Smaller but Better: Post-Growth Public Services

This report is taken from chapter 6 of Green House's book The Post-Growth Project: How the End of Economic Growth Could Bring a Fairer and Happier Society published in 2014.

This report emphasises that the value of most public services lies in our essential biological nature, and that they are pre-requisites for the rest of the economy, not drains upon it. Moreover public services cannot be reduced to commodities, which is why the introduction of the market and privatisation are usually wrong. Recognising the limits to growth, the report calls for smaller, better public services, with greater local democratic control and a place for voluntary organisations with genuine independence.

Many want to see public services – health, education, police and courts, social services etc – not cut during the current crisis, and hope for scope for better services in the future. And most of the campaigners against public austerity expect to be able to pay for no cuts by growing the economy.

Most greens campaign both against austerity and are also sceptical about growth. How then will public services be paid for? Beyond swingeing tax increases, is there any way out of this dilemma? This report explains how better public services are possible in a smaller economy.

If real GDP remains flat, if health spending continues to increase by the trend rate of 4% pa since the formation of the NHS, and other public services are simply maintained in line with expected population growth, overall taxation would have to be increased by around 5% of GDP by 2020-21 to about 44%. That might be possible, but in a further ten years a further X% of GDP would be required. Public services as currently constituted cannot go on expanding forever in a zero-growth economy.

The report considers the nature of public services. Public services consist in doing the things that we have to do because we are not the perfect workers and consumers found in economics text books. We have bodies, an unproductive youth, sometimes commit crimes, health problems and a dependent old age. Moreover, historically, these things have been done by women outside the market and often in the household, with some voluntary or charitable provision. Transfer to the state followed up by marketisation has led to the creation of fictitious commodities, and so to a false culture of consumer rights.

So what is to be done? The report argues that there is no single way of solving the problem, and that we need a combination of policies:

accepting that we may need to devote a higher proportion of GDP to these services and pay more taxes
accepting that the biggest single component, health expenditure, cannot grow at 4% per year forever, and that we should spend much less on keeping the very ill alive for usually just a little bit longer
understanding the essentially different nature of public services, and that they cannot be treated as commodities
from which it follows that marketisation and privatisation is pernicious, and should be reversed, quite apart from not delivering efficiency gains
the services should be localised and all put under democratic control
understanding that the willingness of people voluntarily to give of their time to public services is undermined where others are profiting from them, and finding ways to encourage greater voluntary participation
ensuring that such greater voluntary effort falls equally on men and women; fostering a new growth in voluntary civil society organisations.