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Private and Public
Publication date: 2002-02-04

Private and Public - Where They Belong

Private or Public?   -----   to top

Tony Blair says that the ‘private v public’ controversy began with M. Thatcher saying that ‘all private is good, all public is bad’.

This is not quite right. The idea that all private is bad was advanced long before M. Thatcher was born. This idea is the fundamental principle of Socialism, which was the original philosophy of the Labour Party of which Tony Blair is a member.

The (small c) conservatives under M. Thatcher did not have either the clarity of vision or the guts to expose the false philosophy of Socialism as outright fraud. They did not repeal the Rent Acts as a crime against property committed by the Labour governments responsible for that legislation. They did not repeal all industrial relations legislation as contrary to the fundamental principle of equality under the law. They were politicians, so their thinking was not based on the principles of ‘true or false’, ‘right or wrong’, but on those of ‘right or left’ of ‘politically convenient’ and of ‘socially acceptable’. They did not see their duty to tell people the truth and to explain it to them, but chose to distort the truth to fit it in with the public ‘perceptions’, as they understood them.

So they chose to ‘limit’ rather than to abolish the ‘powers of the unions’, and by doing so recognized that governments can grant to private voluntary organisations ‘powers’ which put them above the law.

To the Labour attempts to nationalize everything, because of the Socialist assumption that private property is a ‘social evil’, the conservatives reacted by ‘privatizing’ everything under the political slogans of ‘government running the economy’ and of ‘mixed economy’.

It is this ‘mixed economy’ that Tony Blair inherited from M. Thatcher successors.

It is true that Tony Blair saved the Labour Party from oblivion, by abandoning the fundamental principle of Socialism that private property is a ‘social evil’. This should be seen as an important positive achievement of Tony Blair.

But, if Tony wants to go further, then it is not enough to say that we need a mixture of public and private — one has to understand where private and public rightfully belong. It is just as wrong to nationalize a private business to save it from bankruptcy ‘to preserve jobs’, as it is wrong to privatize a government activity, which is public by its very nature, just because it is badly managed. Private and public are different areas of human activities and they are not interchangeable.

So let us try to understand what they are.

What is Private?   -----   to top

Private economic activity is the result of a private person (or group of people) exercising his freedom to use his time, knowledge, skill, energy and wealth for the purpose of deriving a financial gain for himself.

There is no legal obligation on any person to engage in such activity, nor is there an obligation on him even to ensure that such activity yields profit, or is useful in any way either for himself or others. He can even engage in such activity as a hobby. The only restrictions on such activity are that it would not interfere with freedom and property of other people against their will, that is, that it would not cause any injustice to others.

The only role a government can legitimately play in such activity is to prevent any form of fraud, or damage to others. This is achieved by the operation of the system of administration of justice, Health and Safety Acts, Weights and Measures Acts, Company Acts, etc.

Any other form of interference with private business activity, be it restricting it, or encouraging it, is abuse of government powers. Restriction of private business activity is interference with the freedom of a person. Encouragement of private business activity is favouritism, that is, use of public funds to favour a person or group at the expense of others.

What is Public?   -----   to top

Public economic activity is an activity performed by government and financed out of public funds.

Such activity can be legitimate if, and only if, it is the government's duty. If it is not, it is abuse of government powers. If it is, then, not to perform such activity by government, is failure by the government to perform its duties.

Public activities do not mean that the government should not use in the course of such activities goods or services provided by private businesses, for example it can hire private firms to erect public buildings, or buy stationery for its departments from private suppliers.

What distinguishes ‘public’ from ‘private’ is its obligatory nature, source of finance, and purpose.

Differences between Private and Public Activities
Source of FinancePrivate FundsPublic Taxes
PurposeAny non-criminal purposePerformance of government duties

What Has to Be Done?   -----   to top

The present concept of ‘mixed economy’ is the result of politics, that is, abuse of government powers by people holding public office. It is a mixture of legitimate government activities and of abuses of government powers.

It is necessary to define clearly and precisely the duties of government by deriving them from the Fundamental Principles of Government by Truth Honesty and Justice and to identify what activities are necessary for the performance of these duties.

The general criteria for determining which government activities are legitimate are as follows:

  1. A government activity is legitimate, if and only if, it is necessary for the performance of the duties of government.

  2. An activity is a duty of government, if and only if, such activity is strictly necessary for the administration of the area of governance (maintenance of law and order, administration of justice, general public safety and well‐being).

  3. An activity is strictly necessary, if it is necessary for human life, and, because of its very nature, it is not normally performed by private individuals, and, if it were given to a private individual or group, would become a monopoly, giving that private individual total control over such activity.

It is not enough that an activity is good or beneficial to somebody, be it majority or minority, or even everybody — it must be an obligatory duty of government. If a person holding a public office believes that an activity would be beneficial for anybody, he should set up a private business, or charity, and not seek to use public funds for financing such activity.

For example food production is a necessary activity for sustenance of human life, but under normal conditions private individuals (singly or in groups) are capable of performing this activity, and this activity is not a monopoly, so there is no reason why food production should become a ‘public service’ and be taken over by government. But, if due to some natural, or man‐made, disaster, adequate food production and distribution by private individuals would become impossible, and famine results in an area of governance, it would become a duty of government to take control of food production and distribution to prevent famine. Once, however, normal conditions are restored the justification for government control of food production and distribution would disappear.

The present controversies about health and education are the result of the fact that these areas of human life have been heavily used by politicians to advance their careers.

This resulted in ‘public services’ the scope of the activities of which is undefined. And without a clear definition of the scope of these activities it is impossible to determine whether these services are ‘successful’ or not. It is not clear whether the purpose of these activities is to ‘create jobs’, to satisfy every possible requirement of any person, or what?

Both health and education cover vast areas of human life, and some elements of both fields are part of the legitimate duties of government, while others are private by their very nature. For example, prevention of epidemic diseases is a duty of government, while changing the shape of a nose, so that one would look more like a pop star one admires would probably belong to the realm of private whims and fancies.

Human desires and ambitions have no limits, but use of government powers to satisfy the desires and ambitions of ones at the expense of others is abuse of government powers. Nor can such task be ever achieved to the satisfaction of everybody.

Only once the scope of government activities is clearly and precisely defined, will it be possible to establish workable criteria for determining the ‘success’ of these activities and of the practical ways, how this success can be achieved.

Privatizing what should be public, or nationalizing what should be private are not the ways to solve any of the problems of the present politicized ‘public services’.

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