The right balance: The case for strong plural, public and private sectors – Canadian Government Executive

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Bookshelf with Harvey Schachter
May 26, 2015

The right balance: The case for strong plural, public and private sectors

Rebalancing Society
Henry Mintzberg
Berrett-Koehler, 151 pages, $20.95

 

In recent years, it has been customary for government – and government executives – to be looked down upon, while business has been exalted. That has been the attitude in the United States for many decades but it has seeped through into traditionally government-supportive Canada.

Somebody who hasn’t succumbed is management guru Henry Mintzberg. His fascination for good management has always included government. His books offer government examples rather than just corporate and in 2000, with other contributors, he put together a helpful (if little known) book, Managing Publicly.

But his most recent book is different from his normal management writing, an emotional fusillade at the notion that the key to a successful country is a strong private sector and a highly limited public sector. Instead, he argues that we must encourage a healthy balance between the private, public, and plural sectors – the latter his clever name for voluntary associations, clubs, non-profits, non-governmental institutions, co-operatives, unions, religious institutions, social movements and the like.

His argument traces back to 1989, when the Berlin Wall fell and the communist regimes of Eastern Europe collapsed in its wake. The subsequent glee in the Western world led to a misguided mantra: capitalism had triumphed. The McGill University professor of management, visiting Prague a couple of years later, balked at the notion, which he found not only overly sanctimonious but wrong and dangerous. He published an article debunking the premise and over the remaining two decades has continued to study the issue, resulting in Rebalancing Society, which mourns the imbalance we are currently experiencing as the private sector has been placed on a pedestal.

Capitalism never triumphed, he insists. Balance triumphed. Whereas communism had been suffocated by too much government, with little else to sustain it, the Western world had a reasonable balance in the late ’80s between the private, public and plural sectors. But no longer.

These days, the private sector has expanded and the two other sectors are far feebler. Politicians proclaim the glories of the private sector and the importance of reducing the public sector. And the third sector has similarly withered, as captured by Harvard sociologist Richard Putnam’s catchphrase that we increasingly are bowling alone.

“Adam Smith’s invisible hand in the American marketplace has become a visible claw in the American Congress. De Tocqueville identified the genius of American society as ‘self-interest rightly understood.’ Now the country finds itself overwhelmed by self-interest fatefully misunderstood,” he writes.

One sign of the growing imbalance that he cites is in the mid-1980s when Ronald Reagan overhauled the U.S. tax system after learning that General Electric and some other corporations were using accounting gamesmanship to avoid paying taxes. “I didn’t think things had gotten that far out of line,” said the exponent of brash American capitalism. But from 2008 to 2012, 26 major American corporations including General Electric and Boeing paid no taxes at all. And there is little momentum to change the situation – with considerable to keep it as is.

On the global front, he notes that in 1987, with the Montreal Protocol, countries from around the world came together to protect the ozone layer. These days we can’t garner similar collective action on global warming.

He observes it has been said the final stage of slavery is when you no longer realize you are a slave. The East Europeans under communism never reached that stage. Today, however, he wonders how many of us fail to see the extent to which we have become slaves of our own economic structures. When an economy of free enterprises becomes a society of free enterprises, he feels it’s the citizens who are no longer free.

“It is telling that the word socialism has become a dirty word in America, leaving the impression that there is something wrong with things social, while capitalism has come to represent all things right. In fact, we are seeing all sorts of proposals for adjectival capitalism – sustainable capitalism, caring capitalism, breakthrough capitalism, democratic capitalism, regenerative capitalism, inclusive capitalism. The impression is that, if only we can get capitalism right, all will be well again,” he writes.

And it’s not just America. He notes that his cherished Canada, long known for its balance and benevolence, has become another cheerleader for this one-sided view of development. He is alarmed by “a creeping meanness” in Canada, not restricted he stresses to our current government.

Although he categorizes his book as a rant, he stresses it’s not a rant against business. He admires businesses that compete responsibly to bring him worthwhile products and services. But he has disdain for those that try to exploit him with shoddy products, indifferent services, shady pricing, and phony advertising – and he feels such corporations are on the upswing, as the stock market demands greater and greater growth. He also dislikes companies that seek to exploit us by using political advertising to sway opinions on public issues, take government handouts in the name of free enterprise, and use vast sums of money to lobby for their privileged interests.

“There’s a tea party going on, all right, for big business, under the slogan ‘no taxation with representation’,” he says.

But he’s not urging tearing down the private sector in favour of government. He feels a country will suffer if any one of the three sectors is given too much power. Balance is the key.

Too much capitalism becomes the predatory capitalism we increasingly see. Too much government and we can end up with state despotism. If the plural sectors become excessive we can be hit by exclusive populism, where some segment dominates society, excluding others, as with the Muslim Brotherhood in Egypt or the social movement that served as the seed of Nazi Germany.

He mourns the emasculation of government. He recalls that under the supposed win-win of communism, the state was supposed to “wither away.” Now capitalism is working on that instead – at least for departments that don’t serve its purposes.

As someone whose first full-time job was with Canadian National, then the most progressive railway in the world and state owned, and an avid listener to CBC radio, he can’t understand the relentless push to privatize public services. He points out that in the U.S. presidential elections in 2012, while private interests were spending billions on the campaigns, some state governments lacked the funds to staff their polling booths. Who can expect decent public services, he asks, when there is little respect for public service?

“Meanwhile, under the banner of ‘New Public Management,’ a euphemism for old corporate practices, public services that cannot be turned into business are supposed to pretend that they are businesses: Put heroic leaders in charge, reorganize constantly, measure like mad, and reengineer everything in sight,” he writes.

“Most activities are in government because they cannot be managed like businesses. How is diplomacy supposed to be so managed? How do you measure what a child learns in a classroom without destroying the quality of education? A senior British public servant, when asked why there had been such a profusion of measurement in his ministry, replied, ‘What else are we to do when we don’t understand what’s going on?’ How about trying to connect, to communicate, even to use judgment?” he writes.

A major contribution to our understanding comes from his naming of the non-business, non-government part of our society. It has previously been inadequately labelled the non-profit sector, the third sector, and even civil society, but plural captures its breadth, the impetus it receives from people, and neatly starts with a letter P to match the other two sectors. Many government executives deal with the plural sector, and this might help understand its function.

The plural sector comprises all associations of people that are owned neither by the state not by private investors. Some are owned by members; others are owned by nobody, like universities. “By virtue of being owned by their members or by no one, plural sector associations can be more egalitarian and flexible,” he observes. The greatest ideological cheerleaders for capitalism, he loves to point out, have been the economists at the University of Chicago, which has no owner and is part of the plural sector.

The plural sector is not “a third way” between the two other sectors. It is part of a balanced society, something that triumphed in 1989 but is shakier today. This book is short, but impassioned, and makes the case for strong plural, public and private sectors. The case for balance.

About this author

Harvey Schachter

Harvey Schachter

Harvey Schachter is a writer, specializing in management and business issues. He writes three weekly columns for the Globe and Mail and The Leader’s Bookshelf column for Canadian Government Executive, and a regular column and features for Kingston Life magazine. Harvey was editor of the 2004 book Memos to the Prime Minister: What Canada Can Be in the 21st Century. He was the ghostwriter on The Three Pillars of Public Management by Ole Ingstrup and Paul Crookall, and editor of Getting Clients, Keeping Clients by Dan Richards. A McGill commerce graduate, Harvey spent more than 15 years in a variety of positions at The Kingston Whig-Standard, including editor and planning and promotions manager. He won two National Newspaper Awards for his writing and a national Owl Award for a marketing program he created at the newspaper.

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