Tuesday, 3 February 2009

Producer Capture:Turn the Ideological Guns Around

What's that then?

Let a former No.10 policy wonk explain,

"‘Producer capture’ is one of the key concepts imported by New Labour from the nostrums of neo-liberal economics. It describes the process whereby the goals of an organisation reflect the interests and prejudices of its employees (the producers) rather than those it is supposed to serve (the consumers, customers or citizens). More precisely, given that workers in a customer-friendly organisation will see their own interests served by serving the customer, capture is evident when producer interests are not aligned with those of the consumer and it is the former that predominate.

New Labour reformers in large part accepted the neo-liberal charge that public services – sheltered from the disciplines of competition or profit – were prone to producer capture. This insight contributed to some of New Labour’s most important public service reforms

Sadly, though, at least according to Matthew Taylor*, it is, "...a difficult concept to apply to the private sector. .... many of us complaining are also shareholders in these same companies through our pensions funds, life insurance or savings. So where does the producer interest lie?"

Oh yeah? Falkenblog doesn't agree. According to him big financial firms have to pay their dealers excessive amounts, including obscene bonuses, 'cos otherwise the traders just have an incentive to 'give away' securities to friends thus 'building up a set of favors for his next position.' Management can't control this because they don't have the time or technical skills to do so, but, nonetheless, get awarded a cut of the 'alpha trader's**' performance in the form of their own obscene bonuses. By this account, then, the financial sector has fallen prey to wholesale provider capture and there is no obvious way out.

As someone who's spent almost all his working life in the not for profit sector I absolutely detest the theory of producer capture. Sure, I've seen it happen in practice occasionally - but only very occasionally: and I know the only way to shift it is to find a way of re-inspiring people with a notion of public service and communal solidarity. But under New Labour 'producer capture' has been the starting point for a whole series of so called 'public sector modernisations' which all focus on the marketisation of relationships. These have been carried through with a huge programme of procurement whose bureaucratic content has been disguised in 'four legs good two legs better' type language.

Perhaps the time has come to apply such a huge bureaucratic programme to control the financial sector. For this is one section of the economy which this particular socialist doesn't want to see under 'workers control....'

*To be fair, Taylor says he no longer agrees the idea of 'producer capture' can be applied indiscriminately across sectors.

**Apparently this ridiculous appellation is applied to people who make a lot of profits on trades. They're like 'movie stars' according to Falkenblog. Presumably usually starring in Hammer films in recent times...

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