inform users about the providers to choose among. Usually, this information is compiled in a catalogue or published on the municipal website. For those who do not wish or are unable to choose, there is also

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a no-choice alternative. This may be the local public provider, a private provider selected in a competitive tendering process, or a set order between all providers (Erlandsson et al., 2013, p. 32). Customer choice is thought to stimulate competition on the basis of quality instead of price. For instance, contrary to the procedure of competitive tendering and the awarding of contracts to the winner of the bids, no provider has a guaranteed number of clients in the customer choice model. Instead, all providers that fulfill the market entry requirements set by the local authorities are authorized and can begin the competition for clients. Applications are open for all legally recognized organizations and there is no time limit on the contract (Erlandsson et al., 2013, p. 30). This procedure is expected to support small providers by increasing their opportunities to compete with large providers, for example by creating distinctive ethnic or linguistic profiles of the services to attract specific groups of clients (SOU, 2008:15). To encourage the implementation of the Act on System of Choice, the NBHW was commissioned by the government to allocate state funds to the local authorities for the development of customer choice models (Erlandsson et al., 2013, p. 35). In October 2015, customer choice was in use or would be implemented in 176 of Sweden’s 290 municipalities (SALAR, 2016). Introducing customer choice into publicly funded aged care services, however, presents several dilemmas. One overall dilemma concerns the regulation and control of quality. In a customer choice model, quality is expected to be “regulated” through the users’ choices. If the users are not satisfied with the quality of the chosen provider, they can change to another provider. But according to the Social Services Act, which is still the general legislative framework regulating the provision of care in Sweden, the municipalities are principally responsible for the quality of the services. In the choice model, the market entry requirements then become the most important mechanism through which the municipalities can regulate and control quality (SALAR, 2014). The Act on System of Choice instructs the municipalities to integrate quality criteria in the market entry requirements. At the same time, however, the standards are not permitted to be unduly high in order to facilitate the entrance of smaller companies and to promote diversity (Government Bill, 2008/09:29). The market entry requirements must then be detailed enough to ensure the quality of care but not so specific as to block the entrance of small care enterprises. There is thus a tension in the market entry requirements between guaranteeing quality for older people and enabling access to the market for small providers. To resolve this dilemma, one recent study (SALAR, 2014) found that the municipalities focus on market entry requirements that are comparatively easily handled, such as provision of information to the users and reporting to the municipality. In addition, most requirements concern process quality management and not the outcomes of the service provision. Finally, 44% of the market entry requirements analyzed in the study were not possible to use for systematic quality control of the providers. Therefore, if they are dissatisfied with the quality of a provider, municipalities may in practice not be able to use the

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market entry requirements to end the contract with the provider. Instead, it may take severe cases of maltreatment before it is possible to legally end the contract. Another dilemma of the choice model relates to continuity of care. The Act on System of Choice particularly encourages small care enterprises, but if users do not choose (or leave) small care enterprises, the companies cannot survive. Many of the small care enterprises seem to have problems surviving in the market. Though there are no available statistics on company turnover, one comparison of providers in a city district in Stockholm shows that in two years, 27% of the original 81 providers had disappeared from the market at the same time as 40 new providers had been set up (Erlandsson et al., 2013, p. 56). The primary reason for this instability is that small care enterprises are susceptible to failure as they usually have few clients. In 2013, approximately 25% of the private companies in Stockholm had fewer than 15 clients, which corresponds to only three full-time employed care workers (Erlandsson et al., 2013, p. 56; Hjalmarsson and Wånell, 2013). Despite the promises of the choice legislation, small care enterprises apparently still have problems attracting clients. A relevant policy in this context is the tax deduction on household services and personal care introduced in 2007 (called RUT in Swedish). Taxpayers may deduct up to 50,000 SEK (US$6,950)5 per year and person for domestic services, such as cleaning, laundering, and gardening. This intersects with needs-assessed aged care in that only private providers are allowed to offer tax deductible household services. An authorised private provider can thus offer users both needs assessed care and various forms of supplementary services that users can buy at market price to “top up” the subsidised eldercare services they receive (Erlandsson et al., 2013, p. 32). Small care enterprises may then use tax deductible household services, such as cleaning, as a strategy to survive on the homecare market. This business strategy, however, creates a third dilemma for quality – the employment of appropriately skilled staff. Once they have been authorized, there are few opportunities for the municipalities to prevent the provider from using unskilled labour to perform qualified care services that require training.

From recipient to consumer? The introduction of market principles in Swedish aged care is commonly explained as having been triggered by the economic crisis of the 1990s, which profoundly affected public finances.6 However, marketization policies in aged care in Sweden are also related to changing perceptions of older adults’ health, capabilities and resources (Brodin, 2005, 2006). Until the 1980s, aged care policies in Sweden generally considered older people to be frail, isolated, and dependent, and it was society’s responsibility to stand in and take care of them when family members 5 The amount in USD is based on exchange rates for 16 October 2014. 6 See Szebehely (2011) for a thorough presentation of different arguments about the marketization process.

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(read wives and daughters) no longer could provide the care. However, this understanding changed during the 1980s, when policy documents gradually started to describe older people as healthy and independent and thus not at all in need for care to the same extent as had been assumed during previous periods. The changing perception of older people’s capabilities and need was paralleled by a decline in the provision of aged care services, first in homecare services (Brodin, 2005; see also figure 12.1 in this chapter). Discursive changes regarding older adults and older adults’ need for care have supported a redefinition of the role of older people from passive recipients of care services to care consumers capable of controlling and being in charge of their needs for care – if the need arises. This discursive shift also has implications for who is considered to play the key active role in the provision of aged care services. Whereas the understanding of older adults as passive recipients of care puts the primary responsibility for activity on the state, the perception of older adults as consumers of care implies that the older individual is to play the active role. New interpretations of older adults and older adults’ need for care are significant in the context of marketization policies. Without the changing perceptions of older people’s resources and capabilities, ideas of competition and choice would have seemed odd and impossible to introduce in aged care. However, regardless of the perception of older adults as passive recipients or as active consumers of care, both discourses have included intersectional categorizations of gender, class, and race. While the discourse on older people as dependent and passive drew on the image of the older person in need for care as a man from the working class, the discourse on older adults as care consumers refers to a man from the middle-class (Brodin, 2005, 2006). Thus, both dominating discourses in Swedish aged care policies have tended to hide the diversity of the older population at the same time as they have created intersecting hierarchical assumptions of older people’s capabilities and needs.

Implementing the rights of older service users: Voice or exit? Both the inquiry (SOU, 2008:15) and the Government Bill (2008/09:29) that preceded the Act on System of Choice define customer choice as an initiative to strengthen the position of the users. For example, the government bill states that customer choice will “strengthen the individual’s right to self-determination regarding the care” (Government Bill, 2008/09:29, p. 18). In both the inquiry and in the bill, one therefore expects to find thorough discussions of how customer choice will improve the care from the older adult’s perspective. Additionally, one assumes that the opportunity to choose and any difficulties connected to this process would be at the centre of the analysis. However, this is not the case. Although the inquiry and the government bill frequently refer to the benefits of choice for the users, choice from the perspective of the older person is only dealt with in ten pages in both pieces of work.7 7 The inquiry is a heavy piece of work at 430 pages in length, and the bill is 200 pages long.

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In both the inquiry and the government bill, user’s choice and any problems related to this process are summarized under the heading “Information and choice in a customer choice model”. In this section, care is on one hand described as a service that cannot be compared to ordinary services on the market: “The services are many times of vital importance to the user and the choice of provider might have huge consequences for the individual” (Government Bill, 2008/09:29, p. 90). On the other hand, just a few lines below this quote care is actually described as a service comparable to any other commodity: “To be able to choose it is necessary that the user is offered the opportunity to make rational choices on the basis of needs and preferences. This requires available and comparable information regarding the choices” (Government Bill, 2008/09:29). Thus, what the customer choice model comes down to is the capacity of the user to make rational choices, which will be enabled by accessible and understandable information. The conceptualization of older service users as rational consumers reflects in its essence the discourse on older people as healthy and independent that has dominated aged care policies since the 1980s. At the same time, however, this also defines care as an impersonal and decontextualized commodity bought and sold on the market. This is the opposite of how quality in care is experienced by the older service users. Although quality in care is difficult to define, extensive care research points to the conclusion that quality care is above all experienced as continuity in the person(s) performing the care (e.g. Meagher and Szebehely, 2013; Szebehely, 2011). This relates to the fact that quality care depends on the personal relationship between the one who carries out and the one who receives the care. Szebehely (2011) therefore argues that in a customer choice model, the possibility of voice is more important than exit for the older adult service users. In both the inquiry and the government bill, however, the rights of the older service user are predominately defined in terms of exit. Moreover, in the bill the government refers to a report by the NBHW (2011c) that is said to support the introduction of customer choice in aged care. According to the government, this report shows that “most users were positive to be able to choose the provider of homecare services, but the choice was not easy” (Government Bill, 2008/09:29, p. 96). However, what the report by the NBHW actually says is that although older care service users appreciate the opportunity to choose, many do not choose at all. Furthermore, most of the older service users are more interested in being able to choose the person who carries out the care than the provider employing the care workers (NBHW, 2011c, p. 11). These aspects of customer choice, which can be seen as expressions of the opportunity to give voice rather than exit, are never touched upon in either the inquiry or in the government bill. Instead, both repeatedly return to the advantages of exit. The preoccupation with exit rather than voice relates to the discursive changes in Swedish aged care policies. Implicitly, the changing interpretation of older adults from passive recipients of care to active consumers has transformed older adults from vulnerable subjects to autonomous individuals somehow removed from the vulnerability of aging. Whilst exit upholds the image of older adults as rational care

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consumers unbound by time and space, voice bears more resemblance to the understanding of older adults as dependent on and in need of support by the state. The question is how well this perception of older adults as rational consumers of care corresponds to the health and needs of the older population in Sweden.

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Choice and need in practice Studies have shown that what matters most to older adults in need of care is to be able to stay in control of everyday life even when they are in need of help and assistance (e.g. Harnett, 2010; Hjalmarsson and Wånell, 2013). Logically, one aspect of control is to be able to influence the care and assistance you need. However, the Act on System of Choice only promotes the opportunity to choose the provider. Though the opportunity to choose the provider is generally appreciated, many older adults would rather decide the content of the care – for example to have the opportunity to influence what help they will receive and how and when the care is performed (Hjalmarsson and Wånell, 2013; NBHW, 2011c). As aged care is needs assessed, however, it is the local authorities that to a large extent decide what is to be included in the care services. Needs assessment is usually conducted by a local official, who investigates the older adult’s need for care after having received an application from the older person. Many times, what happens during this process is that the older person’s need becomes “translated” into available services and that these services are not always experienced as corresponding to the need the older person claims to have in the application (Olaison, 2009). Reports and studies show that the needs assessors generally give much higher priority to physical impairments and medical needs than to social needs or needs associated with depression and anxiety (Brunt et al., 2010; Janlöv, 2006; NBHW, 2008). These needs are often dismissed as a “natural” manifestation of aging and therefore nothing that entitles the person to aged care. Implicitly, these hierarchies of acceptable and irrelevant needs become gendered, especially when it comes to applications for residential care. A report on decisions and court orders not executed in aged care indicates that there are three times more older women than older men whose applications for residential care are rejected (The Counties Administrative Boards, 2009). One local study shows exactly the same pattern (Söderberg, 2005). This local study also indicates that those who most often are denied residential care are older women with health problems related to depression and anxiety. Later-life migrants are another group whose needs often become dismissed as irrelevant (Forssell, Torres, and Olaison, 2015). Needs assessors often perceive later-life migrants as difficult and different compared to other older adults. This is particularly the case if later-life migrants express needs that are not commonly included in the local authority’s ‘catalogue’ of available services. For instance, laterlife migrants may express wishes to have assistance leaving the home to attend church. Upholding cultural and religious traditions are normally not considered as needs that entitle older adults to aged care services. Whilst some needs assessors

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handle this dilemma by dismissing cultural and religious needs as irrelevant for achieving a “reasonable standard of living”, others argue that upholding lifestyles from the country of origin cannot be claimed as grounds for entitlement to aged care services in Sweden (Forssell, Torres, and Olaison, 2015, p. 19). Regardless of the arguments, this indicates that social and cultural needs have low priority in the needs assessment process. In addition, the mere opportunity to choose the provider does not help those older adults who may require assistance to meet social and cultural needs, as these needs are apparently not accepted as relevant in relation to old age. The most critical issue in relation to customer choice, however, is older adults’ capacity to make rational choices. Drawing on a framework developed by the UK Office of Fair Trading, the Swedish Competition Authority (2012) argues that user’s choice is decided by three main factors; awareness, assessment and capability. Thus, to benefit from the principle of customer choice, the older service user needs to be aware of the possibility of choice, to be able to access information about the different available choices, and, finally, to have the capacity to make a choice. In this context, one randomized study of older people’s health in Sweden (Swedish Panel Study of Living Conditions of the Oldest Old (SWEOLD)) found that only a minority (approximately 10%) of people over the age of 77 are healthy enough to have the ability to make rational choices (Meinow, Parker, and Thorslund, 2011). Instead, adults over the age of 77 generally have many physical, mental or cognitive health problems that considerably affect their capacities to access and process information and to make rational choices. As indicated by the striking subtitle of the study, The Semblance of Choice, Meinow et al. (2011) conclude that those older adults most in need of care also are the ones who have the least capacity to arrive at carefully and thoroughly planned decisions about who will provide for the care they need.

Privileged and disadvantaged groups There are no available statistics or studies that can reveal if some groups of older people have been systematically disadvantaged by the introduction of customer choice in Swedish aged care (Erlandsson et al., 2013). However, international studies indicate that institutional changes in health and social care tend to raise new barriers for groups, who were already disadvantaged at the onset (e.g. DilworthAndreson et al., 2012). Therefore, those groups of older adults in Sweden who were disadvantaged before the introduction of customer choice will most likely face new difficulties in exercising their rights as consumers of care. International studies also show that education and income affect older people’s choice of provider (Glendinning, 2008; UK Office of Fair Trading, 2010). Older adults with only primary education and low income do not choose providers to the same extent as older people with high education and high income or older adults who have educated children. Choice-based models thus have tendencies to benefit those older adults who have enough resources to deliberately seek and access information. Curiously, the Swedish NBHW (2011c) emphasized these class-based

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aspects of customer choice in one of the reports that the government claimed supported the introduction of customer choice in Swedish aged care (Government Bill, 2008/09:29, p. 96). These biases of customer choice indicated by the NBHW, however, passed unnoticed in the government bill.

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Who is most likely to benefit from customer choice? Szebehely (2011) argues that customer choice in combination with the tax deduction on household services might generate inequalities and cream-skinning among the providers. As private providers are allowed to offer tax deductible domestic services, they can offer subsidized household services to older adults who want to have additional services on top of the needs assessed aged care they receive. This probably means that older people who have the financial resources to buy domestic services will also choose a private provider that both can carry out the aged care services they are entitled to and provide additional subsidized domestic services. In addition, some private providers might niche their services to attract service users who can afford to buy additional domestic services. Although there are no national statistics enabling cross-comparisons of users who have both needs-assessed care and tax deductible household services, statistics show that tax deductible domestic services are most frequently used by relatively wealthy older adults. For example, in 2010 only 35 out of 1,000 persons 80 years and older with low incomes used the tax deduction for domestic services, compared to 160 out of 1,000 persons in the same age group with high income (NBHW, 2012). The tax deduction for domestic services also has gendered connotations as older men have higher incomes than older women. In 2010, about 15% of men over the age of 80 used the subsidy compared to 10% of women in the same age group (NBHW, 2012). Another group that will probably benefit from the choice model is older people who have children or other close relatives capable of influencing the providers of care. One smaller study has compared older service users who have changed provider with those who have not changed (Galle, Brandén, Gustafson, and Bucht, 2010). In general, those who changed provider had relatives who complained or pressed the provider to fulfill the older person’s – or the relative’s – wishes. Those older service users who had relatives who complained on their behalf also had much higher ability to influence the content of the care they received. This indicates that customer choice will benefit those older adults who have relatives powerful enough to influence the care providers, as the providers most likely will put more efforts on satisfying this group compared to older adults who have less powerful relatives.

At the intersection of gender and social class As indicated throughout this chapter, gender and social class are two intersecting axes of inequality that affect older people’s access to care differently. Aged care is

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from the onset a gendered issue. Women’s longer life expectancy in combination with the heterosexual pattern of family formation in Sweden as well as in other Western countries, according to which women are, in general, 3–5 years younger than their male partners, means that the majority of older women live alone while the majority of older men do not. In Sweden, for example, about 80% of women aged 80 years and older live alone, compared to only 40% of men in the same age group (Larsson and Thorslund, 2006). Older women also have considerably lower incomes than older men, and for many older women to lose a partner means a noticeable drop in income. Even though older adults are assumed to stay healthier today than 30 years ago, studies show that the need for help and assistance in everyday life increases rapidly after reaching the age of 80 (Larsson and Thorslund, 2006). Older women with primary education who also live alone constitute the group most likely not to be able to benefit from customer choice, as they do not have the health nor the resources necessary for making carefully and thoroughly planned decisions about who will provide their care. Neither do they have the money to buy additional subsidized household services if they would prefer to do so. Instead, older women with primary education receive the most help from relatives, usually a daughter (Szebehely, 2009; Ulmanen and Szebehely, 2015). The combination of the introduction of market principles in Swedish aged care and increased thresholds for entitlements will therefore probably reinforce the existing intersecting inequalities of class and gender.

At the intersection of migration and ethnicity Social class does not, however, only intersect with gender but also with migration and ethnic inequalities in Swedish aged care. The discourse on older people as healthy and independent “care consumers” has emerged in tandem with the perception of older migrants as a fragile and dependent category (Brodin, 2006; Torres, 2006). In policy documents, older migrants have repeatedly been emphasized as a group in special need of attention. However, as policies and regulations have been shaped in line with the image of the healthy and independent care consumer, the recurrent emphasis on older migrants as dependent and fragile has never been accompanied with means and resources to improve their situation. Rather, the repeated comments on the frail and dependent older migrant have reinforced the divide between the “us” and “them”. Moreover, the idea of older migrants as different and having different care needs has been supported by a discourse, according to which non-European migrants are perceived as “family oriented”, meaning that non-European migrant families are expected to take care of their own older adults and older non-European migrants are believed to prefer to be taken care of by their own family (Brodin, 2006; Torres, 2006). This racialized discourse not only increases the pressure on women from non-European countries to perform as informal care givers, but also hides the fact that informal care giving is a process shaped at the intersection of gendered, racialized and class-based inequalities.

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The generalization of older migrants as belonging to one single category conceals the diversity of this group. Older migrants in Sweden come from approximately 200 different countries that differ in social and economic development (Brodin, 2012). Most migrated to Sweden in the 1950s or 1960s from other Nordic or European countries. Though the number of older migrants from non-European countries has increased in recent decades, this group is still a minority of the total number of older migrants in Sweden. In relation to needs-assessed care services, older migrants born outside of the Nordic countries have been an underprivileged group, and help from relatives has been by far the most common form of help among this group of older adults in Sweden (Szebehely, 2009). One group that particularly lacks institutional protection is later-life migrants, because due to their age they have not been able to work since their arrival to Sweden. Interview studies indicate that later-life migrants piece together a puzzle of small incomes to survive, such as Swedish minimum pensions, social assistance and money from relatives (Brodin and Mattsson, 2014; Linné, 2005). Later-life migrants will, therefore, most likely continue to be disadvantaged by the introduction of market principles in aged care, such as customer choice. Lack of proficiency in Swedish makes later-life migrants very dependent on relatives to act as proxies for them. Later-life migrants who have no relatives in Sweden are therefore particularly disadvantaged. In addition, because later-life migrants generally lack financial resources, they will most likely not be able to use the tax deduction on household services to buy additional help they might need with domestic services.

At the intersection of age and disability A third strand of inequalities in Swedish aged care is the intersection of age and disability. Age is a significant divide in disability entitlements in Sweden. For example, according to the Act concerning Support and Services for Persons with Certain Functional Impairments (LSS), which regulates entitlements primarily for people with intellectual and severe physical disabilities, disabled adults may keep the service and assistance they have when they become 65 years old. However, if the need for care increases, they are not entitled to additional help and assistance under this Act. Instead, once they are 65 years old, disabled people are entitled to the same help and support as other older adults provided for under the Social Services Act. This implies that some impairments and diagnoses are defined as disability for adults under the age of 65, but as “normalcy” for adults above the age of 65. Furthermore, as disabled people in general have lower incomes and lower education compared to other population groups in Sweden (NBHW, 2010) older disabled adults are less likely to be able to benefit from a customer choice model and the option to receive subsidized domestic services. There are also inequalities among groups of disabled adults when it comes to entitlements, which intersect with age. People with mental health disabilities, such as schizophrenia, are generally excluded from services provided under the Act

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concerning Support and Services for Persons with Certain Functional Impairments (Maycroft Kall, 2014). Instead, people with mental health disabilities are usually entitled to services according to the Social Services Act. However, as mentioned previously, the Social Services Act is rather imprecise in terms of support and services (Maycroft Kall, 2014; Szebehely and Trydegård, 2014). Over the life course, people with mental health disabilities therefore have comparatively weak institutional protection. In addition, as the majority of older adults suffering from mental health disabilities have never participated in the labour market or have only done so to a very limited extent, older adults with mental health disabilities generally live in poverty (NBHW, 2008). Before the heavy reduction of beds in residential care, older adults suffering from mental health disabilities were entitled to move to residential care without having any other form of care needs. This possibility is seriously restricted today, as is the possibility to become entitled to assistance with social activities (Brunt et al., 2010). Instead, older adults suffering from mental health disabilities are usually offered homecare services. The problem with this solution is that older adults with mental health disabilities may not understand why the homecare staff comes to their homes, and may therefore refuse to open the door. If this happens, the homecare personnel have no right to make a forced entry, but must leave the older person without providing any help (Larsson and Berger, 2007). Thus, there is a huge risk that older people suffering from mental health disabilities will be left without any help or support at all and become isolated in their homes, even though it might look as if they have homecare on paper. As older adults suffering from mental health disabilities neither have the financial nor the cognitive capacity to access or process information on how to choose, they will most certainly continue to be disadvantaged in a marketized aged care system based on the principle of customer choice.

Marketization and institutional vulnerability The results of this chapter raise the questions of whether the introduction of market principles into publicly funded aged care endangers the capacity of the Swedish state to promote equality and whether marketization undermines the ability of the Swedish state to monitor and correct its institutions to avoid unjustifiable allocation of resources. As discussed throughout this chapter, the Swedish aged care system has changed considerably since the 1980s. Marketization is only one of many intertwined aspects. At the same time that private producers have increased and customer choice models and tax deduction for privately paid household services have been introduced, thresholds for entitlements have been raised both in homecare services and in residential care. In addition, the number of beds in residential care has been reduced by more than 25% in the last 13 years; with the result that homecare has become reserved for the oldest and most severely ill. One outcome of these interlocking aspects is class cleavages in older people’s patterns of help and assistance. Though help from relatives has increased among all social groups

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since the beginning of the new millennium, help from relatives is still much more common among older adults with only primary education and low incomes. In contrast, the use of subsidized domestic services is far more common among older people with higher education and incomes. This development indicates a declining capability of the Swedish state to provide all of its citizens with resilience towards the vulnerability inherent in aging. The weakened capacity of the Swedish state to provide resilience towards old age also occurs in a setting already structured by complex relations of power and inequality. This intersectional configuration of privileges and disadvantages manifests in older people’s patterns of help. The two groups most dependent on relatives for help are older women with only primary education and low incomes and older migrants from non-Nordic countries, primarily later-life migrants. Both older women with primary education and later-life migrants are groups of older adults most likely to be disadvantaged by market principles such as customer choice, because both groups lack the resources to overcome barriers to accessing and processing information about available choices. A third group with little opportunity to benefit from the principles of customer choice is older adults suffering from mental health disabilities. Older adults suffering from mental health disability have neither the financial resources nor the cognitive capabilities to be able to represent themselves as the “rational care consumer” that the entire marketization process in Swedish aged care draws upon. Marketization also destabilizes the Swedish state’s ability to supervise its own institutions and to correct unjust allocations of resources. From an international perspective, the Swedish welfare sector is weakly regulated (Erlandsson et al., 2013). Weak regulations in combination with the procedures of competitive tendering has favoured large private and mainly internationally owned for-profit companies, which have both resources to invest in the time-consuming activities of competitive tendering and to use the comparative advantage of economies of scale to drive down prices. As a consequence, publicly funded aged care in Sweden has developed into a lucrative business for international investors. These international for-profit providers are also difficult to control through contemporary national regulations. The customer choice model was partly introduced as a way to alter that trend in favour of small and locally situated care companies. However, as discussed in this chapter, regulating publicly-funded aged care through customer choice generates a number of new supervisory difficulties, primarily in relation to guaranteeing older adults quality services. There is no systematic study on how the customer choice model has affected the quality of homecare services. Media has, however, occasionally reported cases of neglect and maltreatment of older adults. For example, the magazine of the Swedish Municipal Workers’ Union (Kommunalarbetaren) published a series of articles in 2013 called “The New Homecare” (“Den nya hemtjänsten”), which revealed cases of both economic fraud and neglect of older adults perpetrated by small and privately owned care companies. Cases of maltreatment in privately run residential

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care have also been reported in the media. In 2011, for example, the largest Swedish newspaper Dagens Nyheter published a series of articles revealing cases of maltreatment at a residential care facility in Stockholm owned by one of the largest for-profit providers in Sweden (Lloyd, Banerjee, Harrington, Jacobsen, and Szebehely, 2014). Media scandals surrounding privately provided aged care services have fueled political arguments for and against profit taking in publicly financed aged care. In general, the arguments have tended to follow the political divide between the right and the left. Thus, while the right-centre coalition government elected in 2006 and reelected in 2010 has been in favour of private enterprises in publicly funded aged care, the left–green coalition government elected in 2014 has promised to create an “orderly welfare system” and to stop “the pursuit of profit” (Prime Minister’s Office, 2014, p. 12). If and how this goal will be accomplished is yet to be seen. Stricter regulation does not by itself reverse the institutional vulnerability caused by marketization. Experiences from Anglo-Saxon countries indicate several unintended consequences of stricter regulation (e.g. Braithwaite, Makkai, and Braithwaite, 2007). Overall, stricter regulation tends to lead to a development in which regulation becomes ritualized and is therefore less effective. Politicians learn to respond to scandals by creating more and more rules so that they appear tough to the electorate, and managers and administrators learn how to get good results by managing the paperwork rather than the care process. Also, Nordic studies stress the risk that stricter regulation may result in politicians and administrators focusing on what is easy and possible to measure. From this follows that those aspects of care that are difficult to measure but crucial to experiences of quality care, such as care relationships, are ignored and undervalued (Meagher and Szebehely, 2013; SALAR, 2014). In addition, research on supervision and control in social care services demonstrates that the actors involved in the regulatory process often have divergent and sometimes contradictory understandings of what regulation of social care means (Hämberg, 2013). This complicates the state’s ability to control marketized care systems, especially in Sweden where the principle of local self-government challenges the state’s capacity to impose national control and supervision. This in combination with the vaguely defined entitlements to aged care imply that we can continue to expect Swedish aged care to be driven by a variety of local decisions, regardless of the political visions of future governments.

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13 E-GOVERNMENT FOR THE DISTRIBUTION OF PUBLIC SERVICES IN SWEDEN Privatization, vulnerability and social responsibility reshaped Titti Mattsson1 I. Introduction Sweden is one of currently 25 countries in the world that has a very developed (electronic) e-government system for the distribution of public services (United Nations E-Government Survey, 2014). E-government is the use and application of information technologies in public administration. In practice, this means that the technology is used to manage data and information, streamline and integrate work processes, transform public service delivery and create new means of communication for the state and its citizens (OECD, 2005; The World Bank, 2006).2 Rapid advances in information and communication technology are currently stimulating the emergence and development of e-government globally. The opportunities offered by the digital development are constantly widening the opportunities, for example with mobile apps, online services, social media and cloud computing. The overall aim is to allow the government to overcome various economic, social and environmental challenges, and, at best, become more open and responsive when providing services (Silcock, 2001). The system is also intended to move control over decisions closer to citizens, increasing service access and transparency and cutting down on service administration. This development is strongly supported internationally by the global and regional political communities. For example, the EU sees e-government systems as a means of improving public services and democratic processes, as well as dealing with the weighty costs of public administration 1 Professor of Public Law, Lund University, Sweden 2 Increasingly, the system is also used for transnational activities, such as electronic health systems. For example, Estonia and Finland have connected their national patient journal systems. This means that if a person in Helsinki forgets or misplaces her prescribed medicine on a visit to Estonia, an Estonian medical doctor can search in the Finnish patient register to find her records and write a new prescription

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(EU Commission, 2008). The United Nations is also very supportive and claims in its survey (United Nations E-Government Survey, 2014, p. 2) that e-government can provide significant opportunities to transform public administration into an instrument of sustainable development in the world. The development of e-government is closely linked to the distribution of public services. E-services are public services supplied electronically to be used by citizens, corporations, or other government agencies. Consequently, many Swedish authorities nowadays provide various kinds of public e-services that can be accessed via computers, smartphones, tablets, mobile phones and similar devices. The nature of the service provided varies. It can be an electronic communication channel for individuals, authorities and municipalities to share information or to work together on individual cases. It can also include moreor-less automated decision-making. For secure handling and control, e-services are commonly linked to electronic identification of the user. Today there are numerous e-services that individuals use regularly. For example, in Sweden the local counties provide e-services for renewing prescriptions, for cancelling appointments, and for ordering various kinds of certificates from the local authorities. The municipalities provide e-services for cultural activities, childcare, and schools, such as e-services for renewing library loans, notification for preschool admission, or calculating individually tailored tariffs for childcare and care for the elderly or the disabled. Furthermore, it is possible to apply electronically for building permits, licences or residential living, just to mention a few examples. Over the years, national, regional and local governmental bodies have become more strategic in their planning of the e-services that should be offered to individuals. For example, more and more public services within the health and welfare sectors are becoming automated. E-health is just such an application of e-government that is currently being widely adopted around the world. E-health refers to all forms of electronic healthcare that are delivered on the Internet. It may be information, education, commercial products or direct health services, including clinical activities (Eysenbach, 2001). The application may comprise computerized healthcare systems (“e-hospital”) that provide users of information with mobile healthcare, enabling users to communicate through wired networks, and health portals that provide health information (Teoh, Singh, and Chong, 2011). Some countries, including Sweden, also provide social welfare services electronically. This can include home services, emergency telephones, food delivery, and other services (Helfrich and Helfrich, 2011). The increasing use of e-services in the health and social welfare sectors raises the question of how persons who need the social justice system the most benefit from this development. Does this development promote social justice or is there a risk of creating new inequalities? In other words, in what way does the development of e-services affect the public responsibility to provide resilience for persons in vulnerable situations in life? To what extent are public e-services accessible to everyone? Furthermore, in what way does the increasing use of e-services affect the legally based

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relationship between the state and the individual ? And to what extent is the increasing use of e-services in society a part of the privatization trend of the expansion of contractual relationships among the individual, the public and the private market in general ? Thus, the overall purpose of the chapter is to analyze some current implications for the individual’s vulnerability of using e-services in areas of significant public interest. The theoretical framework is Martha Albertson Fineman’s vulnerability theory (Fineman, 2008). In short, this theory focuses on how an integrated lifespan approach can guide political and institutional practices, in taking societal responsibility for the individual’s dependency and vulnerability throughout life (Fineman, 2012). A vulnerability analysis emphasizes our interdependency within social institutions and the need for public responsibility for our shared vulnerability. Furthermore, it provides important arguments against the privatization of social need and for a more responsive state. It also proclaims that equal opportunities can be achieved only by offering different ways that vulnerable situations can be overcome by institutional frameworks (Fineman, 2008). The theory therefore emphasizes the need for respecting difference and diversity among persons and during their lifespan (Fineman, 2012). This is relevant for a discussion about how the ongoing development of information and communication technology changes the ways of contacting and communicating with the institutional frameworks providing public services. This development is radically changing the methods for interaction (Axelsson, Melin, and Lindgren, 2013; Holgersson and Karlsson, 2014; Hung, Chang, and Kuo, 2013; Joseph, 2013; Juell-Skielse, Hjalmarsson, Johannesson, and Rudmark, 2014). The way and the extent to which this development affects the possibilities and conditions for building resilience in vulnerable life situations needs to be discussed. One concern is that the new communication system is changing the opportunities for persons without computer access or knowledge to get social services on the same terms as others. Another concern is that the legal system may have problems adapting to the new decision-making processes which, in turn, may affect the individual – for example by limiting ways to complain about or appeal a decision. This, in turn, may affect the individual’s opportunities of using the law as a tool for resilience. Fineman’s argument is therefore applicable; human vulnerability is affected not only by the personal circumstances during one’s life, but also by the institutional conditions that can vary in time and space (Fineman, 2008). Her belief that we should turn our attention to the institutional conditions, such as the organizational and professional handling of clients, patients and other consumers of public services, in order to investigate the real conditions, has encouraged me to analyze the consequences of public responsibility for social needs in an e-government society. I will use social welfare e-services for the elderly as an illustrative example of using e-services in areas of significant public interest. There are two reasons for this. First, the welfare sector is particularly sensitive from a vulnerability perspective; social welfare clients are in a vulnerable situation in general and elderly clients’ vulnerability is often exposed. Secondly, it is an area about which I possess some knowledge, as a result of having taken part in a research and development project

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related to electronic services for the elderly and disabled in Järfälla municipality in Sweden during the years 2009–11. The project aimed to create e-services such as automated case management for some social services for residents in the area. Within the research project, called “Open social e-services”, I was tasked with identifying the specific possibilities and difficulties inherent in each e-service, in relation to the national legal administrative and material rules. The project involved IT vendors, social workers, other public representatives and experts in information systems, social work, and law. The purpose of the project was to develop social e-services to improve individual services for elderly persons. The result was a number of new e-services for assisted living, such as emergency telephones and part-time supervisors. Information was distributed in different ways, to communicate to citizens this option of applying via an e-service.3 Individuals applied for services online, and if they met the eligibility criteria, they received immediate approval to use the service.4 The social e-services were integrated with the administrative systems used by the municipality and service providers. The idea was to remove the manual administration of simple decisions and replace it with automated decisions, allowing social welfare officials to spend more time on more demanding cases and less on the simpler, individual social assistance decisions. The project was evaluated in cooperation with the municipality in 2011. The result was that several of the goals had been met (Helfrich and Helfrich, 2011; Juell-Skielse, Mattsson, Persson, Uppström, and Wohed, 2011). The time spent on administrating the services offered as e-services had been reduced by 85%, and the lead time from the submission of the application to the decision received had dropped from seven working days to four minutes (Helfrich and Helfrich, 2011). Some problems occurred during the design and deployment of the e-services, including technological incompatibilities and a locked relationship with the supplier of the back-end system. There were also conflicting interests among the local stakeholders due to the use of automated decisions. However, the team overcame these problems and the system was implemented. After a couple of years the system needed updating, due to new regulations and changed routines at the social welfare office. The municipality lacked the resources for this and had to close the e-services temporarily. I will return to this practical experience in developing e-services for the social sector when I discuss the implications for the individual’s vulnerability of using e-services in areas of significant public interest. This chapter introduces e-services development to the reader, highlighting the goals and discussing some challenges of fulfilling these goals in practice. Thereafter it describes the development of using e-services for elderly in need of services in Sweden. It then discusses the problems of accessibility and assuring individual legal security with automatic systems. The final issue is to explore the way in 3 See for example the information brochure, http://www.jarfalla.se/download/18.6355bfc913268 07d5658000230/Jarfalla_Estrategi_broschyr.pdf. 4 https://jarfalla.siriusit.net/net/standard_mall/Jarfalla/Jarfalla/e-tjanster/aldreomsorg.

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which the increasing use of e-services by the authorities affects the legal relationship between the responsive state and the vulnerable individual. I argue that the increasing use of e-services is a part of the general privatization trend in the expansion of contractual relationships among the individual, the public and the private market, and I will argue for a public legislative awareness and proactive legislation efforts in order to balance the development with the obligations of a responsive state.

II. E-Services for public services As already mentioned, advances in information and communication technology stimulate the development of e-services for governments in Europe and around the world. The basic idea of e-services is to use e-government technology to move control over decisions closer to the individual, increase service access and transparency, and reduce administration. This development is often said to have the following goals: transparency (i.e. as exposure to public scrutiny); accessibility to anyone at any time or place; and responsiveness to new ideas and demands (OECD, 2005). Transparency is supported by sharing of information with individuals, with respect to applications, grounds for decision, case status and social documentation. Government services can be made accessible around the clock over the Internet. Responsiveness is increased by providing individuals with immediate responses to queries regarding applications and requests, where service lead times are shortened through the digital and automated handling of administrative processes. E-government is a broad concept and not easily defined. One common trait is that Information and Communication Technology (ICT) is meant to be used in internal administration and in contact with external parties in a governmental context (see for example SOU, 2009:86). Even if e-government seems to be the most commonly used term, it is also sometimes referred to as digital government, electronic governance, one-stop governance, online government and Digital-Era Governance (DEG) (Dunleavy, Margetts, Bastow, and Tinkler, 2005; Grönlund and Horan, 2004, p. 713). Anttiroiko defines five relationships in e-government: administration to citizens, citizens to administration, the internal relations of the administration, administration to corporations and corporations to administration (Anttiroiko, 2002; Kirkfors, 2012, p. 10). Such a description reveals the relevance of both the public and private interests in the e-services relationships as well as their intermixed status. As already mentioned, global and regional bodies actively promote the development. The EU is very positive and views e-government as a means to improve public services and democratic processes (EU Commission, 2008). EU ministers responsible for e-government policy issued the “Ministerial Declaration on eGovernment” (2009) to articulate a common vision and the objectives and priorities 2011–15. The perception is that e-government should no longer be regarded as an internal matter for national authorities, but as a common resource for the general development of society. This means that the agencies that cooperate with other

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stakeholders and citizens (as well as entrepreneurs and organizations) are no longer simply customers, but also participants in the system, in the form of re-users or co-creators of government information and e-services. In a global perspective, efforts are underway to harmonize e-government, with the aim of strengthening it at many regional levels. In its E-Government Survey (United Nations E-Government Survey, 2014), the United Nations highlights e-services as a central part of the development of public administration: Through innovation and e-government, public administrations around the world can be more efficient, provide better services and respond to demands for transparency and accountability. E-government can help governments go green and promote effective natural resource management, as well as stimulate economic growth and promote social inclusion, particularly of disadvantaged and vulnerable groups. ICTs have also proven to be effective platforms to facilitate knowledge sharing, skills development, transfer of innovative e-government solutions and capacity-building for sustainable development among countries. E-government can generate important benefits in the form of new employment, better health and education. (United Nations E-Government Survey, 2014, p. 22) The citation expresses key words for the promotion of this development: increased efficiency, better services, increasing transparency and greater accountability. These goals are repeated in numerous government documents and reports. However, so far there is a substantial variability in the world of online service availability. The UN Survey concludes that there appears to be a widening gap between governments that are developing services and governments that are not (United Nations E-Government Survey, 2014, p. 6). Twenty-five countries have a very high e-government ranking. The top five countries are the Republic of Korea, Australia, Singapore, France and Netherlands (United Nations E-Government Survey, 2014, p. 15).5 Regionally, Europe receives the highest score, followed by the Americas. The top-performing countries in this region are the United States and Canada, both of which are also on the top of the list of world leaders. The survey finds that since 2012, the United States has improved rapidly through policies for a more advanced e-government for its citizens, including cloud computing, smart mobile devices, tablets and high-speed networks (United Nations E-Government Survey, 2014, p. 23). Africa continues to be far below the world average. The Asian region is slightly above the world average, with the exception of the Republic of Korea, which tops the 2014 rankings in the United Nations e-government development index (United Nations E-Government Survey, 2014, p. 15). In the survey, Sweden fell from its 2008 Survey position as world leader to

5 These countries are followed by Japan (6th), the United States (7th), the United Kingdom (8th), New Zealand (9th) and Finland (10th).

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14th place. According to an earlier survey, this is mainly attributable to the regression of its online services (United Nations E-Government Survey, 2010, p. 71).

III. E-services as social services for elderly

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A. The case of Sweden In Sweden, as in many other countries, one area of the development of e-services is social welfare services. Social services have traditionally been administered and provided by the social services on an individual basis. The services are based on a public duty stipulated by legislation to provide services for people who cannot care for themselves. The goal of such services is to enable persons with disabilities to be part of society and to live their lives much as others do (Social Services Act, Chapter 1, Section 1). Many elderly people live in their own homes, and many are in good health. There are also many persons who need support, but who are able to continue living at home. Thanks to home help services, mobility services, daytime activities, and other social services of a similar nature, many people can continue to live independently. For those not able to stay in their own homes, special forms of accommodation may be arranged, including care and nursing (Mattsson, 2010). Increasingly, these services have changed, and today a lot of services are arranged electronically, with e-services. Such services can consist of municipality homepages with service and contact tools, social media services to assist in answering welfare questions or evaluating home services, contact group meetings, etc. (Mattsson, 2011). Some e-service consists of automatic decision-making processes and may conclude in an individual’s entitlement to social welfare assistance or service (Juell-Skielse et al., 2011). The idea behind such e-services is that some services, such as emergency telephones, food delivery service, and cleaning services, are rarely refused by the social welfare officer, and can just as well be managed as e-services. Thus, if the person applies correctly through the system, and fulfills the requisites for the desired service (certain age or disability for example), an automatic and immediate decision will follow. Sweden has a tradition of extensive services to elderly people who need help and support in their everyday life. At the same time, the demographic transition resulting from an increasingly ageing population challenges the healthcare and social welfare systems in Sweden as well as in other countries. The phenomenon is sometimes labelled ‘the greying of the globe’ (comp. Doron and Spanier, 2012, p. xi; Numhauser-Henning, 2013, p. 21). This development is highly relevant for the Swedish situation. The elderly represent an increasing share of the Swedish population. Of the country’s 9.7 million inhabitants, more than 18% are pensioners over 65 years of age. The number is expected to rise to 26% by 2050 (Bengtsson and Kirk, 2011). Sweden is among the countries with the largest proportion of its citizens over this age, and is also among the countries with the largest proportion of people aged 80 or more. Consequently, the costs for this sector are very

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high. The main part of this care is financed by municipal taxes and governmental support and the rest is covered by various service charges. These high and rising costs have become a strong incentive for the government to find more time and cost-effective systems for public duties toward the elderly. One solution has been to increase private providers of social services. This privatization trend within social services is encouraged by legislators, often combined with the goal of creating more efficient services.6 One example of this trend is an Act (2008:962, LOV) concerning a system of free choice for healthcare services and for social services for elderly people. As a consequence of this legislation, a vast number of new private suppliers of social services have developed in Sweden over the last few years (Brodin, 2015). In October 2013, 181 of the country’s 290 municipalities had introduced or decided to introduce free-choice systems within one or several service areas (SOU, 2014:2, p. 15). E-services are put forth as another way of making the system adjust to such costs while maintaining, or even improving the quality of these services (Helfrich and Helfrich, 2011).

B. The problem of accessibility As mentioned, one basic goal of e-services is to increase service access and transparency. However, this assumes that citizens are actually using the e-services. One general problem with the goal of increasing the use of e-services, both globally and locally, is the still limited population that can currently be reached via digital media. For example, in many countries the development of e-services seems to be subject to local variation, thus affecting the individual’s opportunities to make use of these services, depending on their place of residence (Krokfors, 2012). In addition, age, intellectual ability, interest and financial constraints all seem to be ingredients in user exclusion. According to Swedish Statistics, 91% of people aged 16–85 have access at home to the Internet in Sweden (Statistics Sweden, 2014). This is a very high percentage, which assures many people access to e-services in general. However, even at this high level of access, it is reasonable to assume that among the 9% of this age group that do not have Internet access, there are large numbers of people in need of state welfare services. Looking at the statistics for different ages, it appears that certain groups of the population have a lower degree of access to public services through the Internet. The elderly population is using the Internet to a much lower extent than the total population. Only approximately half of persons aged 75 to 85 have access to a computer, and less than half have access to the Internet (Statistics Sweden, 2014, p. 21). Approximately the same number of people have never used the Internet (Statistics Sweden, 2014, p. 47). There also seems to be a 6 Many services may be transferred from public providers to companies, associations, foundations or private individuals. Examples of tasks include providing individuals with housing for care or residence, special forms of accommodation, non-residential services, foster homes and other kinds of social service.

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connection between lower levels of education and lower levels of Internet access (Statistics Sweden, 2014, p. 9). Moreover, elderly women in particular have less frequent access to the Internet than do men. Whereas 34% of men aged 75 to 85 lack access to Internet at home, 61% of the women in this age group do not have access (Statistics Sweden, 2014, 32). The reason for this is that for women, the economic situation is often tighter. Fourteen per cent of the women do not have access because the costs are too high, compared to 6% of the men. The statistics also show that Internet access for the elderly varies by education. Access is higher for persons with secondary education and college education than for those with only lower secondary education. Whereas 16% of the men aged 75 to 85 years do not have access to the Internet at home because of lack of skills, the percentage for women is much higher: 34% (Statistics Sweden, 2014, p. 21).

C. Exclusion and vulnerability Studying the statistics, it seems that the development of e-government has taken far too little into account that some people might be excluded. This is a central point of criticism for a development that is pushed by an accessibility goal. It is crucial that e-services for public services are also able to reach marginalized groups with their official mission. The concern is that parts of the population in many countries are shut off from government services (New York Times, 2013; United Nations E-Government Survey, 2014, p. 145). According to a European study, low income was the most important barrier to acquiring a computer and an Internet connection. The average high-income household was four times more likely to have access to this technology at home. In the Netherlands and in Norway, the probability was 2.5 times higher, whereas in Portugal the probability rate was 14 times (Montagnier and Wirthmann, 2011). The development may cause a situation where some citizens gain fast and easy access to public services, whereas underprivileged persons who rely on public services become even more cut off because they do not have access to the Internet or the ability to use it. The dilemma here, then, is that the persons who need the public services the most and who would benefit from accessing the services online risk being the least likely to benefit from e-system development.7 There is a risk of creating new inequalities, such as the difference in the opportunity to use the Internet for crucial services in health, education and social welfare. At worst, the result may be increasing vulnerability for these individuals. For example, looking at the statistics of Internet usage in Sweden described above, there seems to be considerable difficulty in including the elderly in the development. In the United States, the situation seems to be similar (Nielsen, 2013; Wyatt, 2013). The governments need to get a clear view of who their users really are in different public services and adjust to this. Adjusting to the need for resilience in different situations and for different

7 There are attempts to address this problem; see for example in the EU Action Plan from 2011–15.

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people means that the services need to be provided in multiple channels, and not only providing e-services but also other, traditional ways of interaction between the government and its citizens.

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IV. Administrative legal protection of e-services I shall now leave the accessibility problem and turn to the legal security situation for those who are using e-services. One observation is that these services raise general legal issues at various levels (European Commission, 2008). E-services demand a range of private actors, from the creation and implementation to the distribution of the services. This is reflected in the dominance of private law issues that concerns most legal experts in the field. The legal concerns relate to different aspects such as protection and privacy law, trade and competition laws, and liability for goods and services. The tasks ahead nationally and globally are often declared to concern legal clarity and greater harmonization of laws in order to make the system flow smoothly (Carlisle, Whitehouse, and Duquenoy, 2013, p. 6). Less attention is given to concerns about the public interests in a wider sense, such as the implications of the new systems from a democratic point of view, or the implications for the individual of a large distribution of power to private entities. It is problematic that so far private law issues have been foremost on the agenda. In practice, the distribution of public services – at its core – is a central public law issue and concerns the relationship between the individual and the government. Actually, e-services concern the branch of public law referred to as administrative law, which governs the activities of administrative agencies of government such as rule-making, adjudication, and the enforcement of a specific regulation. From an administrative law perspective, public e-services means that public decisions affecting individuals are carried out electronically. The basic legal question arises whether administrative rules and principles may be automatically transferred to and used in the electronic systems. This concern seems particularly relevant for electronic decision-making services. Traditional administrative tools for securing the individual’s legal security are not automatically applicable for an electronic system. For example, the decision-making process between a physical social worker and a person applying for a social welfare service at the welfare office is different from that of an e-services process, in which the applicant instead states his or her needs electronically and receives an individual decision that is automatically processed.8 The integration of the administrative legal rules and principles, such as renewal assessments of the individual’s needs or judicial review of a decision, is therefore a challenge for electronic decision-making that needs to be discussed and analyzed. 8 If an applicant’s claim is successful, this creates an obligation for the municipality to provide a certain service, which in turn may give rise to the creation of certain contracts with one or more public or private service providers in the local area (such as the supply of an emergency telephone and telephone line for providing emergency telephones).

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Obviously, the legal issues are different depending on the type of e-service that is provided. Three different types can be recognized. First, distribution of information aims to supply the community with public information and access to information upon request. The second kind of e-services enables people to engage in contributions and interactions that involve consultation with the public agency. Third, there are decision-making services, where the person may get an application processed (United Nations E-Government Survey, 2014, p. 63). The automatic decision-making e-services are the most challenging from an administrative point of view. The need to establish and maintain distinct legal criteria for decision-making is central. It is also a desired precondition for social e-services. With regard to substantive law, it seems essential to have structures simple enough to be handled by computers, or that each criterion can be broken down into simple steps so that automation becomes possible (Mattsson and Persson, 2011). It is not often the case that this is possible, because many rules are vague in practice and require some degree of discretion and individual assessment by a public official. For obvious reasons, such rules are not suitable for inclusion in e-services that involve decision-making. In order to automate decisions and still maintain legal security for citizens, decision criteria that are distinct and specific for each service and that are the same for all are necessary in order to adjust to the design in legislative rule-making. In this manner, the decision-making process appears somewhat different from the typical administrative decision, in which discretion often plays a substantial role in the decision.9 It is a great challenge to create a technical system that corresponds to the rigorous demands on legal security for the distribution of public services. Requirements on services to citizens are closely linked to administrative and procedural rights. While guaranteeing people their rights, the administrative authorities must also treat citizens with respect and keep them informed throughout the process. For example, the Swedish 1986 Administrative Procedure Act contains several provisions stressing that administrative authorities have obligations regarding the provision of services, as well as obligations to keep parties informed. For example, as well as the authorities being obliged to provide information and assistance (s 4), it shall also be possible to visit their local offices or to contact them by phone (s 5). Furthermore, information must be shared before and after a decision is taken (ss 16, 17, 20 and 21). Lastly, decisions not in accordance with the applicant’s wishes can often be appealed and this demands certain procedures and information-sharing according to the Act. Thus, one conclusion is that automated case procedures raise essentially the same fundamental legal concerns as manual procedures. The legal criteria in Swedish

9 As a consequence, in the project, the e-service was constructed so that there were some options for manual handling and the possibility to switch to manual processing if required. When for some reason the case was not a routine matter, a welfare officer intervened and made more personal contact, or at least made an independent analysis. The possibility to process the case manually was a guarantee that individuals would not end up in a worse position than otherwise.

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legislation are that the procedure should be as effective, legally secure and easy to understand for the individual, when compared to traditional processing (Administrative Procedure Act, s 7). It is difficult to refrain from any of these basic interests in scrutiny of legal security, and these interests are reflected in many countries’ legislation. At the same time, the e-service project in which I was involved concludes that it is difficult to implement traditional legal tools in administrative law for securing enough legal security for the individual. In the project it was concluded that services that involve decision-making processes need thorough scrutiny from a legal perspective. Many proposals for creating e-services had to be abandoned for the simple reason that they would not correspond to the national administrative regulation, and risked impinging on individuals’ legal rights. In addition, many areas of public services, such as those involving health and social welfare issues, require a great deal of privacy and confidentiality. This is independent of whether the services are provided traditionally or through e-services. The wide distribution of sensitive personal information in eHealth systems and e-services for social assistance is a problem in this regard. Electronic health records pose significant new risks for the privacy and security of personal health information (Wicks, 2013). In general, e-services seem to create many new challenges for fundamental legal aims of legal security as well as privacy. At the same time, there are also some advantages to the automatic system from an administrative law perspective – assuming the recipient is an active participant. The system can be developed so that the individual is given the option of continuous transparency in the handling of the case to which she is party, notification as to who received the information, access to relevant administrative practices, and knowledge of administrative procedures pertaining to her own applications. In this way, the individual is gradually given good opportunities to make her own decisions as to how to act with regard to current regulations and participate in the management of her own affairs. If all citizens use e-services in the future, such developments may ultimately create favourable conditions for enhancing legal security, through increased opportunities for influence, knowledge, contacts and control. In addition, some individuals and groups gain in a particular way from digital development, due to new ways for communicating and applying for public services despite disabilities, long distances for communication or other access barriers. Thus, for certain vulnerabilities, an electronic services system may positively affect the individual’s resilience.

V. Social responsibility with e-services? A discussion of public and private domains This chapter has focused on how e-services development for public services may affect the public responsibility to provide resilience for persons in vulnerable situations in life. So far, I have discussed some problems having to do with accessibility and assuring individual legal security with automatic systems. The final questions to discuss are how the development affects the relationship between the responsive

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state and the vulnerable individual, and to what extent the development is a part of the general trend of privatization of social needs. I will argue that the situation calls for the attention of a more responsive state. As discussed, the national and global public community has repeatedly claimed that e-services development will benefit the relationship between the state and the individual, creating resilience. Several arguments are put forth for this statement. One is the advantage of instant response. Information may be delivered quickly and for many persons at once, advice may be given by consultation without having to book appointments far in advance, and instant decision-making may be done for a selection of simple public services. Another argument is that the transfer of services from manual work to electronically based procedures has a positive impact on the availability of resources in the governmental body, in that compared to a traditional system, public officials have more time to work with complex cases requiring in-depth consideration. In the long term, this may mean higher quality governmental work. A third argument for e-services is the advantage of transparency for the individuals, in their role as applicants or merely information seekers. The implementation of e-services opens up improved and uncomplicated communication channels. The technology may be used to strengthen the participation of individuals and their influence in relation to the relevant authorities. A fourth argument is that everyone is treated equally in an electronic handling of a case, compared to the individual’s risky position in the manual administration of the same services. This becomes relevant for e-services that include decision-making. A formal and nationally valid framework that clarifies the criteria for an applicant to be entitled to a certain benefit may offer a higher degree of transparency than the often locally varying assessment criteria. In addition, the public official is omitted as an interpretive factor in relation to the regulations. The equality principle stipulates that everyone should be treated according to the same conditions. The argument is that the applicant need not fear disadvantages based on age, sex, ethnicity, or other possibly discriminatory practices. The arguments that are the most convincing are the instant-response and transparency arguments. Digital technology strengthens the participation of individuals and their influence in relation to the relevant authorities, by opening up improved and uncomplicated communication channels. Provided that the availability requirement can be met and that all persons are given the opportunity to use these services as an alternative to traditional application processes, this is also an easy and quick way of contacting the authorities. For example, people can be provided with continuous transparency in the handling of their cases, notified as to who received their information, and get access to relevant practices and knowledge of procedures pertaining to their cases, projects or applications. An example of this is the emergence of national e-health systems. In addition, some individuals and groups gain in a particular way from digital development, due to new ways for participation despite disabilities, long distances for communication or other access barriers (Mattsson, 2016).

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However, the other two arguments for increasing use of public e-services have flaws. The allocation of resources argument is problematic in that it assumes that the national, regional and local administrations will not be reduced and the availability of resources in the governmental body will be maintained in the future. This is an assumption that does not seem realistic, because the welfare state is under threat due to economic restraints and marketization of public goods in many parts of the world. Private markets and corporations are likely to have costeffectiveness as a top priority. In combination with the expected increasing costs of some groups in society (for example, the demographic challenge mentioned earlier – the rapidly increasing number of elderly in need of public services for health and welfare in the near future), the problem of very tight budgets will not go away. Therefore, one can hardly expect that the decreasing costs of administration will be transferred to employees having physical contact with individuals or more resources being devoted to the complicated cases. Also, the equal treatment argument has some flaws that ought to be considered. It is based on the interpretation of equality as sameness-of-treatment. The problem with this understanding is that it ignores differences in circumstances and abilities of the individual (Fineman, 2012b). Treating everybody the same may, at worst, develop unequal treatment. For example, health, disability, financial conditions or computer access of the elderly may be different from those for the rest of the population. By not considering this, the person may come out worse than the rest of the population due to having been treated the same as everyone else. Therefore, professionals at all levels need to develop alternative approaches to equal treatment that include the context of the person (Brodin and Mattsson, 2014). Such approaches often demand individual and personal contact with the client, patient or other user of public services. In general, one major concern of using e-services from a vulnerability point of view is the lack of physical contact between the state and the individual. The ambition of e-services to reduce the actual/physical contact between social workers and service users reduces the same kind of opportunities for communication. This changes the relationship between the state and the individual. As a consequence, it may have implications from a vulnerability perspective. For example, a lower degree of actual contact reduces the possibility of uncovering individual social or other problems or needs for intervention not clear from the application in question. It is often the case that for people with limited social networks, due to advanced age, disability or other vulnerability, the social worker may well be a very central person/representative of the state. Limiting these personal contacts may give clients the feeling that transparency, accessibility and the level of service are deteriorating. A lower degree of actual contact between the social worker and client reduces the opportunity for variations in individual assessments. In general, it also reduces the ability of clients to exert influence over decisions. In cases where applicants do not meet the standard criteria for a given benefit, there is thus no opportunity for presenting their own sides of their situations, whereas a personal contact would more readily allow these opinions to be heard.

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My conclusion is that in order to secure the social needs of individuals, the state needs to be responsive to the considerable changes that are currently occurring in society and try to diminish the negative consequences while optimizing the positive ones. The question is what tools can be used by the state. In my opinion, the traditional design of administrative law is out of date and needs to be developed to fit the new challenges. The reasons for this are apparent. The automatic decisionmaking process differs from the manual process in several ways. Certain basic administrative legal tools are less than useful, such as the authority investigation responsibility, the requirement for individual assessments and the appeal function. All of these are central aspects of administrative law and give the traditional manual process a distinct administrative law character. E-services must often work without one or more of these legal functions. Instead, the system is based on contractual arrangements between the public decision-maker, the (increasingly private) public service deliverer, and the individual. The practical consequences of this partial use of legal administrative rules designed to assure legal security in combination with individually-based contracts for service does not necessarily provide legal security, privacy and fair decision-making. Alternative regulation to better secure the individual’s position in this semi-public/private relationship with the state ought to be examined and discussed in the field of law over the coming years. To a certain extent, administrative regulation must accept the impingement of contractual law into the public sphere, because e-services expose individuals to contractual ordering and thus to contractual law. Private influence in the public sphere is a general trend in all welfare states. The expansion of contractual relationships among the individual, the public, and the private market is one part of this privatization trend, and e-services represent an example of the intermixed relationships between the public and the private. However, it seems crucial to argue for strengthening public legal protection proactively in this relatively new area of e-services. The situation in Sweden and elsewhere, with a general increasing marketization of public interests, is not unique for e-services. Many areas of state welfare, such as healthcare, child care, schools, etc., are increasingly being distributed to private entities. The negative consequences have been discussed. For example, in this anthology Helene Brodin discusses negative impacts of the introduction of market principles in care for the ageing in Sweden (see Chapter 12). The blurred mix of private and public in society is reflected in the uncertain boundaries for what should be considered private (law) issues and public (law) issues. The goal is a public law that can further strengthen the individual’s position. Therefore, there is a need for a stronger legislative awareness and proactive legislation efforts in order to fulfill the obligations of a responsive state.

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14 WHAT DOES PRIVATIZATION MEAN FOR WOMEN IN UGANDA? Harriet Diana Musoke1

Introduction Women have unique health needs. They face a variety of reproductive health and sexual health problems. In addition to this, they make up the vast majority of healthcare providers in Ugandan community and society. Unfortunately with the introduction of privatization, women’s special needs, responsibilities, and concerns were never taken into account. With privatization, everything the women and men expected government to do it now does less of, preferring to support markets in which these services are delivered through independent, profit-maximizing agents. Systems such as contracting out, vouchering, and the selling off of state assets have been used to remake the government (Strison, 1999). Privatization is the transfer of a range of practices and activities from state assets and responsibilities to private actors (Stinson, 2006). It involves transferring the operation and sometimes the ownership of publicly owned enterprises, services, or assets to private, for-profit companies. The government of Uganda was quick to privatize public services. This had tremendous implications for women in Uganda as they account for the majority of public sector employees, especially in the health and social services sectors. Privatization threatens advances towards women’s equality in the private and in the public sphere. In the private sphere, it usually means more work in terms of responsibilities with little or no payment, and this exacerbates women’s vulnerability. In the public sphere, it means lower wages for women, reduced health and welfare benefits, a heavier workload, and generally more exploitative working conditions. 1 Senior Principal Lecturer, Law Development Centre and Islamic University in Uganda.

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The privatization process in Uganda The privatization process in Uganda was as a result of the Public Enterprises Reform and Divestiture Act, Chapter 98 of the Laws of Uganda. The purpose of the Act is to provide for the reform and divestiture of public enterprises and to establish the Divestiture and Reform Implementation Committee, which was charged with the implementation of the government programme on divestiture. The objective of the privatization programme was to reduce government equity holding in public enterprises, thereby relieving the government of both the financial drain of its resources and the burden of administration. The government also hoped to raise revenue by means of divestiture. This would include the liquidation or dissolution, of public enterprises, and the promotion, development, and strengthening of the private sector. Other stated objectives of the Act are: to promote institutional arrangements, policies, and procedures that ensure efficient and successful management and financial accounting of public enterprises; to separate ownership and management functions; and to enable the government to more effectively play its proper role as an owner of public enterprises (Section 2(2) Public Enterprises Reform and Divestiture Act). In effect, the government wanted to relinquish management of public enterprises and create better managed structures for the delivery of goods and services. The rationale the government adduced for this action was that the state is “poor at doing” business so it should be relieved of any such burden; it is necessary because state bureaucrats are “self-interested;” and that the market will provide more and better alternatives available to the people of Uganda. Furthermore, the government argued that with privatization, poverty would be reduced by encouraging development of the private sector that would then enable government space for social spending; it would reduce corruption and abuse of office; and it would increase employment and create a property-owning middle class (Sejjaka, 2002). The government’s hope did not materialize as expected. The privatization process in Uganda benefited the government and corporate interests more than the Ugandan people, especially the most disadvantaged. Further, there was no explicit affirmative action embodied in the law that the people could rely on to hold the government accountable for any shortcomings, although among the legislation’s objectives was “the promotion of local entrepreneurship”. In addition to the objectives mentioned above, the privatization programme was aimed at economic recovery from the turmoil period before 1986 and the structural adjustment requirements of fiscal discipline. It sought to liberalize the market, ensure security of property rights, improve overall efficiency of the economy, stimulate private investment, and improve productivity and profitability of firms. Before 1986, the political history of Uganda had been marred by military coups, the first in 1966 by Milton Obote, the then Prime Minister, and the second in 1971 by General Iddi Amin Dada. As the country was trying to stabilize, guerilla warfare was waged in 1979 by Yoweri Museveni, which ended in 1986 when the then National Resistance Movement/Army that had waged the war took over government. Due to the destruction of business, buildings, and generally the economy, the government thought that the best remedy was privatization.

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In January 1995, the Public Enterprises Reform and Divestiture Secretariat was restructured and the Privatization Unit and Parastatal Monitoring Unit was formed. The Privatization Unit is a project charged with the duty to carry out the divestiture and the country’s economic reforms. The stated objective of the Unit is to improve the quality, coverage, and economic efficiency of commercial and utility services, through privatization, private participation in infrastructure (PPI) and an improved regulatory framework. In January 2001, the Privatization and Utility Sector Reform Project was launched, aimed at increasing private sector participation in the provision of infrastructure, strengthening the regulatory framework, and restructuring any remaining public enterprises. Despite all the above good intentions of the government to improve service delivery, Uganda’s privatization process has been marred by the malpractice and manipulation of politicians and individuals. Only a handful of firms have been sold by the government to members of the private sector who are real “investors”. Most of the enterprises were sold to the politicians and members of the ruling government, who were not actually intending to invest in them, but instead bought them in order to sell them at a higher price, hence making a huge profit. As it was for privatization in most countries in the world, the privatization process was a global matter dictated by the World Bank. However during the process, the rush of Western experts who have been proposing privatization strategies in Uganda has not addressed the real needs of the privatization process. Much focus has been on the firm-by-firm strategies, meaning the citizens have been left by the wayside. Uganda, like many African countries adopted privatization policies “by the horn” for fear that the donors and multilateral agencies might not find their domestic reforms and commitments satisfactory to warrant granting them financial aid. Uganda’s attempt to implement privatization strategies exposed complex social, political, and economic implications. Privatization touches on a complex of issues including property rights, nationality, ethnicity, bureaucratic practices, donor conditionality, and the nature of market politics. Most of those issues were not grabbed “by the horn”, and hence the privatization process has left many with unmet needs. The privatization process tended to focus strictly on economic recovery without attending to the circumstances of the people, which were also important to ensure success. Prior to privatization in 1992, the Uganda economy fared badly due to the turmoil before the National Resistance Movement of Yoweri Kaguta Museveni government came to power in 1986. Before 1992, the healthcare system was centralized, free and relatively accessible. This, however, collapsed in the 1970s due to global recessions, economic decline, and bad government. With privatization, the government undertook and implemented a number of health sector reforms that had both a direct and indirect effect on women. These included: (1) the introduction and later abolition of user fees in government hospitals; (2) decentralization of health service delivery to local authorities under the decentralization programme; (3) the introduction of public/private partnerships; and (4) the introduction of the Uganda National Minimum Health Care Package.

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A. The introduction of user fees User fees were introduced in government hospitals in 1993. The aim of the user fees, generally referred to as cost sharing, was to generate funds to increase the salaries of the medical workers. These fees would also help raise revenue to buy and stock drugs for use in the hospitals. The only exceptions to payment of user fees were granted to those persons who were either too poor to pay or women seeking maternity services. The determination of the user’s financial status was made by the local council at the village level. The person had to apply to the local council to be exempted from payment. The local council then had to determine the financial status of the person before writing a letter of exemption to the hospital administrator. This process was cumbersome and took a long time. Often, the sick person would have died, been cured, or resorted to traditional doctors for help before they received an exemption. As to the free maternal services, this policy was not implemented free of barriers because, first, drugs were not available in the hospitals so the women had to buy them elsewhere, and, second, the services had to be paid for as the personnel providing them always complained of poor pay and yet they also had to survive. Thus, they demanded payment before they would provide services. People shunned government hospitals and resorted to self-medication. The health of the rural people, especially women and children, deteriorated and as a result, the government had to abolish the user fees in order to attract people to seek medical attention from hospitals. Additionally, the government was forced to abolish the user fees due to the high level of corruption. Corruption occurred on two fronts. The first was at the local council level. The executive at the local council used to demand money from those seeking an exemption. Thus, a sick person who needed the exemption to avoid paying the user fee had to pay for the letter for the exemption. This caused an outcry and the government had to reconsider this matter. The second type of corruption occurred at the hospitals. Those whose job it was to register and receive the user fee would ask the sick person or the caretaker to pay a reduced fee while the receipt issued indicated a different figure. For example, if the user fee was Uganda shillings 20,000 (equivalent to US$10), the person would be required to pay less and yet the receipt would reflect the actual figure. This was mainly done where those concerned printed their own receipts and did not use the official receipts. The government would lose out on the revenue collected on user fees as drugs would be dispensed when the patient had not paid any money. Because of this, health facilities or hospitals serving the poor experienced persistent and long periods in which drugs were out of stock, which subsequently acted as a disincentive to access public health services. As a result of the outcry by the public, the programme of user fees was abolished in 2001. However, user fees remained in the private wings of the government hospitals. Wealthier citizens who can afford the cost and do not want to wait in long queues continue to have access to these wings.

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B. Decentralization of government services Decentralization was not of much use either. The main objective of this policy was political; it was more to achieve a political strategy of the National Resistance Movement government rather than to provide health services more accessible to the people. Although it can be said that a slight improvement was made, this was short lived, as can be seen from Uganda’s continued high infant and maternal mortality rates (Olico-Okui et al., 2006). With decentralization, the stated aim was to bring services closer to the people. Decentralization was provided for in the Local Government Act, Cap 243 of the Laws of Uganda. Decentralization of services seemed a precondition for improving basic healthcare services. It was extensive in nature. District health teams were formed at the districts and hospitals were classified as either health centre IV, III or II. The health centres were graded to indicate that they have health services that may not be available to other centres. For example, at the health centre IV level, the hospital has consultants and yet in other grades they may not have them. This was to enable the government to equip the hospitals with human resources and supplies. The government was of the opinion that if services were managed at the local level, people would more easily access them, as transportation costs would be lower and the people would be accessing the services in familiar surroundings. While decentralization was a good idea, the system was not well sustained at either the central or the local government level. This was due to a shortage of organizational and management skills at all levels, corruption, and scarcity of resources at the local level. In addition, very few investors, if any, invested in the rural areas. This is because rural areas do not appeal to investors, as they may not realize their investment or it might take time before they realize any profits. As a result, little to no investments were made at the village level; any investments made were either at the sub-county level or township level. Because most women live in rural areas and do not have sufficient funds to move to the sub-county or towns, this had a negative effect on their livelihood and access to health services. Self-medication then became the answer. The lack of investment in health facilities also meant lack of healthcare, personnel, and health practitioners and lack of drugs or shortage of them. The few privately owned clinics were the only resort for getting healthcare services. One can therefore conclude that as much as decentralization attempted to bring services to the people in their respective localities, access to healthcare services for very poor and marginalized women became even more difficult to access.

C. Public/private partnership Another reform, the public/private partnership, also did not yield much in the way of results. This is a policy whereby the government provides subsidies to private, not-for-profit health facilities in order for the private health facilities to reduce the

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fees levied on patients. This programme started in 1997. This, too, was short-lived for several reasons. First, while in the beginning some private facilities slightly reduced the fees levied, fees later shot up again due to increases in operational costs. Second, subsidies were provided more at the national level than at the district and lower levels, thus accessibility became an issue. Third, the operations of the private sector were not properly integrated with the public sector and this caused friction in implementation. This means that in the private sector, profits were the goal, time was of essence in whatever action, and professional ethics were in order. However, in the public sector, services were the goal, time was not of essence, and people would do whatever they wanted without much monitoring. The friction was therefore inevitable since methodology of work was parallel. Another form of privatization that the government carried out was the promotion of community participation. The government tried to empower the communities to take responsibility for their own health and wellbeing through active participation in the management of local health services. The government established village health teams whereby the locals had responsibility to care for their own health. However, the government did not in detail consider the gender dimension in the equation. Women, in most households, were the breadwinners, and so could not participate in these activities because they were busy trying to ensure their families’ survival.

D. Introduction of the Uganda national minimum healthcare package This package has four clusters: (1) health promotion, disease prevention and community health initiatives; (2) maternal and child health; (3) prevention and control of communicable diseases; and (4) prevention and control of non-communicable disease. Although the package, introduced by the government through the Ministry of Health, has recorded successes, it has also faced challenges, especially lack of funding and human resources. Further, the failure to target the package to the poorest and most needy meant that those groups most likely to benefit from the package are not the main beneficiaries of the interventions. While wealthier groups have been able to access higher quality services, rural women who are not in this category have missed out.

Public perceptions on privatization Although the government views privatization as having a positive impact on the economy in terms of increased output, income tax revenue, and employment levels, the public’s perception differs. There is concern among the public that the process has not improved the socio-economic welfare of the majority. Service costs have skyrocketed and the welfare of the poor has deteriorated. In the health sector, privatization has led to inequities in health and the utilization of healthcare services. Poor rural woman were more affected, because this meant that they could

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not access even the limited health facilities from government-owned and operated hospitals and healthcare services. Privatization has been viewed as a policy that was not homegrown but foreign induced in order to make the poor poorer. In public opinion, which does not rely on scientific research, it was initiated to enrich government officials, to give foreign investors windfall profits, and as a way of re-colonization. It has led to regional and ethnic imbalance in employment opportunities and benefits. Investors preferred investing in particular areas with potential to have their profits realized earlier than in other areas. For example, they preferred to invest in the central and southern regions rather than in the north and northeast, which are less conducive to business success in terms of climate and prosperity. With privatization, there have been losses in welfare as people, especially women, have lost services that they would have otherwise obtained from the government for free. This is because net government assets have declined and the government has lost the upper hand in setting policies to provide for the poor. This loss in welfare led to an increase in domestic violence, child labour, early marriages, and women’s household responsibility. Women had to work harder to try and make ends meet and, where they fell short, they suffered the consequences.

Effect of privatization on women In all this privatization process and implementation, women were the most affected. Why? Because the majority of women fall into the “poor” sphere and are least resilient to changes in the delivery and financing of health services. As Fineman (2013) notes, “resilience is not something we are born with. It is produced over time within social structures and under societal conditions over which individuals may have little control” (p. 24). Note that although the women were most affected, all Ugandans are vulnerable, but have different access to resources and state support depending on their position in society. Vulnerability as referred to here recognizes that the human experience varies due to many factors, such as biological differences, social institutions, and the law in place. Because vulnerability is not experienced in the same manner by all members of society, some people will be more able to build resilience over the course of their lives. The vulnerability analysis, therefore, trains attention not on so-called vulnerable people but on society as a whole and the way resources for resilience are distributed. What then was the effect of privatization of the health services on women? Given that women in Uganda make up the majority of healthcare providers, paid and unpaid, and suffer more health complications, you would expect the question of the impact on women to be at the top of the country’s agenda (Armstrong et al., 2001). This is not so. Instead there was an increase in self-medication and the use of local herbs and visits to traditional healers. Many of these healers use the spirits as the mediums for treatment, and they cannot treat many diseases. Even when they can help, the dosage for the local herbs is difficult to estimate and this can

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lead to other complications. There has also been an increase in the use of private clinics and drug shops that are nearer to where women live. The biggest problem with these private clinics and drug shops is that they are mostly staffed by unqualified personnel. Privatization was not successful and did not adequately respond to people’s needs because more than 40% of health service facilities are private; rural areas do not appeal to donors and hence receive less aid, resulting in little or minimum access to services in rural areas. The government relied on market forces, ignoring the reality that rural women, who comprise 65% of Ugandan women, lack sufficient income to access the market where quality maternal healthcare can be bought. This made women less resilient. The privatization process in Uganda, in which public companies were simply offloaded without much thought, has produced nothing but bigger problems for the already disadvantaged people of Uganda. While privatization might not be a bad deal after all, women, as vulnerable subjects, deserve a deal that is not full of irregularities and impracticalities. All scenarios that may arise must be considered. For example, what will happen to women when the state completely withdraws from offering services? What is the future for women in light of the state’s obligation to its citizens? What will be the role of private organizations and enterprises in ensuring that women as a vulnerable group are protected? These questions must be answered.

Challenges under privatization The intended purpose of privatization in Uganda was for the government to raise revenue it needed to help ease the fiscal burden. Privatization was expected to increase the level of efficiency in investment, trade, and delivery of services. Did the government achieve its objective of providing efficient services to its citizens? Despite the Ugandan government’s commitment to ensuring increased and efficient service delivery to women, the target has not been attainable. This is because the privatization process was rushed, and the gender implications of the policy were never considered. Moreover, a number of issues that were never considered posed a challenge. First, health practitioners tend to be concentrated in urban areas. The urban areas have a large-scale clientele that is willing to pay for the services. This is not so in the rural areas where people do not have the means to pay and also lack basic necessities such as clean water, electricity, and well-equipped health facilities. Second, funding for the private sector after privatization has been small or limited. Even where there is funding, the population has increased faster than funding levels, and hence demand and supply are not equal. Third, user fees where still applicable are high compared to the income generated in families. Fourth, shortages of drugs in health facilities hamper provision of services, and it has become a common practice for women to be referred to private clinics that are usually very expensive. Fifth, some districts in the country lack hospitals or, if they have them, there are no or few health personnel.

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Recommendations There is no doubt that privatization can be counterproductive. It is, therefore, important that the government deal with the most significant after-effects of privatization, such as loss of subsidies to poor and marginalized groups, loss of jobs, and loss of services. Reforms should be instituted during and after the implementation of the privatization process. These reforms must take into account the gender dimensions and the effect on women as the people who are most in need. This will help the government protect this group from exploitation by private entities. Adopting a vulnerability approach would help the government respond to needs of women. Fineman’s (2014) view of vulnerability as a human condition that the state should respond to should be considered as a method to help the community. Vulnerability theory takes seriously the political and legal implications of the fact that people live within a fragile materiality that renders people constantly susceptible to destructive external forces and internal disintegration. Resilience is central to how people face life challenges in the post-privatization era. The state should be prepared to respond to the needs of people. Transparency in the privatization process and its implementation is a must. This will help gain support for the process among the population, rather than the public seeing it as a foreign concept. There should be adequate monitoring and supervision of the programme, such that where important facilities like health facilities are privatized or there is cost-sharing, the implementation should ensure fairness, equality, and non-discrimination with respect to women. Institutions should be established to monitor the process. Although in Uganda we have the Privatization Unit, based in Kampala, this is not enough, as it cannot effectively monitor the whole country. When implementing privatization programmes, political influence and bureaucratic control should be avoided. This will be the only way that Ugandans will be able to enjoy the fruits of privatization.

Conclusion Rather than solving the problems of poor governance of health services in Uganda, privatization has amplified them. It has introduced new parasitic partners into the decision-making process. The government has abrogated its obligations to provide health services to the community by merging with the private sector and hence avoiding responsibility and accountability. This deprives women of their right to the protection by the state. Because nobody has come up to challenge this in courts of law, the country is taking its citizens for a ride. Due to the fact that the government has given away its powers to the private sector, citizens can no longer depend on the country’s accountability and transparency in its activities. The government should be held accountable for its obligations despite its weaknesses. Through accountability, there might be hope of change and strength.

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No doubt privatization increases prices. This increase affects the vulnerable community; therefore, governments should have policies to ensure that all affected vulnerable communities are not double-jeopardized. For Uganda to achieve its goals in the privatization process, it must consider equity issues within the healthcare system and enhance approaches in promoting women’s rights to health.

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PART IV

Privatization of the coercive power of the state

This fourth section looks at privatization of the most traditional of all state functions, the use of publicly sanctioned coercive power. The authors show that privatization of incarceration and warfare distort our perceptions of state and individual responsibility. William Paul Simmons and Leonard Hammer’s piece, “The human right to dignity and commodification of prisoners: Considering worldwide challenges to prison privatization”, uses a recent Israeli Supreme Court case to illustrate how integration between public functions and private entities leads to violation of principles of human dignity. They argue that commodification of prisoners constitutes an expressive harm that can only be avoided by having the state retain responsibility for incarceration, and that protection and promotion of human dignity is best achieved through a responsive state rather than a for-profit enterprise. Tracey Leigh Dowdeswell’s piece, “Gendered aspects of privatizing force in counterinsurgent warfare”, examines the gendered impact of war and counterinsurgency efforts on women living in counterinsurgent environments. Dowdeswell argues that trends in modern warfare, including privatization, responsibilization, and cultural narratives associated with female soldiers, lead to less predictability and transparency for both citizens and security forces, exacerbating the inherent vulnerability of each. She advocates taking violence back out of the hands of private actors and individual decision-makers and returning it to the state as an important first step for limiting violence. Ulrika Andersson’s piece, “Harmed selves harming others – a vulnerability approach to the criminal justice system”, uses a case of intimate partner violence to examine how the criminal justice system juxtaposes the autonomy of the criminal offender with the vulnerability of the victim in need of protection. Specifically, Andersson demonstrates how the state uses public power to address

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the autonomy of the offender, while largely relying on private services to address the vulnerability of the victim. She argues that taking a vulnerability approach more generally would recognize a more complex notion of the subject and be more consistent with the embodiment of the everyday individual encounter with the criminal justice system.

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15 THE HUMAN RIGHT TO DIGNITY AND COMMODIFICATION OF PRISONERS Considering worldwide challenges to prison privatization William Paul Simmons1 and Leonard Hammer 2 Making a rather ambitious, broad-form, decision, the Israeli Supreme Court in 2009 (Academic Law College, Human Rights Division v The Minister of Finance: hereinafter, the ‘Prison Case’) ruled that privatization of prisons is a per se violation of human rights; in particular the rights to liberty and dignity. The Court ruled that it was not the often deleterious consequences of privatization that violated the rights to liberty and dignity, but that privatization of prisons by itself was a violation of the Israeli Basic Law: Human Dignity of 1992.3 This decision has been subject to much negative commentary and criticism, with most analyzes focusing on the Court’s argument on the right to liberty. Scholars who have dismissed the opinion seemed to have misread it, often grounding their counter-arguments with faulty and wildly abstract premises that misrepresent the human rights issues at stake. This chapter focuses on the Court’s novel argument on the right to human dignity and especially how privatization of prisons turns inmates into commodities (cf. Catholic Bishops of the South, 2000; Robbins, 2006). While this argument may have been under-developed in the Court’s opinion, teasing out and expanding on the Court’s logic provides an important new avenue for litigating matters that pertain to the fundamental human right to dignity in other forums, both domestic and international. The Israeli court decision briefly mentions that similar decisions have not been made in other forums and cited a brief that suggested “that were arguments of this

1 University of Arizona. 2 University of Arizona. An earlier version of this chapter appeared as Simmons and Hammer, “Privatization of Prisons in Israel and Beyond: A Per Se Violation of the Human Right to Dignity,” Santa Clara Journal of International Law. 2015. 13 (2): 487–515. 3 For an overview of the different problems associated with private prisons, see, for example, Bowditch and Everett (1987), Brickner and Diaz (2011), Mason (2012), and Timor (2006).

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kind to be raised before those courts, they would not be expected to be successful” (Prison Case, § 60). This chapter instead argues that the logic of the Israeli decision on the human right to dignity could be successful in other jurisdictions, especially those that have strong case law on the rights of marginalized populations and the right to human dignity, most importantly for our purposes, the Inter-American Human Rights system. Indeed, the viable contentions based on the human right to dignity that could be raised before the Inter-American Commission on Human Rights serve as key potential grounds for challenging the privatization of prisons in Arizona and other states in the US. Following a brief discussion on the integration between public functions and private entities, this chapter analyzes the Israeli prison privatization case with a focus on the Court’s finding of a per se violation of the human right to dignity. The second section analyzes two previous commentaries on the Israeli case to demonstrate how the case has been misread, even by those who agree with the Court’s decision. This analysis provides a deeper and more nuanced reading of the Israeli Court’s logic on the human right to dignity, especially how the commodification of inmates in a private prison inherently is a violation of that right at least in the Israeli context. The third section expands upon the Court’s reasoning through a discussion of what has been referred to as “cauterization” (Simmons, 2011), which involves branding a group as inferior, sealing them off from the social and political sphere, and reducing sympathy for them. Interestingly, the same cauterization logic also was used in a recent groundbreaking mental health decision, Purohit and Moore v Gambia (2003), by the African Commission on Human and Peoples’ Rights. The fourth section teases out the key elements of the Israeli decision to show which elements would need to be present to successfully bring such a case in other jurisdictions. These elements are not only present in the Israeli context, but also in the African Commission on Human and Peoples’ Rights, and the Inter-American Human Rights system. The last section applies the Israeli Court’s logic to show how a case could be brought to the Inter-American Commission on Human Rights based upon the privatization of prisons in Arizona. The deleterious consequences of prison privatization in Arizona have been amply documented with several recent reports and lawsuits laying out the various abuses suffered by inmates and detainees in privatized institutions. Remedies are currently being sought through several ongoing lawsuits addressing the consequences of privatization. A more overarching decision on privatization is probably not available in US law for a per se violation of inmates’ right to dignity (cf. Pischke v E Litscher, 1999); however, relying on the Israeli prison case, this chapter argues that privatization of prisons and detention facilities in Arizona could be found to be a per se violation of human rights in the Inter-American human rights system.

Part I: Integration of the public and private Integration between public functions and private entities creates a number of problems. Reliance on private entities can erode the public sector’s role and remove

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important public interests that are central to governmental functions. The voice of the polity can be obscured by the turn to private entities resulting in a loss of public control and lack of review of the actions of private entities’ charged with carrying out public services (Minow, 2003, p. 1235). More fundamentally, privatization alters the relationship between the state and society by merging public and private functions. This merger unduly enhances state sovereignty by aggregating state power through the use of private functionaries, rather than allowing for a transparent and more restrained form of state sovereignty as deemed appropriate under a rule of law model (White, 2001, pp. 115–116). Nonetheless, there currently exists an inherent and some might say unavoidable link between the public sector and private entities, given that the latter can significantly serve public ends and improve public services (Freeman, 2000; Shamir, 2014). Indeed one can contend that the nexus between public functions carried out by private providers is inherently interdependent in many ways, despite the wariness of the public interest in having a broader private role in public functions (Kozinski and Bentz, 2013). From the private production of goods and services for the public sector to the wholesale shifting of governmental services to the private sector, there is a clear reliance on some form of either privatization of entire sections of formerly governmental services or public–private agreements that allow for the inculcation of private companies into the public sphere. Presumably, this offers greater efficiency and better development of specialization in certain fields than could be achieved when left in the hands of the government, as well as an arguably better quality (and therefore more effective form) of service to the public at large (Minow, 2003, p. 1242). Competition from the private sphere may fuel better outcomes, and even greater social pluralism by involving more people in public services, making it more diverse and productive, and by developing new knowledge by introducing innovations. A central proviso to privatization efforts is the need to maintain public values essential to governmental functions, so as to ensure the flow of benefits to the public and to uphold the quality of service. The key means of preserving such public values has been a reliance on accountability, which is meant to ensure that any private entity involved in a public function will guarantee that it is carrying out the entrusted tasks pursuant to governmental standards (Blumstein, Cohen, and Seth, 2008; Minow, 2003, p. 1236). Of course, even with accountability, there still could result a dilution of public values, as the private actor might bypass its public obligations, and competition can cause a dissonance with the desired social provision of services, as well as further remove common institutions from the public domain. Interestingly, when considering the privatization of prisons, the reliance on accountability proves problematic for a number of reasons. Dangerous incentives are created by competition if the prison is in the hands of a private actor, as the prison will shift from an institution of rehabilitation to one of profiteering (cf. Fulcher, 2012). Maintaining equality becomes expensive and the ability to bring legal challenges to uphold accountability are presumed to be removed (Kozinski

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and Bentz, 2013) because of the undue delegation of public power (Sigler, 2010) and focus on profit maximization (Freeman, 2000, pp. 632–635). Some of these contentions were raised before the Israel Supreme Court when faced with a challenge to prison privatization, yet the Court eventually relied on an even more fundamental basis for overturning the Israeli law on prison privatization.

Part II: The Israeli case The Israeli Supreme Court, acting as the High Court of Justice, held in 2009 by an 8–1 margin that the Israeli law creating the country’s first privatized prison violated Israel’s Basic Law: Human Dignity,4 not because of the potential consequences of the privatization, but because privatization inherently violated the human dignity of prisoners. The Court’s opinion, crafted by then Supreme Court President Beinisch, has been subject to serious criticism by legal scholars, even by those who agree with the ultimate outcome.5 Many of those critics appear to have missed the nuances offered in the argument, most notably Judge Beinisch’s arguments against the commoditization of inmates through prison privatization. As Judge Beinisch writes, “allowing a private concessionaire of a prison to make financial profits, disproportionately violates human rights and the principles required by the democratic nature of the regime” (Prison Case, § 54). It is the branding of prisoners as “means for the private corporation” or the commodification of prisoners that is at the heart of the Court’s reasoning, and it tips the scale to a violation of human dignity. Far from being an idiosyncratic and irrational stance, this logic also underpins Judge Beinisch’s previous ruling, in which she held that corporal punishment is a per se violation of human dignity (A. v State of Israel, 2000), and it is ultimately a sturdy ground for arguments in the Inter-American Commission of Human Rights that Arizona’s rampant prison privatization is a per se violation of the American Declaration of Human Rights.

Judge Beinisch’s argument Given a shortage of prison space, poor prison conditions, and rising administrative costs, Israel decided to look into the matter of prison privatization in 2003 (Prison Case, § 1). On 24 March 2004, the Knesset (Israeli Parliament) passed Amendment 28, which provided the means for submitting private bids, the conditions 4 The Basic Laws are meant to serve as the framework for an eventual written constitution; they are equivalent to any other law except that in some of the Basic Laws, an entrenchment provision requires a special majority vote by the Knesset prior to any change (cf. Goldstein, 1994; Kretzmer, 1996; Navot, 2014). 5 The critics can be placed into two broad groupings: those who assert that the court was inherently incorrect in deeming the matter a violation of human dignity since the focus should be on the state as an integrated actor in the market (e.g., Barak-Erez, 2011; Volokh, 2012; Shamir, 2013) and those who assert that human dignity is an issue, but the court erred in its approach and reasoning (e.g., Harel, 2010; Medina, 2010).

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that must be maintained in the prison, the scope of jurisdiction held by the private facility over the prisoners, and the scope of oversight to be maintained by the state over the private concern operating the prison. Choosing from three different privatization models,6 the Knesset favoured the UK model of prison privatization, which allows the private company to ensure for order and prevent escapes, yet limits their capacity to actually punish the prisoners. Thus solitary confinement was to be limited to 48 hours at a time, and the prison guards were considered public employees. After a tender was awarded to ALA Management and Operation Ltd. to build a prison in the southern part of the country, a challenge was filed in 2005 by the Human Rights Division of the Academic Center of Law and Business in Ramat Gan against the Minister of Finance, Minister of Public Security, ALA Management and Operation Ltd., and the Israeli Parliament. During the time that it took the Court to actually issue its decision, ALA Management had completed building the private prison and was in the midst of hiring personnel to operate the facility. The petitioners contended that privatization of prisons was an inherent violation of the prisoners’ rights to liberty and human dignity, that under the Basic Law: Government, the government cannot transfer its responsibilities to a private actor,7 and that private operators would be inclined to undermine prisoners’ rights by cutting corners to maintain their profit margins. Since the Court held that privatization is a per se violation they did not need to reach a judgment on the consequences of privatization. The Court worried that a decision on the consequences would be premature, as it would be based upon “a future violation of human rights and there is no certainty that this will occur” (para 19; cf. Rosky, 2004).

Privatization as a per se violation of Israeli prisoners The Israeli Supreme Court starts from the stance that imprisonment is an outlier, that is, it is not a normal state of affairs. The State is already in a tenuous position vis-à-vis an inmate’s rights by the very fact of imprisonment, an action that is a violation of a person’s personal liberty, although one that is justified. This first premise of the Court’s argument has been overlooked in many of the case’s critiques, in which the focus is on the inherent nature of privatization in a neutral and free market where monies are regularly exchanged for services (e.g., Volokh, 2012).

6 The French model only allows a private concern to provide specific logistical services like food or medical care, whereas the American model provides complete control to the private concern, including punishment capacity within the prison. The UK model provides for broad administrative control over the prison, but any form of punishment is to be meted out by the state (Shamir, 2013, pp. 756–757). 7 The court dismissed this argument, noting that the clause regarding the prohibition of power delegation by the government is only recommended (Prison Case, § 3).

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Justice Beinisch, however, focuses on a different type of inherence, stating that “we examine the extent of the violation of the right to personal liberty inherent in placing a person under lock and key” (Prison Case, § 30). The focus then is on imprisonment and the lived experience of the inmates and not the exchange of currency for services. According to Justice Beinisch, from this tenuous position regarding the right to liberty, any modification to the accepted form of imprisonment would risk tipping the scales to an abuse of inmates’ rights. To understand how privatization undermines personal liberty we must ask what added risks to personal liberty are inherent in the privatized prison model, even when following the extensive regulations of the UK model, as adopted in Israel. Despite protective regulations, prison employees must exercise discretion when they “are in control of the managing the lives of the inmates in the prison on a daily basis”, and this includes “dealing with unexpected situations in the course of direct contact with the inmates and making quick decisions on an immediate basis, where the supervision and scrutiny of the making of the decisions and the manner of exercising the discretion can only be carried out retrospectively” (Prison Case, § 31). Thus, decisions that go to the heart of personal liberty, a right that is already greatly at risk in the prison context, are made by those working for “a private corporation motivated by economic considerations of profit and loss” (Prison Case, § 33). The risk to personal liberty “is inherently greater than the violation of the same right of an inmate when the entity responsible for his imprisonment is a government authority that is not motivated by those considerations” (Prison Case, § 33). However, this is a consequentialist argument that would require, and could be refuted by, empirical evidence. Justice Beinisch instead argues that privatization constitutions a per se violation of the right to liberty where it would be a violation “even if the term of imprisonment that these two inmates serve is identical and even if the violation of the human rights that actually takes place behind the walls of each of the two prisons where they serve their sentences is identical” (Prison Case, § 33). Her logic for a per se violation of the right to liberty rests on two principles: first, that the right to liberty is already violated by imprisonment and, second, that punishment administered by a private prison has less legitimacy than punishment by a public entity. In a liberal state, according to Justice Beinisch, the state monopoly of the criminal justice system is fundamental to the social contract establishing the state (see Harding (2012) who develops this argument in more detail), in particular the constitutional principles of Israel. “The subordination of the various security services to the elected government has always been one of the hallmarks of the State of Israel as a modern democratic state, and it is one of the basic constitutional principles underlying the system of government” (Prison Case, § 24). Thus, punishment removed from state authorities would reduce its democratic legitimacy as well as being more likely to lead to abuses. The argument for a violation of personal dignity tracks the argument for personal liberty. Section 2 of the Israeli Basic Law: Human Dignity and Liberty states, “One may not harm the life, body or dignity of a person.” If the resulting

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circumstances in the private and public domains do not differ, how can privatization be a violation of s 2? How can Justice Beinisch hold that one of two contexts that potentially provide the same treatment is more violative of personal dignity? Justice Beinisch’s argument begins with the premise that inmates may have lost their “liberty and freedom of movement, as well as additional rights . . . but an inmate of a prison does not lose his constitutional right to human dignity” (Prison Case, § 35). And yet, the prison context must be seen as inherently violating the right to personal dignity, albeit justifiably so. The dignity of inmates in such a special situation is tenuous and must be recognized as such.8 With human dignity of inmates so crucial and yet so tenuous, “the question that we need to decide in this case is whether imprisoning a person in a privately managed prison causes a greater violation of his human dignity than imprisoning him in a public prison” (Prison Case, § 30). To answer this question Justice Beinisch returns to the meaning of human dignity: “no one denies that the right to dignity applies with regard to preventing the denigration of a person and preventing any violation of his human image and his worth as a human being” (Prison Case, § 31). Needless to say, the imprisonment of a person, the very classification of someone as a criminal or an inmate, would per se constitute a “violation of his human image” as countless sources discuss the deleterious real-world effects of branding a person as an inmate or a felon (e.g., Parkes, 2003). However, this denigration would be considered justified in the same way that the violation of personal liberty through imprisonment is justified. The question is whether this branding is any worse in a private prison. Here, Justice Beinisch relies on the argument that privatization commodifies inmates. They are treated as a means to an end, because they enhance the profits of a corporation: There is therefore an inherent and natural concern that imprisoning inmates in a privately managed prison that is run with a private economic purpose de facto turns the prisoners into a means whereby the corporation that manages and operates the prison makes a financial profit. It should be noted that the very existence of a prison that operates on a profit-making basis reflects a lack of respect for the status of the inmates as human beings, and this violation of the human dignity of the inmates does not depend on the extent of the violation of human rights that actually occurs behind the prison walls (cf. in this respect the question of employing employees in a prison (HCJ 1163/98 Sadot v Israel Prison Service 55(iv) PD 817 (2001). (Prison Case, § 35)

8 Quoting Justice Mazza from a previous decision, she holds that the dignity of an inmate holds a special place in and for society as a whole: “a violation of the human dignity of a prison inmate does not merely affect the inmate, but also the image of society. Humane treatment of prison inmates is a part of a humane-moral norm that a democratic society is required to uphold. A state that violates the dignity of its prison inmates breaches the obligation that it has to all of its citizens and residents to respect basic human rights” (Prison Case, § 35).

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Just as the loss of democratic legitimacy in privatized prisons is enough to move imprisonment from a justifiable deprivation of human liberty to a rights violation, the branding of a prisoner as a commodity in private prisons – in her words “the very existence of a prison that operates on a profit-making basis reflects a lack of respect for the status of the inmates as human beings” – is enough to move a justifiable deprivation of dignity to a rights violation. Justice Beinisch’s arguments for per se violations are contextual in several important ways. As noted previously, she begins from the special context of a prison and the special scrutiny that needs to be considered when fundamental human rights of incarcerated individuals are at stake. In addition, the Israeli context is critical for finding violations of both the right to liberty and the right to dignity. The Israeli government is based upon the state monopoly of power that led to a violation of the right to liberty and, by extension, the right to dignity. “The imprisonment of a person in a privately managed prison is contrary to the basic outlook of Israeli society . . . with regard to the responsibility of the state” (Prison Case, § 39). Justice Beinisch notes that such a decision might not apply in other jurisdictions with different views on state power and the privatization of prisons. For instance, “both in the United States and in Britain – unlike in Israel – there is a historical tradition of operating private prisons, which naturally is capable of influencing the manner in which the constitutionality of the privatization of prisons is regarded” (Prison Case, § 62). Reinforcing this reading of the Prison Case opinion, Justice Beinisch in an earlier and equally controversial ruling, A. v State of Israel (2000: hereinafter, the ‘Corporal Punishment Case’), used the same approach to ban corporal punishment in Israel. The Supreme Court, sitting as the Court of Criminal Appeals, was presented with a case of a mother hitting her children repeatedly over the course of several years. In defence, the mother claimed that the hitting did not rise to the level of abuse, and that corporal punishment should be allowed for educational purposes. Judge Beinisch noted that “we are dealing with cruel behaviour of the mother to her children and humiliating them, regarding them as property that she can do with what she wishes” (Corporal Punishment Case, § 18). But, Justice Beinisch went further, agreeing with the trial judge that corporal punishment is a per se violation of human rights. While previous Israeli cases had given wide discretion to parents’ techniques for raising their children (cf. Shmueli, 2008), Justice Beinisch examined the issue with an “emphasis on the child’s right of dignity, bodily integrity and mental health” (Corporal Punishment Case, § 22) drawing upon the right to dignity provisions of the Basic Law, as well as Israeli ratification of the Convention on the Rights of the Child (cf. Kaplan, 2006). From this framework, Justice Beinisch concluded: It should be held that corporal punishment of children, or their humiliation and degradation by their parents as an educational method is totally improper, and it is a relic of a socio-educational outlook that is obsolete. The child is not the property of his parent; it is forbidden that he should serve as a punching bag which the parent may hit at will, even when the parent

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believes in good faith that he is exercising his duty and right to educate his child. The child is dependent upon his parent, needs his love, protection and gentle caress. Inflicting punishment that causes pain and humiliation does not contribute to the character of the child and his education, but violates his rights as a human being. It harms his body, his feelings, his dignity and his proper development. ( Corporal Punishment Case, § 29) This ruling mirrors the prison privatization decision as it is grounded in a particular context of vulnerability – a child’s dependence upon parents for love and protection. The decision takes a broad view of human dignity, including the expressive harm that is inherent to corporal punishment, in that such punishment harms one’s body, feelings, dignity and proper development.

Part III: Previous analyzes of the Israeli Supreme Court decision While several commentaries have been written on the Israeli decision, two stand out and will highlight the broad significance and uniqueness of Justice Beinisch’s opinion. Volokh’s (2012) critique embraces the prevailing law and economics position on privatization of public services (cf. Volokh, 2008), that in the abstract privatization is no different from any contractual obligations including the state– employee relationship found in public services. Therefore, privatization can never be a per se violation of human rights as it is just another form of the provision of public services (cf. Volokh, 2013). Medina’s (2010) critique, on the other hand, is sympathetic to Justice Beinisch’s overall argument but misreads the Court’s commodification argument, claiming the Court has created a new right, the right to be free from privatized prisons. Instead, we argue that the Court was not creating a new Constitutional right but rather further elaborating on the meaning of the right to human dignity, especially how the expressive meaning of labelling an inmate as a commodity infringes upon that right.

Alexander Volokh and veils of ignorance Volokh (2012) presents wide-ranging arguments against privatization as a per se violation of human rights that, if followed to its logical conclusion, could support the very expansive position that there can be no per se argument against privatization of any public service. Given the lack of distinction between governmental employees or governmental contractors, Volokh holds that the key aspect of privatization is the relationship between the state and the contracted, irrespective of whether the contracted service is sanitation, highway construction, or managing people such as inmates who are enduring a violation of personal liberty and dignity. He writes, “The state is an abstract set of relationships; therefore, to act, the state must use agents of some sort. Both employees and private contractors are

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private individuals; both do things for the state in exchange for money; both have private purposes, as well as the discretion to follow those purposes sometimes, even contrary to the desires of the state” (p. 133). At this level of abstraction, public employees and employees of private contractors are equivalent. Thus, according to Volokh, any critiques of privatization must rely on the admittedly ambiguous empirical consequences of privatization. His is a convincing argument if we accept the level of abstraction that he insists upon and the playing field that he creates behind his veil of ignorance. Nonetheless, like any analytical game based upon a veil of ignorance, the outcome is dictated by the level of abstraction we are willing to accept. How many veils are we willing to cover ourselves with? How ignorant will we pretend to be about reality? If we are to agree that we are all born free and equal, then a veil of ignorance leading to a Rawlsian account of “justice as fairness” could logically follow. But, such an abstract position has no more validity than starting with the premise that we are all interdependent individuals and who all experience vulnerability.9 Moreover, if we are to change the rules of the game to include some substantial facts, facts that are clearly a condition of any real-world circumstances, then the rules and outcomes will change. This is the case with the Israeli decision and, further, any discussion of privatization. First, we must make some assumptions about who is being acted upon. In the criminal justice system, in the nursing home industry, in welfare programmes, in immigration detention and deportation systems, it is already marginalized people who are being acted upon. Surely the rich and powerful live lives influenced by privatization as well. Their children attend private schools, they golf at private golf courses, they may drive on private toll roads, and rely on private homeowners’ associations for a wealth of services. However, the difference remains that they are rich and powerful with important social connections. Thus, if the services they desire are not provided in a timely, satisfactory manner, they have the means to switch services rather than endure the blow of having poorly manicured greens on their favourite course. Second, we are not living in an abstract world with abstract rules created behind a veil of ignorance (Habermas, 1995, p. 112). Treaties, constitutions, and courts around the globe have held that states have extra duties to marginalized individuals. These duties are not just found in international human rights law, but in domestic laws of almost all countries including in Israel’s Basic Law. To start off with a more abstract position than that would unnecessarily create an artificial state of affairs. Perhaps, the clearest signal that Volokh’s abstraction has gone too far is that he argues that there is no inherent distinction between private contractors and 9 See Fineman (2004) that “we do not begin out lives in equal circumstances. We begin in unequal ones. . . . In such a society, the approach to a resolution to this type of inequality is not found in simplistic and hypothetical prescription or ideological placebos of independence, autonomy, and selfsufficiency” (p. 6).

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public employees because they both perform services for money; both groups seek to “earn a profit” (2012, p. 174). In fact, “we’re all seeking to earn a profit” (p. 175). For Volokh, even the profit motives of shareholders are not inherently different from public prison guards or their supervisors. While some prison guards might be more public-spirited than some shareholders, “investors might put their money into prison firms . . . because they really care about corrections” (pp. 175–176). Yes, that possibility exists, as does the possibility that shareholders will someday open luxurious prisons for purely philanthropic motives. But the mere possibility of a counter-example would water down almost all definitional distinctions. Further, in the shareholder example, courts, at least US courts, have made it abundantly clear that corporations are by nature profit maximizing organizations. For instance, in Ebay Domestic Holdings v Newmark (2010), the Supreme Court concluded that: Having chosen a for-profit corporate form, the Craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders. The “Inc.” after the company name has to mean at least that. Thus, I cannot accept as valid for the purposes of implementing the [poison pill] Rights Plan a corporate policy that specifically, clearly, and admittedly seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders. (pp. 60–61, emphasis added) Volokh, however, quickly dismisses the arguments that corporations act as inherently profit-maximizing entities: “this strikes me as incorrect: firms don’t necessarily act to maximize profit, nor is profit-making any part of their essence” (2012, p. 183). Volokh’s assumption would undermine the Israeli Court decision, which relied heavily on the distinction between private and public enterprises. At minimum, Volokh seems to be conflating individuals in an abstract state of nature with individuals who have already contracted for some good, in this case profit. It would seem safe to assume that private prison corporations are not created to provide a service in the best interest of vulnerable people. Once we accept that corporations are inherently more likely to seek profits through a cost–benefit analysis even when they are implementing public policies, we have to expect the corporation to be involved in social triage, where they will, within their discretion, take on clients that will offer more benefits (read: profits) for less cost. This entails “‘a sorting on social grounds,’ which diverts the goods and services from those found to be most wanting” (Derber, 2006, p. 127; cf. Simmons and Casper, 2012). Those most likely to be addressed by the private firm will not be the ones most in need of services. Of course, the emphasis on helping marginalized populations is often written into law specifically to counter policies that adopt a social triage approach that would leave out those most deserving of protection; thus, governments are well aware of the tendency for this drive to social triage based upon the inherent profit-maximizing motives of corporations.

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So, the question is not whether there is an inherent wrong to privatization at its most abstract level, but whether there is an inherent wrong in privatization considering the fact that much of privatization disproportionately affects already marginalized populations, especially where there is already a standard of special duties for such individuals. The key to the argument for private prisons, then, is the lived experience of inmates who are commodified when they are held by a private corporation. It must also be stressed that the argument of the Israeli Court is not the consequential argument as Volokh portrays it, that the cost–benefit analysis will lead to greater likelihood of damages to the inmates. The concurrence in the Israeli case relied on the argument of the consequences of privatization on incarcerated populations, but that argument is subject to empirical testing. Instead, Justice Beinisch’s argument is that the inmates are denigrated by the very fact of privatization, by the very labelling as a commodity.

Barak Medina and the commodification argument By contrast, Barak Medina (2010) ultimately agrees with Justice Beinisch’s conclusion that the Israeli privatization law violated the Basic Laws, but argues that the decision would have more legitimacy if it were not grounded in human rights, but in a “constitutional norm prohibiting the privatization of ‘core’ governmental powers” (p. 3). He reaches this conclusion by reading the Court as creating a new right to be free from punishment by private actors, “a right against privatization” (p. 3). He writes, “the Israeli Supreme Court’s decision . . . holds that an inmate also has an interest, which is classified as a human right, that the discretion what specific measures will be used against him or her (for instance, to maintain order in the prison) will be employed by organs of the state and not by private entities” (p. 24). As argued above, though, instead of creating a new right against privatization, it appears the Court was fleshing out the already ensconced human right to dignity. Medina first distinguishes Justice Beinisch’s per se argument from the consequentialist arguments of two of the concurring opinions. Medina then, at least in the early part of his paper, separates out how privatization works differently for the right to liberty and the right to dignity; that the loss of democratic legitimacy in the privatization context leads to a violation of the right to liberty, while the right to dignity argument relies on a symbolic argument about the meaning of privatization. He correctly notes that while many scholars have previously discussed the symbolic meaning of privatization, their arguments are rarely fleshed out adequately, and they have been unable to tie them to a constitutional law argument. Medina argues that while the Israeli decision aims to create a bridge between cultural and ethical theories and constitutional law, the Court’s reasoning is not sufficiently founded: “even if one could establish some kind of such an essential symbolic message or ‘social meaning’ to punishment, it has not been established that a prison operated by a private corporation necessarily conveys the wrong message” (p. 18).

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To better understand the Court’s reasoning for the symbolic meaning of privatized punishment, Medina lays out two possible analogies (elaborating on the inmates’ interests in each example); but it is striking that his examples are founded on the premise that the Court has created a new human right not to be incarcerated in a privatized prison. The first is a classic argument between consequentialists and deontologists on the role of intention in harm. While the consequentialist would only consider actual harm and disregard intentions, the deontologist sees a difference between intended harm and unintended harm. The second example he lays out is the difference between being harmed by an action of the executive branch or by action that has included legislative deliberation. Only in the first example does Medina find the intention to be part of the harm itself, while in the second example, the decision as to who authorized the act does not necessarily have a bearing on the harm suffered. For some victims it might be better if the authority came from the executive branch instead of a majority of the legislative branch or vice versa. So, what of the prison privatization example? Medina concludes that the democratic legitimacy argument of privatization which the Court uses for the right to liberty is more like his first example. Medina then turns to the symbolic status of the inmate argument, which the Court used to find a violation of the right to dignity. Here, he agrees with the Court, albeit with one important caveat. “An inmate has, at least as an objective matter, a substantial interest in being treated as a human being, not as a mere means for a private corporation to make a profit. If it can be shown that prison privatization brings about such a (symbolic) outcome, it is indeed justified to classify it as an independent infringement of inmates’ basic liberties” (p. 27). However, he does not agree with the caveat that “privatization brings about such a (symbolic) outcome” at least in all cases. First, he argues that the privatization of the prisoner plays a “relatively minor role” in constructing the social meaning of the prisoner and that it was not the profit-maximizing private prison which gave the inmate his status, but “public organs” (p. 30). Secondly, Medina holds that no clear-cut distinction exists between private and public actors. For instance, even in the Israeli case the guards were classified as civil servants according to the law. Thus, if privatization evinces disrespect, it is not clear whether we are dealing with public or private actors. Medina concludes, “I don’t think that we should view incidents of the use of force by a prison-guard against a prisoner as ‘actions [that] are generally considered to express disrespect’ just because the prison staff works for a corporation rather than the state” (p. 30). The Court then should not have made a per se constitutional argument against privatization of prisons, based upon the symbolic meaning of the punishment as “such a conclusion is not inevitable” (p. 30). Medina’s two arguments against a per se violation miss the mark in two respects. First, Medina argues that “the social meaning of punishment” is determined by the legitimacy of the institutions that have issued the sentence and not by the entity running the prison. This may be true, but the Court was not looking at the social meaning of the punishment, but rather the image of the inmate, an image

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that was already reduced by the imprisonment context. For Justice Beinisch, the question is whether treating an inmate as a commodity worsens the “violation of his human image and his worth as a human being” (Prison Case, § 35; cf. Ben-Dor and Sachs, 2011). Medina’s second criticism tracks Volokh’s argument that there is no categorical distinction between a private employee and a public employee. For Medina these exist on something of a continuum. One counter to this proposition would be to question why any legislation would ever be labelled the privatization of prisons if such a concept has no meaning. Of course, it has meaning, specifically because private for-profit companies are for profit. As such, the inmates are more likely to be treated as commodities. In Justice Beinisch’s view this additional dehumanization was enough to rule that privatization of prisons is a per se violation of the human right to dignity. While offering a generally sympathetic reading of Justice Beinisch’s decision, Medina misses the fundamental premise of the decision: namely, inmates are already found in a very tenuous position vis-à-vis the state, one that already jeopardizes their human dignity. Justice Beinisch does not begin with the stigmatization of inmates as commodities, but with inmates stigmatized as inmates. Thus, the question is not whether inmates in private prisons are stigmatized but whether they are stigmatized in an additional, non-necessary way, by privatization. The very fact that a profit-maximizing corporation is involved in the incarceration is enough to make the inmate a commodity, and thus infringes upon the right to dignity. As Justice Beinisch writes, “the very existence of a prison that operates on a profit-making basis reflects a lack of respect for the status of the inmates as human beings” (Prison Case, para. 36). In short, Medina’s analysis underestimates the importance of branding in the prison context.

Part IV: Cauterization of inmates Nonetheless, Medina is correct to argue that the commodification arguments are not fleshed out adequately, or as Rosky (2004) points out, “oddly, critics rarely bother to explain the normative importance of commodification” (p. 965). Thus, we need to explore this branding in more detail. To do so, we first look at the recent use of the term “cauterization” in human rights scholarship to demonstrate how the branding process is inherent to most major human rights abuses, particularly when the mere labeling of a person tips the human rights scales. We then briefly examine a recent mental health case, Purohit and Moore v Gambia (2003), from the African Commission on Human and Peoples’ Rights that used analogous logic, to further clarify the ills of branding in the human rights context. The term “cauterize” aptly describes the comprehensive way that the “Other” has been excluded. There are three identifiable aspects of cauterization that correspond to the term’s three original interrelated meanings. The first meaning comes from its roots in the Greek verb kauteriazein which means to burn with a kauter or a branding iron (Liddell and Scott, 1968). Such branding was historically done to physically mark a slave or criminal as rightless or someone as poor (Tedhams, 1994).

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Second, cauterization refers to a medical procedure in which burning is used to seal off or remove part of the body. This procedure is most often used to stop bleeding but it can also seal a wound to stop the spread of infection. Finally, in its most metaphorical meaning, cauterization means to deaden feelings or make one callous to the suffering of another (Oxford English Dictionary). The “Other” is then branded as beneath humanity, below those who deserve rights. Those deemed inferior (or “rightless”) are sealed off from the polis and its attendant forms of protection (like a court); in effect, treating the voice of the rightless as an infection that must be stopped from spreading. Finally, those with rights, the full members of the polis, deaden their feelings toward the suffering of those who are branded as rightless.10 This logic lurks behind almost every ideology that has supported genocide, colonization, or slavery. Examples abound. African slaves brought to the Americas were often physically branded on their faces or shoulders (Hoenig, 2012). Even after that practice was banned, less physical, but very real, legal branding was perpetrated by legislation and legal opinions. African Americans were famously branded as so far inferior that they had no rights which the white man was bound to respect, and therefore, they “might justly and lawfully be reduced to slavery for [their] benefit” (Scott v Sandford, 1857). Once branded as rightless, as beneath rights, those marginalized would no longer be and perspectives literally did not exist (see Cogan, 1989). Of course, such branding and exclusion contributed in no small part to the brutality they suffered at the hands of genteel slave owners and “courageous” captains of death boats who were deadened to the immense suffering of the rightless. As British seaman James Field Stanfield described one ship captain: “Because of his debility, he ordered anyone to be flogged tied to his bedpost so he could see the victims face-to-face, enjoying their agonizing screams, while their flesh was lacerated without mercy” (Rediker, 2007, p. 149). It should be noted that the second and third prongs of cauterization are consequential arguments, but not the type that the Israeli Supreme Court eschewed in its decisions. Instead, they are theorized as consequences inherent to the branding process, not to the act that causes the branding, such as incarceration in a privatized prison. At least one regional human rights tribunal has found that the expressive harm caused by such branding is a violation of the human right to dignity. The African Commission in its pioneering case of Purohit v Gambia found that that The Gambia’s mental health legislation (the outdated Lunatics Detention Act) and its treatment of the mentally ill at its Campana psychiatric unit violated several provisions of the African Charter, such as Article 2 (equal protection), Article 5 (human dignity), Article 6 (right to liberty and freedom from arbitrary detention), and Article 16 (the right to enjoy the best attainable state of physical and mental health). Among other things, the government was found to have cauterized the 10 The notion of cauterization is analogous in many ways to the Roman notion of infamia, where a citizen was stripped of his reputation, then could not give testimony, and was generally below consideration as a citizen (see Fletcher, 1999).

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mentally ill in the manner described above. The Commission was troubled by the way in which the mentally ill were labelled or branded by Gambian law “as ‘lunatics’ and ‘idiots,’terms, which without any doubt dehumanize and deny them any form of dignity” (§ 59). Similar to the Israeli Supreme Court decision, the human rights tribunal found this branding by itself to be a violation of Article 5 of the African Charter that guarantees “the right to the respect of dignity inherent in a human being”. Once branded as “lunatics”, the mentally ill were sealed off from the polis by internment at Campana and the patients did not have a voice in the appeals process, as Gambian law contained no “provisions for the review or appeal against an order of detention or any remedy for detention made in error or wrong diagnosis or treatment” (§ 71). Their voices were further cauterized in that all patients at Campana regardless of the type and extent of their illness were denied the right to vote in violation of Article 13 of the African Charter. The Gambia was ordered to repeal the Lunatic Detentions Act and to establish a panel to review previous detention decisions. It was also ordered to provide a voice to the mentally ill through representation in the form of legal aid so that patients could challenge their detention and to provide for the right to vote for the mentally ill.11 Sharon Dolovich’s recent impassioned work on the dehumanization of inmates tracks this cauterization logic that imprisonment, which brands the inmates as inferior, poses special risks for further violations of human dignity. Dolovich (2012) holds that the mass incarceration of the past 20 years has been grounded in what she calls “the exclusionary project”. “People in prison are subhuman, and they are polluted and unclean. They must therefore be kept away from society, lest they defile the rest of us” (p. 115). Similar to the Purohit case, attempts at redress are stymied by incarceration, “where a defined minority of the population is stripped of both civil liberties and, often, the right to vote; prisoners are therefore excluded from the bargaining necessary to prevent oppression, and, especially in a privatized context, the general public usually is excluded from regular information about the treatment of inmates at prisons” (Aman, 2005). Dolovich’s writings also concur with the Israeli Supreme Court decision, that the consequences of further degradation are exacerbated by the prison context: “prisoners facing such conditions are not free just to walk away. They instead must remain locked inside the site of their abuse, often in close proximity to their abuser, in what can only be a permanently traumatized and terrorized state bereft of any peace of mind” (Dolovich, 2012, p. 108). Thus, prison privatization is a per se violation of prisoner’s dignity through the commodification process, with the attendant branding process maintaining empirical effects as well. 11 Such arguments closely resemble analyzes of expressive harm. Consider Ahmad Haque’s (2004) discussion of segregation in the US: “The wrongfulness of racial segregation did not lie entirely in the gross material inequality of social conditions maintained for whites and for persons of color, but also in a pervasive message of racial hierarchy and white purity. To say that ‘separate . . . [is] inherently unequal’ is in part to say that when segregation expresses negative evaluations of one group this is itself wrongful” (p. 6).

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Part V: The fundamental elements of a per se violation of the human rights to dignity Could similar violations of the human right to dignity be found in other jurisdictions? From the discussions above of the Israeli case and the logic of cauterization, there seem to be three fundamental elements necessary for a court to find a per se violation of human dignity. First, the case would need to involve marginalized individuals and the jurisdiction would need to have special protections for marginalized populations such as inmates. As Justice Arbel says in concurrence in the Israeli case, privatization “abandons the prison inmate, who is already at the bottom of the social ladder and in a sensitive and vulnerable situation, to his fate” (Prison Case, § 4). Similarly, in Purohit, the African Commission had to reiterate that mentally disabled persons “have a right to enjoy a decent life, as normal and full as possible, a right which lies at the heart of the right to human dignity. This right should be zealously guarded and forcefully protected by all States party to the African Charter” (§ 61). Second, there needs to be a special emphasis on the human right to dignity. As Justice Beinisch writes of the Israeli context, “The right to human dignity became a super-legislative constitutional right that every government authority is liable to respect” (Prison Case, § 35). The African Commission in Purohit also highlighted the special place of human dignity as “an inherent right which every human being is obliged to respect by all means possible and on the other hand it confers a duty on every human being to respect this right” (§ 57). Finally, there needs to be a sense that the action of the government, such as privatization or labelling of the mentally ill as “lunatics” or “idiots”, serves as a direct assault on the populations’ dignity in a symbolic way, such as an expression of disrespect. Justice Beinisch approvingly quotes Meir Dan-Cohen: “As long as certain actions are generally considered to express disrespect, one cannot knowingly engage in them without offending against the target’s dignity, no matter what one’s motivations and intentions are” (Prison Case, § 38; Dan-Cohen, 2002, p. 162). Thus, the privatization of prisons in Israel, “both in practice and on an ethical and symbolic level – expresses a divestment of a significant part of the state’s responsibility for the fate of the inmates” (Prison Case, § 39). Based upon these criteria, the Inter-American system is an especially fruitful jurisdiction for applying the logic of the Israeli Supreme Court decision. In the next sections we argue that a case could be pursued in the Inter-American Commission for the per se violation of the right to dignity for the widespread and growing privatization of prisons in Arizona.

Part VI: Privatization of prisons in Arizona The State of Arizona has for years been a leader in privatizing essential services as a supposed cost-saving technique, most infamously selling the state capital complex to a private real estate company and then leasing the buildings back in 2010. The

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same legislation that sold the state capitol complex included provisions to sell all state prisons to private firms. Alas, no private companies came forward to bid on such a proposition, but such a move would have only sped up a process that has already seen approximately half of Arizona’s prisons being owned and run by private firms. In addition, the federal immigration detention facilities and deportation transportation systems located in the state have been nearly completely privatized in response to the huge influx of undocumented migrants over the past decade or so. As documented in previous studies (ACLU, 2011b; Simmons and Mueller, 2014), the privatization of migrant detention and transportation facilities in Arizona further fuels the structural violence found at the US–Mexico border and exacerbates the vulnerability of already marginalized populations, especially women, children, and members of indigenous groups. Many NGOs in Arizona and beyond have also extensively documented the abuses that seem endemic to private prisons and detention facilities (ACLU, 2011a, 2011b; AFSC, 2012). NGOs and private individuals have brought several high-profile lawsuits charging that the effects of the privatization of prisons and detention facilities are violations of fundamental civil rights (e.g. American Friends Service Committee v Brewer, 2011; Parsons v Ryan, 2014). Other jurisdictions have successfully argued that the worsened conditions traced to prison privatization constitute a violation of basic human rights (e.g., Sebriest v Epps USDC So Dist Miss, 2012). Arizona’s extreme privatization shows the mutually reinforcing effects of privatization, commodification, and empirical consequences. The extensive prison privatization in Arizona has been driven by budget shortfalls, enormous increases in the number of prisoners, and vast numbers of immigrants and refugees coming into Arizona (AFSC, 2013). Arizona also was primed to embrace privatization because of its political culture of conservative libertarianism as well as the extremism and lack of professionalism in the legislature created by structural electoral procedures. These factors created something of a perfect storm leading to animus against any type of special protections for vulnerable individuals, especially prisoners and immigrants. Rights long enshrined in state law have been torn asunder.

Privatization of state prisons Arizona began privatizing prisons in the 1990s and accelerated the process in the first decade of this century (Abramsky, 2012). Arizona was facing a large expansion of inmates, but the legislature was also very much attuned to budget savings, and even saw private prisons serving out-of-state prisoners as a means for increasing revenues. Currently, about 20% of Arizona’s inmates are housed in private facilities and the state has six prison complexes run by Corrections Corporation of America (CCA) in the sister towns of Florence and Eloy for holding immigration detainees and out-of-state inmates from Washington, Hawaii, Ohio, California, and Alaska (AFSC, 2013). A recent report compiled by the American Friends Service Committee has fundamentally called into question the benefits of privatizing prisons in Arizona.

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The report was compiled by AFSC-Arizona Director Caroline Isaacs after discovering that the state Department of Corrections had failed to issue legally required regular reports on private prisons. Confronted with legal action by the AFSC, the Arizona Department of Corrections issued its first report in December 2011, but its data and methodology were weak, and it offered few concrete conclusions comparing public and private prisons. The AFSC did note: The ADC report contains one important revelation: Two of our state private prisons – GEO Group’s Central Arizona Correctional Facility and Management and Training Corporation’s Cerbat Unit at Kingman – are exempt from a state statute that requires private prisons to provide an equivalent or better level of quality than the state. State legislators apparently don’t care whether these are good prisons. They don’t care whether they are safe prisons. They just want them to be private prisons. (p. 5) Indeed, it quickly became apparent that there was little oversight of Arizona’s private prisons, and basic data such as recidivism rates were not being compiled. The six prisons located in the state but servicing federal and out-of-state prisoners had almost no oversight by state authorities. The most lauded justification for privatization has been cost-savings, but there was little comparative cost data between private and public prisons. The AFSC estimated that “between 2008 and 2010, Arizona overpaid for its private prisons by about $10 million. If the requested 2,000 medium security private prison beds are built, Arizona taxpayers can expect to waste at least $6 million on privatization every year” (p. iii; Fein, 2013). Privatized prisons not only cost more, but they were also found to be less safe for the community, the inmates, and the staff. “The problems in private prisons stem from low pay, inadequate training, poor background screening procedures, high rates of turnover, and high staff vacancy rates” (p. iii). One especially troubling area has been the privatization of medical services throughout Arizona prisons. In 2013, Arizona, facing a lawsuit from the ACLU for its substandard medical services, cancelled its contract with Wexford Health Sources, Inc., but then contracted with the equally troubled Corizon, Inc. (Harris, 2013). Both companies have been subject to fines or under investigation for their inadequate level of care in private prisons, with one report from Idaho noting that “prison care under Corizon amounts to cruel and unusual punishment and that the government agents were “deliberately indifferent to the serious health care needs of their charges” (AFSC, 2013, p. 11). Despite provisions in state law and in individual contracts with corrections corporations that each private prison document its cost-savings, very few, if any of those reports have been filed. The legislature even “repealed a state law requiring the corporations to demonstrate cost savings in their bids for new contracts” (Abramsky, 2012). Indeed, cost-saving does not seem to be relevant to the actual implementation of these policies. Legislation was passed that lifted cost ceilings

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in the provision of medical service and opened medical service contracting to the best contract, but barred the Arizona Department of Corrections from submitting bids. Of course, the greatest savings in incarceration occurs when the number of prisoners decreases, and one of the best methods for ensuring that decrease would be to reduce recidivism rates, and yet these are not tracked by private prisons. There also is a mutually reinforcing dynamic between privatization and cauterization. Inmates are dehumanized by government officials, and by pushing for privatization there is a desire to further brand the inmates as inferior. For instance, during the bidding process for the new private prison, there was precious little discussion of the inmate safety records of the four companies that placed bids even though all four of them operate prisons in the state with substandard safety records. The AFSC reported that there were 101 assaults per 1,000 prisoners in one of CCA’s Arizona facilities (§ 28). Even data on riots and “serious disturbances” are hard to find and likely under-reported. The State of California conducted an investigation of out-of-state private prisons that were housing California residents, including those in Arizona, and found denial of inmates’ rights, poor security and safety infrastructure, unenforced rules, practices and contract obligations, poor medical care, and weak internal administrative procedures (Shaw, 2010). Hawaiian inmates kept at a private facility in Arizona have filed suit against the state and the company operating the private prison (CCA) alleging inadequate oversight by prison authorities, cost-cutting measures, and allowing gang-related violence at the prisons (AFSC, 2013, p. 28; Kakesako, 2012). In preparation for its lawsuit against the State, the AFSC solicited opinions from inmates. Here are a few representative responses (from pp. 61–62).12 In addition to the consequences of private prisons, note the feelings of disrespect that the inmates experienced in private prisons. While this is not the per se violation caused by commodification that Justice Beinisch was referring to in her decision, it can be argued it is symptomatic of a deadening of feelings for the inmates once they are deemed to be inmates, especially commodified inmates in a privatized environment: Completely unsafe. If something were to happen, the staff is neither qualified or able to contain any serious situations. The staff, I believe would rush out and assure own safety. Complete lack of fire safety, regarding welfare of the inmates. The CPO’s regularly lose inmates’ release paperwork and inmates don’t go home on time. It is just a very poorly run facility The majority of the staff appear unkempt, out of shape and lazy. With my own eyes I’ve seen them enforce rules on one person and let the next slide.

12 All of the responses quoted from the report are from prisoners at the Florence West facility, which is operated by GEO Group.

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They talk in an abusive manner towards inmates quite frequently cussing or trying to make us look stupid in front of each other. I believe they get most of their training on the job from other guards who don’t do their job in a professional manner. I would much rather be on a normal DOC [Department of Corrections] state run facility because it seems that officers are trained better and respect us men when respect is given.

Legal remedies for prison privatization in Arizona Justice Beinisch conjectured that privatization would not hold the same symbolic meaning in countries such as the US and the UK where privatization has such a long history. Indeed, in one of the few cases to challenge privatization as a per se violation in the US, Judge Posner dismissed the claims on Thirteenth Amendment grounds and warned that to re-file such a case on other Constitutional grounds would be “foolish” noting that “they will merely waste their money and earn a strike. The claims are thoroughly frivolous. The Thirteenth Amendment, which forbids involuntary servitude, has an express exception for persons imprisoned pursuant to conviction for crime. Nor are we pointed to or can think of any other provision of the Constitution that might be violated by the decision of a state to confine a convicted prisoner in a prison owned by a private firm rather than by a government” (Pischke v Litscher, 1999, § 4). Without recourse to such a broad per se ruling in US courts, plaintiffs have had to bring suits against the conditions in privatized prisons. However, a more broad-based per se ruling against privatization could arguably succeed in the InterAmerican Human Rights system, as all the elements of such a ruling that we outlined above can be found there. The consequences of privatization in Arizona would also likely constitute violations of several articles of the American Declaration and the American Convention on Human Rights including, inter alia, the rights to life, humane treatment, personal liberty, and judicial protection. But, the Inter-American system is an especially fruitful jurisdiction for making a broader decision by applying the logic of the Israeli Supreme Court decision. The system has been quite sensitive to marginalized populations especially in detention settings, ruling that they are entitled to special protection and oversight (e.g., Urso Branco Prisons Case, 2002) and holding that the state maintains an affirmative duty to protect the many facets of an inmate’s human dignity, including “protecting him from possible circumstances that could imperil his life, health and personal integrity, among other rights” (Minors in Detention v Honduras, 1999, § 135). In a mental disabilities case, the Inter-American Court broadened these affirmative duties to all individuals whose vulnerability is most evident: “any person who is in a vulnerable condition is entitled to special protection, which must be provided by the States if they are to comply with their general duties to respect and guarantee human rights” (Ximenes-Lopes v Brazil, 2006, § 133).

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The Court has also developed a very strong jurisprudence on the right to dignity (Ximenes-Lopes v Brazil, 2006; see also Pasqualucci, 2008), and this right clearly applies to those incarcerated, as Article 5 of the American Convention on Human Rights states that “all persons deprived of their liberty shall be treated with respect for the inherent dignity of the human person”. The Inter-American Court of Human Rights has ruled that the human right to dignity is especially tenuous in a detention setting: “The State has an ineluctable obligation to provide those persons with the minimum conditions befitting their dignity as human beings, for as long as they are interned in a detention facility” ( Juvenile Reeducation Institute v Paraguay, 2004, § 159). The Court even expanded the standard for prisoners’ right to dignity to what we call a proyecto de la vida standard, calling on the state to not only ensure the right to dignity but also enable inmates the opportunity to build their proyecto de la vida in holding that “the Court must establish whether the State, in fulfillment of its role of guarantor, took measures to ensure to all inmates at the Center – adults and children alike – the right to live with dignity and thus help them build their life-plan, even while incarcerated” ( Juvenile Reeducation Institute v Paraguay, 2004, § 159; cf. Minors in Detention v Honduras, 1998, p. 573). From our analysis, all the elements are in place to argue that prison privatization in Arizona is a per se violation of the human right to dignity in the InterAmerican Commission of Human Rights. While such a ruling might have little immediate impact as the US often ignores the decisions of the Inter-American human rights system, it could set important precedents in the region that would thwart the further privatization of prisons in other countries. It could also reinforce Justice Beinisch’s groundbreaking decision that commodification through privatization is a violation of the human right to dignity, thus providing a new avenue for such claims based upon commodification in other contexts.

Part VI: Conclusion The privatization of prisons has well-documented real-world consequences. Increasingly prisoners’ “very bodies now represent profits” (Shaylor, 1998, p. 409). Private prison companies are warning shareholders that reduced incarceration levels could hurt the bottom line, saying, “The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by criminal laws” (Mason, 2012, p. 12). The rulings of the Israeli Supreme Court and the African Commission in Purohit took seriously the pre-existing vulnerability of the inmates and patients as well as the consequences of further cauterization. These stand in sharp contrast to legal scholars whose arguments abstract from the real world to hold that there is no fundamental distinction between public and private prisons. It may be possible that private prisons could enhance the dignity of prisoners by improving prison conditions (Metzger, 2003), but for many contexts that seems like a fantasy.

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If improving the dignity of prisoners is the goal and incarceration is inherently degrading, then turning to a for-private corporation is troubling. Humanizing prisoners does not require privatization, it requires a changed mindset about prisoners and concrete actions that reduce violence, improve rehabilitation efforts, and lower incarceration rates. It calls for the reversal of the cauterization process. As Dolovich writes: Consider what would have to change if prisoners were widely understood to be fellow human beings and fellow citizens: Prison conditions would necessarily be humane and the opportunities for human development meaningful, notwithstanding the (temporary) deprivation of freedom. Parole applications would be seriously scrutinized, and, perhaps after some period of confinement proportionate to the crime, those individuals found to pose no future public safety risk would be released. And once released, people with felony convictions would not be burdened with gratuitous civil disabilities and might even be assisted by the state with the enterprise of reentry. (2012, p. 121)

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16 GENDERED ASPECTS OF PRIVATIZING FORCE IN COUNTERINSURGENT WARFARE Tracey Leigh Dowdeswell 1

Introduction Women suffer in times of armed conflict, not only as civilians who face the violence and deprivations that accompany war, but also in ways that are specifically gendered. In the 2003–13 US-led Coalition operations in Iraq, Iraqi women, who had once enjoyed some of the best legal protections in the region, found that their rights had deteriorated under the occupation. A general climate of physical insecurity, as well as security measures taken to reinforce security such as walls and checkpoints, restricted women’s movements outside of their homes (Human Rights Watch, 2003a; Human Rights Watch, 2003b; Zangana, 2010). Both Coalition forces and private contractors committed acts of sexual violence, arbitrary detention, and torture against women (Human Rights Watch, 2005; Whitcomb, 2014). The rise of religious conservatism and the influence of extremism also contributed to restricting women’s rights and freedom of movement. This has been heightened by the recent incursion of ISIS forces in northern Iraq, whose militants have committed acts of rape and enslavement against women (McLaughlin, 2014). Not only does war impact women in ways that are specifically gendered, but modern techniques of counterinsurgency have consequences for women in these conflict zones. For example, Coalition forces erected concrete security barriers and set up frequent checkpoints throughout Iraq and Afghanistan in order to restrict the movement of insurgents, but these also had the effect of restricting the movement of women for school and work, and made even daily tasks frightening and difficult (Zangana, 2010). This prompted many women to stay home, and has

1 PhD candidate, Osgoode Hall Law School of York University. The author would like to extend warm thanks to the Nathanson Centre on Transnational Human Rights, Crime and Security for their contribution towards funding this research.

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kept children from attending school. This chapter examines aspects of modern counterinsurgency in order to assess some of the often hidden ways they impact women, by focusing on the gendered aspects of security governance in the recent counterinsurgencies in Iraq and Afghanistan. First, women have been encouraged to enlist as security providers, and their role has often been used by government officials to highlight the differences between social conditions for women created under Western liberal feminism and the poor conditions for women in Iraq and Afghanistan. While this may seem to many to be a positive aspect of these operations, the idea that the West is bringing democracy and liberal rights to local women is a narrative that assisted in selling these wars to the public in troopproviding countries, while obscuring the very real ways that these occupations have harmed the women living there, and have even brought about a very real deterioration in their legal rights and daily living conditions. At the same time, the recent incursions of women in combat-related roles represents not a transformation of the modern military into a more responsive humanitarian organization, as it is often presented, but more of an assimilation of these women into the hypermasculinized values of the military. This, in turn, contributes to the mainstreaming of a militarized liberal feminism and the normalization of violence as a liberal feminist value. On the receiving end of these narratives are the women who are living in counterinsurgent environments. These security practices promote the increasing privatization and responsibilization that dominate modern counterinsurgent and counterterrorism strategies. Responsibilization describes neoliberal policies whereby the government adopts an ethic of self-care as a means of social control, downloading responsibility onto individual and private actors. Shamir (2008) describes “responsiblization” as “a technique of government that sets into action a reflexive subjectivity deemed suitable to partake in the deployment of horizontal authority and one which willingly bears the consequences of its actions. In a nutshell, it may be said that, while obedience had been the practical master-key of top-down bureaucracies, responsibility is the practical master-key of governance” (p. 4). Privatization not only refers to the devolution of combat activities onto private actors and military corporations, but also to the ways in which ordinary front-line soldiers have been made responsible for their own safety in conflict zones, and thus have been encouraged to make their own decisions to employ force in the absence of supervening command control. This creates a more unpredictable and less restrained use of force by soldiers against civilians, which in turn shifts many of the risks of the conflict away from security forces and onto civilians. This force can often be random and arbitrary in nature, causing widespread fear and dislocation among the civilian population, even in response to relatively low levels of actual violence. Such neoliberal values of responsibilization, privatization, and self-defence in the face of risk are not neutral with respect to gender. Soldiers’ decisions to use force against civilians are privatized and responsibilized in a social context of what Enloe (2000) and Whitworth (2004) have termed “hyper-masculine” militaristic

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values. These values encourage honour, a reluctance to back down in the face of even remote threats, a sense of strong camaraderie with one’s fellow soldiers, and a tendency to characterize as cowardice any reluctance to shoot or compassion for civilian victims. Women have been recruited in increasing numbers to work in counterinsurgent security forces – both public and private – and they are frequently encouraged to adopt these values as well. Such militaristic values are then brought under the banner of “liberal feminism”, drawing upon popular attitudes about women’s individualism, empowerment, and equality to men in physical strength and courage. In this way, Western militaries have produced a synthesis of neoliberal and liberal feminist values that serves to reposition their security operations as humanitarian and progressive, and the women who fight them as strong and courageous. The wars in Iraq and Afghanistan were ostensibly waged to build nations, to bring democracy, and to promote rights – particularly rights for women in societies characterized as backwards and illiberal. Such wars might be more difficult to justify to Western audiences without this emphasis on liberal feminist values. But as women are staking out their territory in one of the last bastions of male privilege in Western societies – military combat roles and leadership – they are also staking out their territory over the civilian populations they are tasked with occupying. The imperial agenda of American neoliberalism has sometimes been called a “soft empire”, maintained primarily by economic and ideological influence (Cotterrell, 2008, p. 2). Rather, privatized and responsibilized security governance is the hard power that backs up these ideologies and practices on the ground, as security forces are tasked with identifying and then managing “risky populations” in ways that subvert established legal norms. Not only the ultimate decision to employ force, but control over the very criteria for who is a civilian, who is an insurgent, and who is the enemy, have been re-packaged, privatized, outsourced, and this has given newly empowered security providers great discretion to identify persons who pose some risk, and are thus liable to be attacked with military force. The continued rise of neoliberal security governance – which has not only become the means of choice to fight terrorism, but has also become established to govern such diverse activities as contracting out peacekeeping operations (Kent, 2007; Koyama and Myrttinen, 2007), protecting resource extraction in Africa and South America (Abrahamsen and Williams, 2011), engaging in protest policing in the United Arab Emirates during the Arab Spring (Reflex Responses, 2010), and their waging of war in Yemen by non-nationals of the UAE (Hager and Mazzetti, 2015) – is taking up an increasing amount of social space in diverse regions of the globe and is commonly justified in terms of protection, national security, and humanitarian intervention. The long-term and chronic nature of its violence must be masked, justified, and repackaged in order to normalize its worst effects. Fear, uncertainty, and an emphasis on national security are obvious such justifications, but liberal feminist narratives of Western female soldiers are also used to justify security operations in terms of freedom and liberation, as wars of humanitarian intervention, democratization, and nation-building. In the recent conflict in

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Yemen, this includes a popular narrative about a female Emirati air force pilot, Mariam Al-Mansouri, who has been portrayed as a vanguard of women’s rights in the Emirates for conducting successful bombing raids against one of the poorest nations in the world during a humanitarian catastrophe (Kim, 2014). Yet the UAE is a country that continues to be sharply criticized by international human rights organizations for its actual treatment of women (US Department of State, 2014). The ideologies and practices of a privatized and responsibilized security sector have incorporated these liberal feminist narratives in ways that facilitate these justifications, while masking the very real violence employed by security forces, and increasing its acceptability. In this way, the synthesis of neoliberalism and liberalism fosters the overall imperial agenda.

Hypermasculinity and liberal feminism in military culture: an imperial synthesis In the run up to the wars in Afghanistan and Iraq, the Bush administration was keen to claim that “the fight against terrorism is also a fight for the rights and dignity of women” (Hunt and Rygiel, 2008, p. 2). As Hunt and Rygiel state: One of the most remarkable and lasting war stories is that the war on terror is being waged in order to protect women’s rights and liberate Muslim and Arab women in places like Afghanistan and Iraq. Thinking back to the initiation of war in Afghanistan, images of burqa-clad women represented as victims of “barbaric, unshaven, cave-dwelling fundamentalists” dominated the media and provided the basis for the Bush administration’s rhetoric that this war would liberate Afghan women. (p. 9) New cultural frames are needed to portray continuing security operations as a means to reconstruct failed states, to liberate citizens from despots, and to protect Western democratic values. These values include liberal feminist values of individuality and equality, and it would, in fact, have been difficult for the President of the United States to justify the invasion of Afghanistan and the continuing counterinsurgency there to Americans without paying heed to these values. This, in turn, required that the military itself be seen to be empowering women, and the US wars in Iraq and Afghanistan thus saw a remarkable increase in the inclusion of women in combat-supporting roles. Many of the US Coalition partners permit women to serve in full combat roles, including Canada (CBC News, 2006), Australia (Ministerial and Executive Coordination and Communication, 2013), and Norway (Deutsche Welle, 2014). Several European nations now permit women to serve in combat roles, as well (Fisher, 2013). The experiences of Jessica Lynch as a prisoner-of-war in Iraq are well-known (Martin, 2008). Books have begun to be written about women’s role in waging war, many of them published by the armed forces itself (Wise and Baron, 2006). In Canada, it has become

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common to speak not of “our fighting men” in Afghanistan, but of “our fighting men and women”. Women have also joined non-state armed groups. For example, the Kurdistan Workers’ Party (PKK) has long had female fighters among its ranks, and this has been spurred on by the recent conflict in Syria in which women are fighting in greater numbers in the People’s Protection Units of the PYD (Flanagin, 2014). The organization Syria Deeply reports that about 30% of the People’s Protection Units are female fighters (Flanagin, 2014). Flanagan reports that the presence of these female fighters is helping reposition the Kurds, long seen as backwards, as having secular and liberal values and so increase their acceptability to those in Turkey who are suspicious of Kurdish groups; they have been much vaunted in the Western press as well (Flanagin, 2014). However, this rhetoric belies the true situation. Kurdish women are still subject to a sexist culture and patriarchal practices, including forced marriages, honour killings, and female genital mutilation (Flanagin, 2014; Human Rights Watch, 2010). American women are still excluded from serving in combat roles in the US military. One report prepared by the US Marine Corps argues in favor of maintaining this traditional ban, based upon women’s physical and emotional characteristics, as well as changes in military culture that would be brought about were women to fight in combat (Meelarp, 2006). Nor does the rhetoric ref lect a military culture that truly values its women in uniform. There have been large numbers of sexual assaults against female soldiers in the US military, and large numbers of convictions for sexual assault have been overturned by commanding officers (Department of Defense Task Force Report on Care for Victims of Sexual Assault, 2004). The role that female fighters play in sustaining the war story has not necessarily translated into tangible positive results for fighting women. The US Marine Corps feared that having women serve in combat roles would negatively impact the (masculine) culture of the Marine Corps (Meelarp, 2006). Others argued that the inclusion of women might transform the values of the military in a positive light – one that would highlight pro-social values of peacekeeping and humanitarianism (Whitworth, 2004). Whitworth describes the debate that took place in the 1990s about women in the military as producing a crisis between the idea that peacekeeping was a force for good and the prime vehicle for humanitarianism, and the idea that the soldier was the embodiment of the masculine virtues of strength, courage, and virility (p. 16). Whitworth states that by the mid-1990s, incongruities between the images of the welcome peacekeeper and the hyper-masculine soldier began to reach a critical juncture (Whitworth, 2004). Charges of sexual exploitation and physical violence against women by peacekeepers on mission, including by peacekeepers in Cambodia, East Timor and Kosovo, had begun to crop up so often that even the United Nations itself was beginning to acknowledge the problem (Kent, 2007; Koyama and Myrttinen, 2007). When the image of the benign peacekeeper on a humanitarian mission began to unravel, an image “upon which a number of national militaries, and national identities have been constituted”, this “precipitated a backlash from various centers of power,

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aimed at defending traditional images and understandings of both war-making and peacekeeping” (Whitworth, 2004, p. 16). Many feminist critics responded to this crisis by challenging the biological essentialism that justified the hyper-masculine values of the military (Ehrenreich, 1997; Enloe, 2000). Feminist ire was provoked, for example, when Captain Meelarp justified women’s exclusion from serving in combat by stating that “being a rifleman is not innate for females” (p. 7). Liberal feminists might well challenge this biological essentialism by inquiring into the manner in which the skills involved in cleaning and firing a rifle are innate for males or by asserting that females are often just as good, or better, markswomen. What was lost in this debate is the impact this militarism has on those at the receiving end of the rifle barrel. In other words, the role of the military, its values, and the true impact of peacekeeping and counterinsurgent operations on civilian populations – issues of most concern to non-Western women – have been submerged in the debate over whether women were just as effective as men at fighting wars and just as deserving of leadership positions within the military – issues of most concern to upwardlymobile Western women. Accordingly, the soul-searching over the place of the military and the ethics of its security operations that might have taken place has been missed by both military elites and their liberal feminist critics. Instead, military authorities chose to better incorporate women into the military, so as to be seen to be keeping in step with modern ideas about equal rights for women. By doing so, the military did not need to transform itself or its values; instead, it could make use of liberal feminism to instill hyper-masculine values in its female soldiers as well, while repackaging them in terms of women’s empowerment and equal rights. This enabled the military to increase its recruiting numbers and to avoid criticisms that it was backwards and discriminated against women, all while maintaining its culture of violence. This was exemplified in the US Army’s advertising campaign “Army Strong”, launched in 2006, which carried the tag line, “There’s Strong. Then There’s Army Strong.” Many of these ads prominently featured women (Minitrez, 2008; Quenqua, 2008). This campaign promotes the values of courage, loyalty, and duty, mixed in with a culture of violence, as being attractive to women who wish to become truly equal with men in one of the last bastions of male privilege in Western societies. Some of the advertisements portrayed the military as a helping profession, with one depicting a group of heavily armed combat soldiers and carrying the tag line, “Standing up for yourself is strong. Standing up for those around you is Army Strong” (Joyner, 2009). The US Navy went further, launching a new advertising campaign and motto, “America’s Navy: A Global Force for Good™” (Connors, 2011). Similarly, a recent recruitment campaign from the Canadian Forces avoids any reference to arms or armies – even going so far as to change the official name from “The Canadian Armed Forces” to simply “The Canadian Forces” – and it seamlessly integrates domestic search and rescue operations, international humanitarian assistance, and military combat manoeuvres in Afghanistan, thus blurring the

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distinctions between the provision of humanitarian aid and combat missions in a conquered land (Canadian Forces). Instead, the potential security provider is urged to “Fight Fear, Fight Distress, Fight Chaos – Fight with the Canadian Forces.” Similarly, the Canadian Forces’ “Combat Camera” presents a gallery of images of female Canadian soldiers in full combat gear fighting in counterinsurgent operations in Afghanistan (Combat Camera, Photo IS2004–9002a, 2004; Combat Camera, Photo IS2003–2572a, 2003; Combat Camera, Photo AR2006-H031–0008a, 2006). Combat Camera visually depicts the synthesis between masculine militarism, liberal feminism, neoliberal values, and the neo-colonial nature of the Afghan occupation. Images of female soldiers in Kevlar vests and full combat gear depict them as strong, assured, and larger-than-life. To highlight this, female soldiers are often depicted against a backdrop of small, thin, ragged Afghan boys. In one photo, female soldiers pose for a picture commemorating International Women’s Day in which a large group of women in fatigues, smiling broadly, stand above their elderly Afghan gardener, who is dressed in ragged clothing and kneeling on the ground, and whom they have reportedly named “Popeye” (Combat Camera, Photo IS2006–1034, 2006). One photo highlights the provision of humanitarian and medical services to local Afghan women by depicting a female soldier searching the clothing of two very young Afghan girls – the dehumanizing price of receiving Western charity (Combat Camera, Photo AR2006-H037–0026a, 2006). In another photo, local Afghan women are depicted from far away, their burkas billowing against the backdrop of the desert, a pleasing and anonymous part of an exotic landscape (Combat Camera, contact author for reprint). In contrast to the small, anonymous, and de-individuated portrayals of Afghan men and women, female soldiers are always portrayed on Combat Camera with a name, a home town, and a short biography. This ensures that they are humanized and individuated, their stories made personal and important. Exemplifying the neoliberal and liberal feminist values of a soldier fighting in the global “Long War” (Graham and White, 2006), the image of the female soldier is important in describing the values that she is fighting for, values in which the freedom and liberation of women play a key role – and nowhere is she so liberated, so much a feminist, as when she is a soldier. This synthesis of the images of the hyper-masculinized soldier and the liberal feminist heroine has been useful to the governments sending Coalition troops into Iraq and Afghanistan, as it allows the occupations to be sanitized and repositioned as exercises in peacekeeping and nation-building. In the wake of the Cold War and the collapse of the international system that it sustained, the United Nations promoted peacekeeping as a more humanitarian alternative to traditional soldiering (Whitworth, 2004, p. 23). Peacekeeping was portrayed as a humanitarian response to growing anarchy and ethnic conflict, such as those that took place in the former Yugoslavia and Rwanda (Whitworth, 2004). However, this portrayal may have served to mask less benevolent interests. Data from the Correlates of War project indicates that the incidence of armed conflict actually declined in the 1990s, and the popularity of peacekeeping missions may have served to sustain national

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defence budgets that had lost their chief pretext with the fall of the Soviet Union. Whitworth also notes that the security sector gains financially when nations commit troops to peacekeeping missions, as the “United Nations compensates troopcontributing countries through a leasing agreement, and for militaries with lower relative operating costs (typically those from lesser developed countries), this can be very beneficial” (p. 34). Private military companies also benefit financially from receiving peacekeeping contracts from sending states, as well as the United Nations (Lynch, 2010). Peacekeeping provides post-authoritarian countries with the opportunity to rebuild their national militaries, as occurred with Argentina, Germany, and Japan, and allows them to “insert themselves into the global landscape as transformed, reconstituted actors” (Whitworth, 2004, p. 35). These powerful interests benefit when traditional soldiering is repackaged as peacekeeping and nation-building, with the further advantage that these latter functions can be performed by private actors and corporations, whereas the former cannot. This repositioning of the security sector in line with neoliberal values of privatization and responsibilization is an important aspect of the construction of colonial modernity. As Whitworth states, “If the discursive practices surrounding peacekeeping contributor countries established them as ‘normal’ nation-states, that could live up to their traditional obligations, it also inevitably told us something about the countries in which peacekeeping missions were deployed” (p. 38). The same criticisms have been levelled against proponents of the Responsibility to Protect (R2P) Protocol (O’Connell, 2010). The West’s vision of the civilian population at the receiving end of this reconfigured security apparatus is one of empty space, as in the Combat Camera photo of the Afghan women, upon which Western liberal values can be written. As Roxanne Doty states, “Within these blank spaces the West may write such things as civilization, progress, modernization, and democracy” (p. 11). In reality, the reconstruction efforts in Iraq and Afghanistan have produced remarkably few concrete results in building either basic infrastructure, basic rights, or governmental institutions (SIGAR, 2012; SIGIR, 2013). Both countries are ranked by Transparency International as being among the most corrupt nations in the world; not only this, but their rankings on the Corruptions Perceptions Index have dropped steadily as the reconstruction efforts have progressed (Transparency International Corruptions Perceptions Index, 2005, 2013). There has, therefore, been a marked deterioration in perceptions of corruption in these countries in this short space of time, which is correlated with the amount of reconstruction funds accumulating in their economies. John Sopko, the Special Inspector General for Afghanistan Reconstruction, told Lerman and Capaccio (2014) that, “Maybe the lesson here is: Don’t pour so much money into a poor country so quickly and maybe you won’t have unintended consequences. . . We are part of the problem. We opened the spigot.” Although these campaigns began with the rhetoric of fighting terror, assisting local populations, and bringing democracy and human rights, the neoliberal “mission civilisatrice” (Paris, 2002, p. 650) that grew out of the peacekeeping paradigm of the 1990s has not been able to accomplish any of these goals.

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The privatization of public force Liberal feminist and neoliberal values also foster an individualizing synthesis that has privatized the use of public force. One of the core principles of international law being reconfigured by neo-liberal and “new governance” values and management practices in the security sector is the public authority requirement. International as well as domestic laws have long required that only a legitimate public authority can initiate and wage war (International Conferences (The Hague), The Hague Convention IV, 1907, Article 1, Annex B). Once initiated, the in bello use of force is governed by a tightly-bounded and hierarchical chain of command, which ensures that the use of force is kept within the bounds of this public authority. In this traditionally liberal view of international relations, public force is morally justified because the state is itself a just institution – one that meets the liberal goals of providing liberty and security, and which legitimately represents the collective will (Galston, 1991; Rawls, 1993). The use of armed force has long been considered an “inherently governmental function”, or a “core governance function” (Harel, 2010, p. 396), as it involves the exertion of violence in the name of the public. Harel argues that core governance functions must be self-executing, in the sense that state agents must not interpose their own private or personal judgment, else the act will lose its public character (p. 398). State agents, such as soldiers in the military, must not scrutinize the decisions made by public authorities, and it is for this reason that soldiers are trained to be what Mark Osiel has termed “reflexively obedient” (Osiel, 1998, p. 947). If soldiers discard their blind obedience to public authority then their acts cease to be acts of state, acts committed in the name of the public; such acts would be without moral or legal justification. The self-executing nature of inherently governmental functions expresses an ideal view of state authority and the means by which the use of public force is justified. Neoliberal values of privatization and responsibilization have significantly impacted the military chain of command and the ways in which soldiers use increased personal discretion to make decisions to use force. Since the mid nineteenth century, the administration of military force has been governed by the chain of command, composed of a series of offices such that each holder is directly responsible to, and takes orders from, the office above. This traditional doctrine of the chain of command requires that it be hierarchical, clear, and unequivocal at all times, and that there be unity of command in the form of a single, clearly identifiable commander for each operation; there must also be continuity of command, with a clear succession of command at all levels (Department of National Defence Canada, 2008, para. 0507). It is this chain of command that maintains the use of military force as an inherently governmental function, ensures that the government has ultimate control over the armed forces, and fulfills the requirements of international law. However, significant changes in military administration governing the use of force have been introduced, and they have been shaped and justified by neoliberal

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mentalities of governance that have gained influence since the 1980s. They have been embodied in a succession of management philosophies that have come to be known as “New Public Management”, “New Governance”, and “networked governance” (Lobel, 2004; Salamon, 2002). They have led to a wave of government reforms that import techniques of business management into public administration, accompanied by the privatization of many government functions – including in the army – in order to promote efficiency and competition (Fukuyama and Shulsky, 1997). Neoliberal governance is driven by goals and outcomes – “missions” (Osborne and Gaebler, 1992, p. 19) – rather than by enforcing strict rules and regulations, as it seeks to empower subordinates by decentralizing control out of the hands of leaders and government officials. The features of decentralization, privatization, a minimal state, and corporate or “entrepreneurial” governance and self-organizing systems rather than centralized and top-down management inform the new governance model (Rhodes, 1996). The impact this has had on privatization and the outsourcing of functions to private military and security companies – horizontal outsourcing – has been discussed (Abrahamsen and Williams, 2011; Avant, 2005; Johnson and Shearing, 2003), but less well-researched are the vertical effects this has had upon the use of force by public security providers. The new governance mentality subsumes and creates space for a range of privatization principles: efficiency, flexibility, and decentralized decision-making, among public actors, as well. These entrepreneurial mentalities of governance ask that agents be proactive and directed toward identifying and preventing problems before they emerge (Osborne and Gaebler, 1992, p. 20). Successful entrepreneurs in the service of the public are defined by the “extent to which they define risks and contain them” (p. xx). Neoliberal mentalities of governance have significantly impacted military governance in combat operations by decentralizing control and by promoting discretion and freedom of action down the chain of command. This is instituted in “Intent-Based Orders” and “Standing Rules of Engagement”, which were shaped to adopt the features of a modern organization transformed in line with new governance mentalities. Intent-based, also called “mission-type” orders, are defined as “commands to perform a mission without specifying how it is to be accomplished” (US Department of Defense, Dictionary, 2014, p. 46). Rules of Engagement “are standing directives that specify the circumstances under which soldiers will engage in combat activities and use force in a combat zone” (US Department of Defense, Dictionary, 2014, pp. 240–241). These new military doctrines devolve decision-making onto individual soldiers, which increases the risk that a soldier could use lethal force against local civilians and within their communities. Soldiers can use force in self-defence if they perceive a hostile intent on the part of a civilian or if they perceive a hostile act as coming from the civilian (Chairman of the Joint Chiefs of Staff, 2005, Enclosure A, para. 2(a)). Rules of Engagement issued to soldiers feature a “prominent notice regarding the right of self-defense” (Martins, 1994, p. 33). As Martins states, “This cautionary rule typically appears at the very beginning of written ROE, often in capital letters. One

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common version states that ‘nothing in these rules limits the right of individual soldiers to defend themselves or the rights and responsibilities of leaders to defend their units’ ” (Martins, 1994). This disaggregation and decentralization has transformed the military’s command control structure by pushing decisions to use force as far down the chain of command as possible, thus individualizing and privatizing decisions to employ force. Now, it is not a matter of soldiers being “reflexively obedient” (Osiel, 1999, p. 3) and following orders, but soldiers have been responsibilized to make individual decisions to use force in their own personal self-defence against potential threats in the combat zone. Such views have been particularly influential in the development of the US Marine’s new Counterinsurgency Field Manual of 2006. The 2006 US COIN Manual is a significant reconceptualization of military doctrine for waging complex irregular warfare, and is likely one of the most significant shifts in military doctrine since the nineteenth century. Similar COIN Manuals have subsequently been adopted by the United Kingdom (Ministry of Defence, 2006), Canada (Department of National Defence Canada, 2008), France (Coste, 2010), Germany (German Army Office, 2010), and NATO (North Atlantic Treaty Organization, 2011). Intent-based orders and decentralized and individualized decisions to use force are cornerstones of these new COIN doctrines, where their main function is to empower subordinates in the field to make use of force decisions during counterinsurgency operations: Thus, effective COIN operations are decentralized, and higher commanders owe it to their subordinates to push as many capabilities as possible down to their level. Mission command encourages the initiative of subordinates and facilitates the learning that must occur at every level. It is a major characteristic of a COIN force that it can adapt and react at least as quickly as the insurgents. (Department of the Army, 2006, para. 1–146) The US COIN Manual states that the primary objective of any counterinsurgency operation is to foster the development of effective governance by a legitimate host government (para. 1–113). The excessive use of force by counterinsurgent forces can weaken the legitimacy of a host government that supports the counterinsurgency (para. 1–132). On the other hand, the use of force in counterinsurgency operations is governed by intent-based orders and standing Rules of Engagement, in which individual front-line soldiers are expected to use initiative and judgment to accomplish mission goals, and exercise force in their own and their unit’s selfdefence. This can have the effect of increasing their use of force, and this in turn increases the chance of violent reprisals against the counterinsurgent forces. Condra and Shapiro (2012) performed a study of civilian killings in Iraq, using data from the Iraq Body Count data set from 2004 to 2009, and found that “Coalition killings of civilians predict higher subsequent levels of insurgent attack directed against Coalition forces” (p. 168; see also Condra et al., 2010). The authors put

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forth a theory that local civilians are key to both insurgent and counterinsurgent efforts; when Coalition forces killed civilians, the local population was more likely to withhold important information and intelligence from Coalition forces, and more likely to assist insurgent groups (p. 168; see also Condra et al., 2010). Condra and Shapiro tested for causality, and they concluded that the relationship between Coalition-caused civilian casualties and subsequent insurgent attacks against Coalition troops was probably causal (p. 176). Killing civilians weakens the support of the local population for the counterinsurgency and the host government that it supports, and makes civilians more likely to lend support to the insurgency. The over-use of force in self-defence can therefore make security force more, and not less, vulnerable to attacks, the more their violence is directed at the local civilian population. Not only does this foster a cycle of violent reprisals, but it exposes a fundamental inconsistency at the heart of counterinsurgency doctrine and its claims to efficacy: its strategies are designed to justify the use of force against nonstate actors – civilians – in order to build legitimate governance, yet the prospects of building stable and legitimate governance among the civilian population are decreased to the extent that force and coercion are deployed against them. The ill-effects of policies of decentralization and responsibilization can also be seen in another counterinsurgency tactic used by US forces in Iraq and Afghanistan – the policy of arming and training members of the local population to form militia to fight an insurgency. In Afghanistan, US forces armed and empowered local war lords (Gopal, 2014), and in Iraq in 2007–08 the US government armed and mobilized more than 90,000 local Sunnis to fight al-Qaeda, forming militias known as “the Awakening” (Nidiffer, 2012, p. 1). US policymakers were operating on the theory that the local population would be thereby empowered and have a stake in quelling the insurgency (Nidiffer, 2012, p. 22). Yet, many of these militia fighters went on to join ISIS. As stated by retired US Army Colonel, Derek Harvey, after the central government of Iraq failed to integrate these militia into the national security forces, there were now “thousands of their sidelined former members either neutral or aligned with the Islamic State of Iraq and Syria in its war against the Iraqi government” (Harvey and Pregent, 2014). Several commentators believe that this has weakened the host governments for whom counterinsurgent forces were attempting to build support and, combined with the excessive levels of corruption that developed within those governments, has been a contributing factor to the ease with which Iraqi forces were overpowered by ISIS (Clemons, 2014; Reynolds, 2014). When the city of Mosul fell to ISIS militants on 6 June 2014, corruption among senior military officials meant that the city was short of supplies and ammunition, as well as troops themselves. Much of this was due to the practice of “ghost soldiering”, whereby soldiers and officers would remit half of their pay to their officers in return for not reporting for duty (Parker et al., 2014). Many soldiers who were on duty had no weapons or ammunition, as these had already been looted by their commanding officers. At the same time, ISIS itself grew out of the Iraqi insurgency instituted after the fall of the central government in 2003 (Hussain, 2015). Like the Sunni militias, several ISIS

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fighters armed themselves with US-made weapons and equipment they were able to procure in a post-invasion Iraq that had been flooded with armaments (Chulov and Lewis, 2014). Both sides of the conflict were therefore the product of US policies in the region, at times even fighting one another with US-supplied weapons. Much of this present crisis stems from the US practice of moving control over military force away from centralized national authorities, and into the hands of private actors who, as a result, cannot be controlled. This privatization and restructuring of power exposes another paradox of neoliberal security governance: that the public authority justification for the use of force could be lost as a result of these activities, and along with it that state’s monopoly on the legitimate use of force. This, in turn, increases the power and legitimacy of non-state actors’ violence. Women are an integral part of this restructuring of power, both through their increasing presence in security forces, and in the images of women and power that are used to justify these wars. As public force is privatized, the distinctions between combat and non-combat roles have been blurred, and certainly women have killed and been killed in counterinsurgent actions in the Middle East (Oliver, 2007, p. 1). The courts martial of Lynndie England and Sabrina Harman over abuses they committed against prisoners in Abu Ghraib prison, Iraq, remind us that women have also been involved in war crimes, torture, and abuses of a sexual nature against prisoners (Oliver, 2007, p. 19). Yet these women have largely disappeared from our narratives about the Iraq war. At the same time, crimes committed by female terrorists have received a good deal of interest in the media, where their characterizations are frequently tinged by racist and sexist stereotypes. Tashfeen Malik – who along with her husband perpetrated a mass shooting in San Bernardino, California on 2 December 2015 that killed 14 people and wounded 22 – has been portrayed as an educated woman, and a “typical housewife” staying home to look after a young infant. She represents one end of this spectrum (Karlamangla et al., 2015). At the other end is Hasna Aitboulahcen, who carried out a suicide bombing during the terror attacks in Paris on 13 November 2015, and who was portrayed in the media as a “party girl”, who liked to drink alcohol, and who was thought to have been assisting a male relative, one of the leaders of the attack (Sawer and Samuel, 2015). Photos were reprinted from social media showing her in suggestive poses (Sawer and Samuel, 2015). Our portrayal of violence as a Western liberal value for women may also have come full circle in motivating many so-called “brides of ISIS” – Western women who move to Syria to marry militants and join the Islamic State. Jaffer found that many of these women were born or raised in Western countries, or shaped by a Western education; many were strongly moved by violence against Muslims, and used the language of “human rights”, “girl power”, and “sisterhood” while sharing stories of “women in niqabs, with weapons, charging into battle” (Jaffer, 2015). Our frequent reliance on racial and gender stereotypes in this debate signifies our ambivalence about whether or not women who use violence are exercising their agency. This allows us to preserve our preferred cultural narratives concerning the masculine nature of such

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aggression, and the Islamist nature of such aggression, without ever critiquing the aggression that exists in human nature. This shores up the Hobbesian view that force and coercion are just and necessary to stave off the violence and anarchy of the state of nature, thus maintaining the legitimacy of security operations that “fight chaos” and so maintain the social structures of the power elite. Public violence is still characterized as being for the greater good. The only difference is that women and private forces have been empowered to act on behalf of these authorities as well.

The effects of counterinsurgent operations on female civilians The privatization of public force has disrupted the principle that military forces distinguish between civilian and military targets, and has permitted them instead to exercise their “inherent right of self-defence” against any risks they perceive as coming from the surrounding civilian population. Martins states that the current boilerplate self-defence clause now prominently displayed in all Rules of Engagement was first enacted after the 1983 Barracks Bombing in Lebanon, as a response to that extraordinary emergency situation, but later came to be institutionalized in all theatre Rules of Engagement as a standing order (Martins, 1994, p. 61). This shifts many of the risks of the conflict away from security forces and onto the surrounding civilian population, and women are placed at particular risk. Turpin (1998) found that between the Second World War and 1998 civilian casualties increased from 50% of all casualties to 90%, and the majority of these victims were women and children (p. 3). Morbidity and the ill-health effects of prolonged conflict and dislocation also weigh heavily upon women. Many of these ill effects are worsened when the conflict is prolonged rather than acute, as this both causes more substantial displacement and dislocations among the civilian population and facilitates the gradual collapse of social institutions, such as healthcare and education. Estimates of civilian morbidity in Iraq and Afghanistan have not been properly tracked. Different estimates have been offered to fill this gap, and they have been beset by much criticism and controversy. The Iraq Family Health Survey of 2006–07 undertaken by the World Health Organization tracked traditional female indicators of maternal health, as well as levels of education, employment, and domestic violence, through the use of household questionnaires. One of the goals of this study was to bring greater attention to women’s health needs within the Iraqi public health service (World Health Organization, 2008, p. 4). The study found that male mortality rates had doubled due to the war, and female mortality rates had increased by 30% (p. 31). The survey found that one in eight deaths were due to violence, whereas violent deaths had been rare before the war (World Health Organization, 2008). While the survey did not track those who were injured as a direct result of violence, it did track catastrophic health costs, many of which were due to acute in-patient hospital care for trauma (p. 28). Such care used a good deal

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of resources in the fractured Iraqi healthcare system, leaving fewer resources for other health needs. Furthermore, a quarter of all Iraqi households reported financial hardships due to catastrophic health payments, with many more families left unable to pay for catastrophic health services at all due to a lack of funds (p. 27). The picture that emerges is one of a large number of households requiring medical treatment due to catastrophic injuries, with many more not receiving adequate care, leaving fewer public and private resources for other kinds of medical treatments or social goods (Giacaman, 2015). Unfortunately, the recent increase in violence in Iraq and neighbouring Syria will only exacerbate these problems. It is estimated by the UNHCR that there were approximately 4.3 million refugees and internally displaced persons inside Iraq as of December 2015 (UNHCR Iraq, 2015). In neighbouring Syria, there are approximately 8 million internally displaced persons, and about 4.1 million refugees, with many of these persons lacking access to basic housing, healthcare and education (UNHCR, Syrian Arab Republic, 2015), producing a refugee crisis that is largely the result of foreign policies that promote regime change and armed conflict in the region. This increase in morbidity, mortality, and dislocation of the civilian population is a result of the weakening of the principle of distinction and the failure of security forces on all sides to shield civilians from the worst effects of armed conflict. This is greatly facilitated by the tenets of modern counterinsurgency doctrine, as well as the lengthy nature of these campaigns. The privatization of public force, and the individuation and responsibilization of individual security providers represents an attempt to shift the risks of these security operations away from the security providers, and onto the civilian population. As Condra and Shapiro’s study suggests, not only do these counterinsurgent tactics fail to protect security forces, they may actually increase the risks of escalating violent attacks and reprisals against them. In addition, the privatization and responsibilization of violence produces a pattern of attacks that are seemingly random and arbitrary in nature. The perception among the civilian population that the attacks are random can serve to produce widespread terror and social dislocation, as civilians may see fleeing as the only rational response to arbitrary violence. Even when the use of force is minimal, the result can be extremely disruptive to normal social functioning. Civilians are unsure of how to behave, are mistrustful of security forces, and are more likely to shut down their day-to-day activities and to flee affected areas. They are also more likely to behave in ways that that are perceived by security forces to be “erratic” or “unusual”. Fleeing checkpoints or areas with recent IED explosions can be perceived by soldiers as evidence of wrongdoing, and could subject those persons to attack (Slater and Ball, 2010). Civilians in a conflict zone will attempt to discern the norms, guidelines, and expected behaviour that will allow them to coexist with security forces in ways that minimize their risk of harm. When security forces violate these norms, civilians no longer have any guide as to their expected behaviour, and they thus appear to security forces to be a much riskier population to police. For example, some of the Iraqis who spoke to Mark Kukis (2011) to construct an oral history of the

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2003–13 Iraq War tell of a number of such situations. Farid Hadi Abdul Zahra describes one such situation in which US forces failed to observe the customary principle of international humanitarian law that civilians waving white flags are not to be attacked. This rule was well-understood by the Iraq population during the initial 2003 invasion. As Farid states, “Most of the cars on the road had some kind of white cloth waving from them in order to show the Americans they were peaceful. The guys in the truck had done the same, but the cloth had blown off and was in the bed of the truck where we sat” (p. 27). In the early days of the war, Iraqi civilians attempted to use long-standing norms to distinguish themselves from combatants. For Farid, this failed to protect him. He continues: We had no idea where the firing was coming from or why we were being attacked. But it seemed as though they bombed the vehicles at the head and rear of our line in order to trap the rest of the cars and destroy them one by one. That was my guess. The driver of the truck must have thought the same, because suddenly he slammed the accelerator and began speeding around the cars in front of us to try and get away. I reached into the bed of the truck and found the fallen white cloth and held it up as we raced ahead. (p. 28) Farid’s hand was taken off by a bullet as he held out the white flag (Kukis, 2011). Such incidents become widely known; civilians no longer have recourse to accepted methods of distinguishing themselves, and they have no incentive to do so. The synthesis between neoliberal and liberal feminist values results in a widely-perceived war story that masks the violence of the conflict and the result it has on the lives of women living in the conflict zones. It is often merely assumed that the security operation will improve women’s lives, and that they will benefit from the greater assumption of liberal feminist values in their own society. As Hunt and Rygiel (2008) state: “Moreover, this war story about women’s liberation deflects attention away from the violence that women, in particular, suffer as a result of war, including sexual violence, the loss of male family members, and the burdens of caring for the young, old, and injured” (p. 10). This happened, for example, to Zahra Sangur and Fackria Khata, who lost their husbands and sons when they were murdered by local death squads (Kukis, 2011, p. 143). They had to spend more time caring for children and injured family members, thus disrupting their family relationships and closing off economic activities outside of the home. Economic collapse in counterinsurgent wars can lead to long-term unemployment, so that families suffer poverty when breadwinners are out of work, and women cannot find the means to earn an income. Strategies to adapt to this can include finding work within the sex industry, which has been found to increase when soldiers and peacekeepers are present (Kent, 2007; Koyama and Myrttinen, 2007). Serious injuries may make it difficult for young men and women to find marriage partners, forcing them to remain living at home with their extended families (Kukis, 2011, pp. 75, 155). Rana Abdul Mahdi, a young Iraqi woman who

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was injured in an insurgent bombing, was rejected by her husband because she could no longer bear children and had suffered the loss of both of her legs (Kukis, 2011, p. 179). At the time she spoke to Mark Kukis, she was attempting to seek compensation, or receive a stipend from the government as a victim of terrorism (Kukis, 2011). The violence in Iraq will have a long-term impact on family dynamics and demographics there. The liberal feminist war story also obscures the strength and dignity that women show in counterinsurgent war zones. It tends to characterize them as victims of an unjust culture, rather than as active participants in their own society and full human beings in their own right. Usra J’Bari Hadi, the matriarch of a large farming family in Iraq, reminds us of this with her own story (Kukis, 2011, p. 154). The farming community in which she lived became beset in 2006 by sectarian violence and illegal checkpoints set up by local militias. Iraqi government forces failed to assist the community. About 100 members of the community led a demonstration and sat in the middle of the main road, stopping all traffic in the area. An army commander came to speak with them, but separated out the women, placing them on the other side of the road before beginning to negotiate with the men. The commander did little about the militias, only agreeing to return in three days’ time. Usra continues, telling us: I had heard enough. I crossed the road alone and in front of my father and my husband told the commander in essence, No way. You don’t leave us here for three days. If you think we can stay safe for that long, then send your family to stay with us. At the very least, I said, if you are going to leave us today, give us your guns and ammunition so we might have a chance. And then I walked away from him. The commander followed me after a minute. When he caught up he said, Okay, where do you suggest I set up checkpoints? I suggested a spot and he left six or seven men there that day. (Kukis, 2011) Women such as Usra Hadi do not need to be taught how to exercise fortitude or how to lead their communities. On the contrary, we have much to learn from such women and the adversities they have faced.

Conclusion Privatization and responsibilization in the management of counterinsurgent warfare have shifted the responsibility to make decisions to use force onto individual security providers. The violence thereby produced has a random and arbitrary character, which is far more likely to cause widespread fear and dislocation among the surrounding civilian population and disrupts the ability of security forces to work with the local population to stem the tide of violence. This is the violent face of the new imperialism of the new governance – a form of hard power that enforces the ideologies and practices of neoliberal sovereignty. This results in a

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self-sustaining cycle of violence, including attacks on civilians, reprisal attacks on security forces, and the empowering of local militias where state security forces are weak. This feeds the conflict, while enhancing the vulnerability of both civilians and security forces alike. This global Long War, and the permanent state of emergency that it strives to maintain, is transforming the cultures and the social structures of both sending and receiving states on a fundamental level. This chapter has sought to examine some of the specifically gendered aspects of these transformations on women. This includes cultural narratives concerning female soldiers as the feminist liberators of women among illiberal peoples. The liberal feminist soldier offers an alternative and much less objectionable vision of these conflicts, enabling them to be characterized in the popular consciousness as wars of peacekeeping, nation-building, and the liberation of women. Such narratives help to sustain and prolong the state of emergency by masking its violent and imperial nature. The results of this kind of counterinsurgent warfare have not had the intended effect in Iraq and Afghanistan, and this was both predicted and predictable. One possible remedy for this is to take violence back out of the hands of private actors and individual decisionmakers, and subordinate it once again to the public rule of law. At present, such a step appears to be a prerequisite to placing limits on that violence. The challenge will then be to ensure that this is, in fact, done.

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17 HARMED SELVES HARMING OTHERS – A VULNERABILITY APPROACH TO THE CRIMINAL JUSTICE SYSTEM Ulrika Andersson1

Introduction In recent decades violence in intimate relationships has garnered considerable attention in both media and legal doctrine in Sweden. The demand for state responsibility and prevention of this violence has been strong and loud, especially in the last five to ten years (e.g. Amnesty, 2010). As in many other legal systems, this violence had not been an explicit issue for the criminal justice system until some 30 years ago; until then it was considered more or less a private matter.2 Gradually the attitude towards public interference in intimate relationships has changed, both within and outside the legal system. At the moment, public authorities such as the police, social services, and the courts are being heavily criticized. For example, in some high-profile cases policemen and judges have been blamed for missing important aspects of the victim’s vulnerable situation and the ongoing violence, thus indirectly causing the death of the women victims. In this chapter, I analyze one of these cases in order to highlight the notion of autonomy and vulnerability in public and private domains within the criminal justice system. When these types of cases encounter the criminal justice system, two seeming opposites are confronted: autonomy and vulnerability. In determining whether a penalty should be imposed, autonomy is vital, in the sense that rationality and freedom of the bounded individual is fundamental for criminal responsibility (Lacey, 1998). Violence in intimate relationships, on the other hand, is clearly related to the vulnerability of the individual exposed to violence. This vulnerability 1 Associate Professor of Criminal Law, Lund University Faculty of Law. 2 For example, in 1982 the prosecution rule for non-aggravated assault not committed in a public place was changed, and indication from the victim or a special reason for prosecution in the public interest was no longer needed. This change was of particular importance for the possibility to prosecute violence in intimate relationships.

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represents something contextual, where power relations are crucial, and is also connected to its structural context (Andersson, 2009, 2011; see also Fineman and Mykitiuk, 1994; MacKinnon, 1989; Niemi-Kiesiläinen, 2004; Smart, 1995). Thus there is a clash between autonomy and vulnerability, a clash that I analyze in relation to private and public domains within the criminal justice system. I use the concept of the vulnerable subject advocated by Martha Fineman (Fineman, 2008). It is used as a theoretical approach as well as a methodological tool. The vulnerable subject entails both autonomy and vulnerability, so I find it useful to transcend the conflict between autonomy and vulnerability. In the area of criminal justice the state has been more reluctant to give away power to private actors than in other fields of the Swedish welfare state (Brodin, 2015; Mattsson, 2015a). The powers within the criminal justice system are often described as the most repressive of all coercive state powers (Asp, Ulväng, and Jareborg, 2013). Sweden and the other Nordic countries have a tradition of leaving this power to the state. This could be related to the view of the criminal legal subject, which is seen as autonomous, independent and free to make choices to act in a way that is criminalized. Implicitly, repressive state power is not to be used in relation to vulnerable individuals. Furthermore, only the state should pursue the most repressive power that forms the basis of the criminal justice system. Leaving this power to the state is supposed to ensure the use of the rule of law and legal certainty (Friedman and Parenti, 2003). However, some parts of the powers in the criminal justice system actually have been given away to private actors. Examples include the services for those who are suffering from vulnerability caused by violence in an intimate relationship. Women’s crisis centres are run mostly by private organizations (Helmersson and Jönson, 2013). So the question of privatization in criminal justice is not as clear-cut as it might seem, and clearly there is a connection between autonomy and vulnerability on one hand and criminal justice power in public and private domains on the other. The more autonomy a subject is expected to have, the more likely it is to be handled by the powers in the public domain. In this chapter, I analyze the notion of autonomy and vulnerability in the criminal legal process in Sweden. In this context, I discuss what kind of power is kept within the state and where privatization is to be found. My aim is to explore the construction of vulnerability and autonomy in relation to the individuals confronting the criminal legal process. As an example in which vulnerability is a crucial issue and where questions of private and public treatment might be found I have chosen a case of lethal violence in an intimate relationship. I analyze the legal treatment of the individuals involved in the four judgments associated with this case. In particular I analyze how the individuals’ vulnerability is constructed in relation to autonomy, and vice versa. The following section provides a brief introduction to the Swedish criminal justice system. Thereafter, I present my theoretical approach to the criminal legal subject, followed by my analysis of how autonomy, the base of criminal responsibility, and vulnerability, which needs criminal legal protection, are constructed

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in four judgments on violence in an intimate relationship. The chapter concludes with a discussion about the kind of power that is kept in the public domain and the kind that is given away to private actors.

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The criminal justice system A crucial starting point is that only the state has the power to criminalize an act. In Sweden, the main legislator in this area is the parliament.3 The main penal code, Brottsbalken, defines the different crimes and the penalty each crime can incur. There are two main different penalties in Sweden: fines and prison. There are also penalties that under certain circumstances can be decided upon instead of prison, such as probation, suspended sentences or community service. For young people between the age of 15 and 20, certain rules apply. Special reasons are needed to put young people in custody and prison, and there are also certain so-called discounts when the penalty is decided upon. There are also special penalties for young people, such as juvenile care (ungdomsvård ), youth service (ungdomstjänst), and closed juvenile care (sluten ungdomsvård ) (Swedish Penal Code, Ch. 32). Moreover, the starting point is not to put people suffering from severe mental disorders in prison; for this, extraordinary reasons are required. The preference is for this group of people to be treated in forensic psychiatric care.4 The general courts, the district courts, the courts of appeal and the Supreme Court decide whether or not the defendant should be found guilty and what the penalty should be. The penalty is executed by the public authorities; these are the correctional agency (kriminalvårdsmyndigheten) when it comes to imprisonment, and the probation agency ( frivårdsmyndigheten) in cases of probation, suspended sentence or community service. Unlike the Swedish social welfare system, the criminal justice system contains few possibilities for private initiatives. Traditionally, there have been very few private actors in this area of the Swedish welfare state. At first glance, this seems still to be the case. Most of the actors – the police officers carrying out the criminal investigation, the prosecutors prosecuting the case, the judges deciding the cases at trial, and the officials at the correctional and the probation agencies – are provided exclusively by the state. But, if we take a closer look, we see some private actors even in the field of criminal justice. For example, women’s crisis centres have been established through private initiatives. However, these have subsequently been financed in part in various forms by the state or municipalities, and service is also provided by the state; for example, there is a national telephone support line for women who have been subjected to threats and violence.5 Furthermore, different kinds of victim and witness support are run by private organizations. 3 In Swedish Riksdagen. Also the government has the competence to criminalize exceptionally. 4 Swedish Penal Code, Brottsbalken, Ch. 30, para. 6 and Ch. 31, para. 3. Extraordinary reasons could be the severity of the crime, or if the accused does not need psychiatric care. 5 See http://kvinnofridslinjen.se/index.php?page=startpage.

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The punitive field has also opened up for private actors, for example within the correctional agency, regarding different treatments. The former minister of justice stated some years ago that this is fruitful and can make the work more efficient. However, she claimed, “in the future, all activities involving the exercise of public authority interfering to a greater extent should also be a task for the public”.6 All Swedish prisons are still run by the state.7 However, a discussion is going on about private alternatives, in which the prisons in the US are sometimes used as a bad example.8 After some prison-breaking from high-security prisons some years ago, there have also been political proposals, suggesting attempts with two or three private prisons for a certain period, for the purpose of evaluation.9 Many defendants in Sweden have a right to public defence counsel, provided by a private lawyer who is paid by the state. For example, a young defendant has a right to a public defender when under 18 years of age (unless there is no need), when accused of a serious crime or when the case is difficult in some way (Swedish Code for juvenile offenders, para. 24, and the Swedish code of judicial procedure, Ch. 21 para. 3a). However, the defence attorneys all run their private businesses. The system with state lawyers was abolished in Sweden some decades ago. Accordingly, private actors are easily given room when it comes to defending individuals from the repressive power held by the state. Up until some 30 years ago, the view of criminal justice – with the defendant as the only party – was also the dominant view. This has naturally formed the view of the criminal legal subject described in the next section.

The liberal subject in criminal law In this chapter, I apply Martha Fineman’s theory of the vulnerable subject to the field of criminal legal justice and use it as a basis for my methodological approach. Instead of taking for granted the autonomous subject presupposed in criminal law, I question it by using the vulnerable subject proposed by Fineman. It is my intention to transcend the conflict between autonomy and vulnerability mentioned above. The vulnerability thesis was largely developed as a criticism of the notion of autonomy central to the view of the liberal legal subject (Fineman, 2004, 2008; see also Fineman and Grear, 2013). Taking as a point of departure 6 See http://beta.riksdagen.se/sv/Dokument-Lagar/Fragor-och-anmalningar/Svar-pa-skriftliga-fragor/ Privata-aktorer-i-kriminalvard_GV12554/ (in Swedish). 7 See http://www.kriminalvarden.se/swedish-prison-and-probation-service for information on Swedish Prison and Probation Service. For a discussion on human rights and private prisons in Western countries, see Friedman and Parenti (2003). 8 se e.g.: http://www.fria.nu/artikel/1671.(in Swedish) See also a parliamentary discussion: http://www. riksdagen.se/webbnav/?nid=67&doktyp=fr&rm=2007/08&bet=554&dok_id=GV11554 (in Swedish). 9 http://www.riksdagen.se/sv/Dokument-Lagar/Fragor-och-anmalningar/Fragor-for-skriftliga-svar/ Privata-aktorer-i-kriminalvard_GV11554/ (in Swedish).

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the idea that vulnerability should be understood as universal and constant, and as such inherent in the human condition, Fineman proposes that the vulnerable subject should be used as the heart of social and state responsibility. The areas of law she refers to are mainly family law, social law and labour law. Here I make an attempt to use the vulnerable subject as an approach to the criminal legal process. Fineman talks about our personal and social lives being “marked and shaped by vulnerability” and that a “vulnerability analysis must have both individual and institutional components” (Fineman, 2008, p. 10). I agree with this idea and believe it will make us move away from focusing on individuals to instead putting more focus on institutions (Fineman, 2008, p. 21). Using the vulnerable subject as a starting point in the criminal process also implies an awareness of power relations, allowing us to take structural factors into account. This might shed some new light on cases and improve the individual’s chances of making demands for legal protection. When a specific situation is explicitly connected to structural aspects of power, such as gender inequality, this may have a positive effect on legal practice. The chances of noticing that the individual is vulnerable would also be improved. The following analysis of how vulnerability is handled in relation to lethal violence within the criminal legal process will be an example of how individuals are “positioned differently within a web of economic and institutional relationships” and how our vulnerabilities have great differences at the individual level (Fineman, 2008, p. 21) The criminal legal process shapes the individuals involved in the proceedings in certain ways. I analyze how the defendant and the victim are positioned in relation to the courts’ interpretations of autonomy and vulnerability. The traditional notion of the legal subject assumes that this subject is competent, able to negotiate, and can make rational choices. This is also the case with the criminal legal subject, which is supposed to be autonomous, free, and rational – characteristics that form the basis of criminal legal justice, legitimizing its use of repressive power in relation to the individual. There is a difference, however. Free and rational choices are usually respected and have positive connotations in most contexts, because they are based on autonomy and competence in general (see Ramsay, 2012, p. 94). But within criminal law, making a free choice could also be to act in a way that is condemned by society through criminalization, society’s most repressive reaction to its citizens’ behaviour. Furthermore, a choice in the criminal legal context usually causes someone else’s harm. In other words, criminal behaviour causes vulnerability. Thus there is a link between the autonomous choice of the criminal legal subject to act in a way that causes someone else’s vulnerability, and this vulnerability itself. In the following I will explore this connection between autonomy and vulnerability in the criminal legal process. This is a highly important question, crucial to the notion of the criminal legal subject; it has not been discussed much, although several scholars have highlighted and questioned the traditional notion of the subject in criminal law, as well as in human rights and law in general (see e.g. Grear, 2010; Lacey, 1998; Naffine, 2002, 2004; Naffine and Owens, 1997; Niemi, 2010).

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Autonomy and vulnerability in a case on lethal violence As just discussed, criminal legal responsibility is built upon the autonomy of the defendant (Lernestedt, 2010, p. 37). However, Swedish law does not focus on accountability in the construction of criminal responsibility; anyone who is 15 years old or older could be charged with a crime and held responsible. Instead, questions concerning accountability are relevant in the choice of sanction and the assessment of the penalty. In principle, a severe mental disorder prevents imprisonment (Bennet and Radovic, 2016). This means that issues of mental illness and other vulnerability questions are dealt with in the court’s sentencing and can be studied in the judgments. In this chapter, I present four judgments, all of which relate to a recent, very notable Swedish case of a woman’s murder. These are two judgments from Malmö District Court, one judgment from the Court of Appeal in Skåne and Blekinge, and one judgment from the Supreme Court of Sweden. The legal treatment of this case and the public authorities’ handling of it in general have been severely criticized.10 The criticism has to do partly with questions related to the penalty the defendant should have received or other actions that could have been taken, in light of the defendant’s mental status and his ability to control his actions – in other words, his autonomy. In addition, attention has been drawn to the (lack of) protection of the victim and inability of the authorities to recognize her vulnerable situation. These issues of autonomy and vulnerability are central in the documents, and I analyze how the victim and the defendant are positioned in relation to vulnerability and autonomy. In particular, I study the way the courts reason and argue in their sentencing and assessment of the penalty. The history of the case was that the woman had been threatened by her husband for some time. They got divorced and in connection with the separation he was charged and convicted of wrongful detention after having had her locked in the house; he was sentenced to one year in prison. On that occasion he had overpowered her, bound her with handcuffs and cable ties, locked her up and put her on the floor next to the gun cabinet where he kept three rifles. The woman managed to talk herself out of this threatening situation by telling him that she was ready to make another attempt to live with him. The prosecutor in the subsequent trial had asked the court to keep the man in custody until the judgment became final, but the court chose to let him go, while waiting for him to serve his sentence. Two months later, he attacked her again and this time he killed her in front of their children. At this time there was also a dispute over custody of the children. The woman, who had told her friends and family she was certain her ex-husband would kill her one day, had been in hiding in a sheltered accommodation with the two daughters in the central parts of the city of Malmö, in the south of Sweden.

10 E.g. http://www.sydsvenskan.se/opinion/aktuella-fragor/ett-rattssamhalle-kan-inte-tolerera-atthotade-personer-dodas/ Article in a Swedish newspaper entitled: ‘A modern state cannot accept that threatened persons are killed’.

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The 47-year-old man managed to find out where they lived, and attacked the woman with a bayonet when she and the children came out into the street. The 39-year-old woman was killed by blows to the chest and stomach. The District Court that decided the first case about unlawful detention did not think the risk that the man would continue to commit crimes against the woman was of such concern that there was reason to keep him in custody, and therefore chose to let him go. No further justification was given. However, the court stressed that the woman’s detention was not brief and that the act caused the woman both physical and, above all, mental suffering, and was a violation. Furthermore, there was no reason to suspect that the defendant suffered from a severe mental disorder of such a nature that it would preclude imprisonment (JDC1, 6–7). Accordingly, the court in this first judgment positioned the victim as vulnerable. Her vulnerability was caused by the defendant, who was deemed to have acted completely autonomously. However, in deciding whether she was in a potentially vulnerable situation in relation to her ex-husband after her detention, the court decided that was not the case. In the murder trial that followed, the defendant admitted to manslaughter; he claimed that owing to the state of his mental health, he had no control of events and was in need of psychiatric care. However, the District Court found the man guilty of murder (JDC, 2). The core issue in this trial as well as in the higher courts was whether the man should be sentenced to life imprisonment or a fixedterm sentence. The District Court sentenced him to life imprisonment, while both the Court of Appeal and the Supreme Court sentenced him to 17 years in prison (NJA, 2013, s. 376; see also BRÅ, 2014:6). There are certain circumstances that recur in the courts’ argumentation. In all three instances the defendant’s determination and accuracy are stressed. This indicates that in the view of the court, he acted autonomously. Furthermore, both the District Court and the Court of Appeal found there were no mitigating circumstances in relation to this murder. Instead, the vulnerability of the victim is stressed when the aggravating circumstances are described. The Court of Appeal stated: The deed has been completely unprovoked. As the district court stated, the defendant has shown great cunning by, contrary to a restraining order, finding out where the victim and her children lived and identifying their habits. This knowledge has enabled him to commit the murder. The deed was particularly ruthless in that it was directed against a related party. The victim was in a particularly defenceless position as a result of the defendant having rushed towards her without warning and overtaken her. The defendant carried out the attack with substantial brutality using a bayonet. The deed was done in a public place. (JCA, NJA, 2013, ss. 376, 386, emphasis added) Thus, the defendant’s autonomously committed attack was found to have been aggravated in relation to the victim’s vulnerability.

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Only the Supreme Court emphasizes both the defendant’s autonomy and vulnerability. In the following, where the Supreme Court concludes that the accused was determined to kill the victim, the court establishes the defendant’s autonomy:

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No other conclusion can be drawn other than [the defendant] had decided to kill [the victim]. (JSC, 13, emphasis added) The court continues: The Supreme Court bases this conclusion on the fact that the defendant’s conduct was characterized by speed and determination and that he, when he approached [the victim], had not first tried to start a conversation with her, but instead immediately thrust the bayonet into her body at two vital points and then, seemingly quiet, awaited her death without calling for help. (JSC, 13, emphasis added) In spite of the fact that the defendant’s actions described in the quote above are seen as expressions of rationality, and thus implying autonomy, later in the judgment the court stressed how the defendant had been affected by the divorce that took place earlier, establishing the defendant’s vulnerability: The crisis that he experienced when [the victim] moved from their home sparked, as has been mentioned in the preceding [. . .], a deep depression with significant negative consequences for himself, including losing his job. (JSC, 14, emphasis added) In addition, the fact that despite the prior assessment of rationality and determination, it was proven that the defendant has a disorder that led to his inability to control his actions. All this demonstrates insufficient autonomy: The defendant’s complaint that, due to a mental disorder his ability to control his actions was impaired, thus does not appear to be unwarranted. The penalty for the act is thus lower than it otherwise would have been. (JSC, para. 44, 16, emphasis added) The defendant had to take medication for his mental problems, and in the view of the court, this medical treatment that was necessary because of his mental illness “increased” his autonomy. Thus, paradoxically, his mental illness caused more than his vulnerability. The Supreme Court stated: The medical treatment the accused had undergone in the period preceding the act, [. . .] caused him to become vigorous and uninhibited. He is considered to have had a sustained understanding of reality at the time of the deed. (JSC, 15, emphasis added)

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Regarding the victim’s situation, the Supreme Court emphasizes only her vulnerability: The defendant abused the victim’s defenceless position and difficulty in defending herself. The victim was afraid that the defendant, even though he had a restraining order, would attack and kill her – but she did not think this would happen if the children were present. What the defendant is guilty of is an insidious, public attack on an unsuspecting person who had no opportunities to escape. (JSC, 13, emphasis added) It is interesting to note, however, that the victim’s vulnerability is not positioned in relation to the defendant’s attack on her. Instead, she is positioned as being in a defenceless position and as an unsuspecting person. Nowhere in the judgment is the victim’s autonomy or potential autonomy indicated.

Public and private domains in the criminal justice system It is obvious that in the reasoning of these judgments, the defendant and the victim are positioned differently in relation to vulnerability and autonomy. As for the assessments of the responsibility of the defendant, both autonomy and vulnerability are referred to in the argumentation. As for the victim, on the other hand, only her vulnerable situation is stressed. For example, typical signs of autonomy, such as her ability to contact the women’s crisis centre and live in hiding, while at the same time taking care of her children, do not seem at all relevant in this criminal legal process. This is highly interesting, because at least in theory, criminal legal responsibility is built upon the full autonomy of the defendant. As noted earlier, according to Swedish law, criminal responsibility means that anyone who is 15 years old or older can be charged with a crime. Issues of vulnerability are therefore dealt with when deciding the penalty. This means that issues of mental illness and other vulnerability questions could be discussed explicitly in the judgments. And as I have shown, this is the case in the analyzed documents. As indicated earlier, there seems to be a link between the autonomy of the criminal legal subject and the public use of repressive power within criminal legal processes. In principle, punitive power, which presupposes an autonomous individual, is left in the hands of the state. Vulnerable subjects in the criminal justice system, on the other hand, for example victims of violence in intimate relations, are left to care-oriented powers exercised by private actors such as women’s crisis centres. In other situations, for example within the correctional agency, private actors are also allowed to step in regarding different more care-oriented sanctions. In other words, within the criminal justice system, punishment requires autonomous agents and is used in the public sphere, while care-oriented activities provided by private actors are directed towards vulnerable individuals.

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It is clear from the analysis above, however, that neither the defendant who is presumed to be autonomous nor the victim who is primarily considered as vulnerable is all that clear-cut. Both parties are imparted with autonomy and vulnerability. One important difference is of course that the victim is preferably constructed as vulnerable in the judgments, whereas the defendant is assessed in relation to both autonomy and vulnerability. It seems the subject exposed to public repression, who is presumed to be autonomous, is also considered to have vulnerability in the legal practice, whereas the vulnerable subject who is referred to private care does not have autonomy in the legal practice. I claim this is deeply problematic, primarily in that it prevents the public authorities from comprehending the vulnerability of the victim. Regarding the defendant, it seems the focus on autonomy in theory does not hinder taking into account issues of vulnerability in practice, at least according to this small study. However, from the perspective of the victim, the singular focus on vulnerability is a severe flaw, and could actually be one of the reasons for the bad decision to not keep the defendant in custody in the first case – something that could have prevented the defendant from killing the victim. I believe that the predominant notion – of the victim being primarily vulnerable, unable to make rational and capable decisions – prevents the courts from fully assessing a seriously vulnerable situation such as the one in this case, where the information from the victim herself about her certainty that the defendant was going to kill her was not taken seriously enough. It was as if helplessness and fear were considered part of her everyday vulnerability – or, even worse, that she was not rational enough to perceive a serious threat. I would argue that a move towards a vulnerable subject as a starting point for the criminal justice system would affect this practice. The vulnerable subject does not entail a helpless individual without capacity to make rational decisions. On the contrary, as mentioned above, the thesis of the vulnerable subject does not stress that vulnerability is an ever-present human attribute. Rather, there is a potential for all humans to experience vulnerability during a life span. In the judgments explored in this article, this view is already reflected when it comes to the positioning of the defendant, who is seen as highly autonomous while at the same time as his vulnerable situation is taken into account in determining the penalty. However, as shown here, the positioning of the victim does not include these nuances. In my view, a move towards establishing a more accurate definition of a vulnerable subject in this field of law would emphasize an awareness of a more complex notion of the subject and be more consistent with the embodiment of the everyday individual encounter with the criminal justice system (Grear, 2010). In addition, there is a need for a more nuanced view of the powers at stake in criminal justice. An approach to criminal legal justice, where powers everywhere in the system were stressed more, would make visible not only the obvious powers used in relation to the defendant but also the powers applied in relation to the victim. This could pave the way for a public response to the areas of the criminal legal justice system currently left to private actors. I would find that most welcome.

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INDEX

administrative legal protection of e-services 231–3 anti-targeting acts: United States 80 autonomy: assumptions of 18; collective 151; corrective justice, and 46–9; criminal legal responsibility, and 298–9; critical legal studies 39; equal 60; faculty 144–8, 153; feminism 88, 90, 93; human needs, as 22; individual freedom 63, 96, 109, 122, 172, 203; lethal violence 295–8; neoliberalism, and 25, 103–4; offender 247–8, 298–9; private–public divide 34; professional 195; responsibility, and 50; role of state 69; universalism 167; violence, and 295–8; vulnerability, and 290–4, 295–8; welfare, and 180 benefit-sharing: limitations of regulating 118–22; southern Africa 108–23 budget counselling: Canada 134–8 Canada 124–42; budget counselling 134–8; credit counselling 124–42 capital development 29, 31, 32; privileging protection for 25–7 capitalism: criticism of 103, 105; economic and social arrangements 103; higher education, and 29–32; housing loans, predatory agreements 67–8; neoliberalism, and 164 coercive power: state, of 247–8 Consolidated Credit Counseling Services of Canada (CCCS) 130

cost–benefit analysis: risk, and 97 corporate: higher education, and 29–32; law 40–2; social responsibility 42–4 corporations: rising power of 35–8 corporatization: higher education, and 159–60 corrective justice: private law, and 46–9 counterinsurgent operations: effect on female civilians 285–8 counterinsurgent warfare 272–89; gendered aspects of privatizing force 272–89 credit: agencies, see credit counselling agencies; Canada 124–42; counselling 124–42; free market 62; unions 65 credit counselling agencies 128–30; bankruptcy option, and 138–40; community based 131–2; fees 140–1; funding 131; mystery calls to 132–41 Credit Counselling Services of Alberta (CCSA) 131 Credit Counselling Services of Metropolitan Toronto (CCSMT) 129–30 Credit Counselling Society of British Columbia (CCCSRC) 130–1 criminal justice system 290–9; domestic violence 290–9; liberal subject in 293–4; Swedish penal code 292; private domain 298–9; public domain 298–9; vulnerability approach 290–9 data collection: Swedish aged care 204–5 debt: nature of 124–5; private 126–32; public 126–32; relief options (Canada) 126–32

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340

Index

deregulation 1, 62, 66, 93, 168 distressed neighbourhoods: chronic stress in 72; contractual vulnerability in 71–7; coping 73–4; outcomes 75–6; stressors 72–3 distribution of public services: e-government system 222–36 domestic violence in criminal justice 290–9 ethics 87–107; vulnerability, of 88–91 external value of academic research 152–4 Federal Insolvency Trustee Agency (FITA) 127 female civilians: effect of counterinsurgent operations 385–8 free market: credit and loans 62; hypercommitment to 69; intervention 65; liberalism, and 93–4; measure of response to vulnerability, and 60; myth of 84; prisoners, in 253; reliance on 66 globalization 37, 43, 204 higher education 143–60; commerce, as 155–9; corporatization, and 159–60; liberal state, and 159–60 hypermasculinity 275–9 indigenous knowledge: southern Africa 108–23 invulnerability: fallacy of 92 legal pluralism 126 lenders: targeting efforts 67 lethal violence 295–8 liberal state: higher education, and 159–60 liberal subject in criminal law 293–4 managerialism: welfare state, and 186 market-driven society: individual freedom, and 64 market exploitation: ex post response to 69–71, 82–3 marketization: Swedish aged care 201–2, 204; welfare state, and 186 markets, exposure to 78–9 military culture 275–9; hypermasculinity 275–9; liberal feminism 275–9 moral privatization 10–11 motivations 12, 198; for privatization 9; for production 168 mountaineering: risk, and 98–9

neoliberalism: big government, and 24; capital development, and 25–7; competition 164; contractual vulnerability, in 63–71; entrepreneurship 97, 106; global 31; governmentality, and 88, 94, 96; ideology 28, 102–3; justifications, for 20, 93–4; marketization 164, 168, 174; market restraint 68–9, 164; reverse privatization, and 32; risk to vulnerable subjects, and 23, 62, 101; responsibility, and 50, 102; state 60–3, 93–6; work, and 196 passivity: risk, and 101 patent ownership: southern Africa 108–23 peer review panels 151–2 power and trust: public law, and 45–6 prison privatization: 249–71; Arizona 265–70; cauterization of inmates 262–4; commodification of prisoners 249–71; human right to dignity 249–71; integration of public and private 250–2; Israeli case 252–7; previous analyses of Israeli Supreme Court decision 257–62; violation of human rights to dignity 265; worldwide challenges 249–71 private is public 49–58 private law 34–59; autonomy 46–9; corrective justice 46–9; criteria for allocating responsibility 52–8; rethinking responsibility 34–59, 49–58; special characteristics 46–9 private–public divide 25, 34, 35, 38, 39, 46, 49, 58, 61 privatization: choice in education 163–81; definition 10; educational 11–14; effects 1; fiscal 10; Hoodia 108–23; implications 1; interrogating privatization 20–3; Israeli prisons 252–7; power 34; prisons 265–70; public interest in wealth, and 24–9; public priorities 24–33; reality 60–84; risk, of 87–107; shaping of self, and 96–100; Swedish welfare state, and 166–70; undermining theoretical grounds 45–9; vulnerability critique 24–33 privilege: vulnerability, and 104 public force: privatization 280–5 public law: power and trust 45–6; special characteristics 45–6 public power: human vulnerability, and 27–9 public welfare policy: privatization, and 2 public: who counts as 24–5 public interest: private wealth, and 24–9

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Index

Reagan, Ronald 69 redlining 68 REF 143–60; changes in collegial relations 154–5; goals 149–51; impact factor 152–4; instrumental view of research 151–2; regularizing production under 154; UK, and 147–9 republic of choice 10 Research Assessment Exercise (RAE) 143–60; instrumental view of research 151–2; UK, and 147–9 resilience: coping, and 74; cultivating 62, 80–2, 243; difference in abilities, and 171; social production of 4, 32–3; Swedish system, and 220, 223–4; vulnerability 3–4, 24, 203, 233–4 responsibility: social structure, and 50–2 responsive state 203, 224, 226, 234, 236; aspiration, of 50, 203; contractual vulnerability in 77–83; cultivating resilience 62; e-services, and 226; Nordic welfare model 203; privatization, and 63; vulnerable, meeting needs of 110, 22; restraining the market 66–9, 79–82 reverse redlining 68, 70 risk: cost–benefit analyses 97; entrepreneurial subjectivity, and 91–6; Foucault on 91–4; function of 94; incapacity, and 101; mountaineering, and 98–9; passivity, and 101; privatization of 87–101; shaping of self, and 96–100; social resilience, and 32–3; vulnerability, and 101 San 108–23; history 110–12; modern/ nonmodern subjects, as 115–18 social responsibility 24–33; big government, and 24–33 social structure: responsibility, and 50–2 socially distributed risks 100 soft law 42–4 southern Africa 108–23; benefit-sharing 108–23; indigenous knowledge 108–23; patent ownership 108–23 state: action doctrine 39–40 58; coercive power 247–8; “choice” 20; contracts, and 60–1, 63; contractual vulnerability, and 77–83; ex post response to market exploitation 69–71; exposure to market, amd 63–6; funding in women’s reproductive health 18–20; funding of education 30–1; goals 11, 33; higher education, and 143–5, 148–9, 150, 152, 154, 156, 159–60; investment 30–1;

341

privatizing 10; relationship with citizens 126; responsive see responsive state; retreat of 35–8; role of 3, 10, 22, 60–3; transferring responsibilities 14; welfare 14–17, 26; withdrawal from financial markets 66–7; withdrawal of 1, 9, 21 stress: contract law, and 61; decision-making 76–7 stressors: distressed neighbourhoods, and 72–3 Swedish aged care: benefit from customer choice 216; choice and need in practice 214–15; data collection 204–5; from recipient to consumer 211–15; implementing rights of service users 212–14; inequalities 201–21; institutional changes 205–11; intersection of age and disability 218–19; intersection of gender and social class 216–17; intersection of migration and ethnicity 217–18; marketization 201–2, 204; marketization and instititutional vulnerability 219–21; marketization policies 208–11; organization and resources 206–8; privileged and disadvantaged groups 215–29; theoretical framework 203–4 Swedish educational system 173–9; evaluating changes 169–70; government bill 176; investigation on independent schools 2013 174–5; motions from opposition 176–7; parliamentary debate on school choice 175–6; parliamentary debates 177–8; reform of 1992 173–4 Swedish welfare state: autonomous or vulnerable legal subject 172; conflict on future of 171–3; different forms of privatization 168–9; equality 163–81; freedom of choice 163–81; freedom of choice in embedded and embodied context 171; private/public distinction 172–3; privatization, and 166–70; school choice system 173–9; universalism, and 166–70 threats to academic freedom 145–7 Uganda: challenges under privatization 244; decentralization of government services 241; effect of privatization on women 243–4; national minimum healthcare package 242; privatization process 238–9; public perceptions on privatization 242–3; public/private partnership 241–2; user fees 240

342

Index

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United States: anti-targeting acts 80 universities 143–60; corporatizing 143–60; privatizing 143–60; threats to academic freedom 145–7 university-industry integration 156–9 vulnerability: ethics of 87–107; feminist ethics of 88–91; human constant, as 3; negative view of 105; privilege, and 104; public power, and 27–9; risk, and 101; susceptibility to harm, and 90 vulnerability lens 2 vulnerability theory 3–4 vulnerable subject: liberal subject, and 293–4 welfare reform 14–17 welfare state: adaptations: perverse consequences 199; agency, workforce

and client 197–9; commercial income 187; consumer subsidies 187–8; doing more with less 193–4; financialization 190–2; impact of managerialism on frontlines 192–3; intensified accountability 188–90; key functions 183; managerialism 186; marketization 184–5; more forprofits 188; practitioner–service user relationship 195; reduced funding 186–7; service delivery 193; three stages of privatization 183–99; US, contraction of 185–6; US, rise of 183–4; working conditions 195–7 welfare to work programmes 104 women’s reproductive health 17–20; state funding 18–20 working-class families: debts of 132