Christian ethics and the privatization of utility industries.

This study offers an ethical assessment of the privatization of the gas water and electricity industries in the United Kingdom. The privatization policy of the 1979 conservative Government aroused considerable controversy, especially in relation to the utility industries. Not only were they large public monopolies, in important respects they were natural monopolies. In the discussion of the ethics of privatization they represented a limiting case.

The study traces the development of the privatization programme and the political and economic ideas which lie behind it. The political context is derived from an examination of the Parliamentary debates on the privatization legislation and the philosophy of the New Right. The macro-economic context is derived from an analysis of the theoretical positions of John Maynard Keynes and Milton Friedman, and the micro-economic context from the work of John Vickers and George Yarrow. The performance of the three utilities since privatization is assessed principally through the reports of the regulators, Ofgas, Ofwat and OFFER. The ethical criteria are derived from the Bible and modern Christian social doctrine.

Five ethical issues are identified: the proper role of the state in economic management; the control of the abuse of power; incentives; stewardship; and the balance of benefits. Privatization was based on the idea of the limited state and liberal economic theory; both are shown to be an inadequate foundation, and the study argues that the notion of the limited state cannot be maintained in modern society. Assessed against Christian conceptions of community, justice, gift and egality modern economic theory is shown to be at odds with more basic social models, and, more seriously, with the duty to conserve the environment and natural resources. The study concludes that the acid test of utility privatization is not economic efficiency, understood as better value for money, but better stewardship of the environment.