The history of the public-private divide

U.S. liberal-democracy, the basic model for contemporary society, was born from a compromise between aristocracy and discontented merchants who felt oppressed by the constraints of the feudal system. With popular support and democratic intent along the lines of the liberal tradition, entrepreneurial types such as the Founding Fathers in the United States succeeded in overthrowing the ancien régime based on land ownership and title. On occasion these merchants also garnered support from egalitarian and reform-minded entrepreneurial aristocrats who saw a bright future for all in the wealth they had generated from economic activities. Even though they promoted liberal ideals of democracy, freedom of speech and equality, the wealthy entrepreneurs who often fronted these revolutions were faced with a predicament: who could ensure that the majority of the population, granted full democracy, would not exercise these rights not only to remove the power of the landowners but additionally the concentrated wealth and savings of the merchants? For the merchants, it was their accumulated wealth that facilitated their ability to achieve great things such as overthrowing the existing order.

It was in this moment that a compromise was created: on the one hand the purpose of liberal-democratic government would be to promote equality and democracy, on the other the government must prevent the appropriation of the wealth of a minority by a majority. James Madison, one of the drafters of the U.S. Constitution, explained in his 1829 speech at the Virginia Constitutional Convention that, “the rights of persons, and the rights of property, are the objects, for the protection of which Government was instituted. These rights cannot well be separated…. The only effectual safeguard to the rights of the [wealthy] minority, must be laid in such a basis and structure of the Government itself, as may afford, in a certain degree, directly or indirectly, a defensive authority in behalf of a minority having right on its side.” This compromise between wealth and freedom, entailing inherent restrictions in the public’s capacity for democracy, is today reflected in the public-private separation of our liberal-democratic nation states.

The nature of the public-private divide

This separation ensures that state action is limited to the public sphere and that individual rights and freedoms are protected from illegitimate uses of state power through their positioning in the private sphere. But what exactly is the public-private divide? What is public? What is private? Where can we set the divide itself? It is a political compromise and thus an essentially contested concept by its very nature. It is not a scientific thing which can be studied in an objective, permanent and natural scientific sense. The divide is always in motion due to its nature as an abstract political creation, shifting and changing as social relationships and the balance of power in society shifts and moves.

In spite of this history, liberal theory views public and private as two separate realms, different by nature; some things such as the state are viewed as essentially public, other things such as contracts and economic interaction as essentially private. Much economic, political, legal and other social scientific work, consciously or not, builds on the existence of this divide. Theories of the corporation, concepts of rights and obligations, contract theories, theories of public choice and more; all commonly build on the assumption that the private and public realms are two distinct parts of societal functioning. Positivist social scientific research has for over 100 years often assumed this divide as a fixed background element; a ‘social’ equivalent to the natural scientific concept of gravity.

The public-private divide is, however, merely an illusory ‘gravity’ which obfuscates that there is in fact no such thing as a private or public part of society. As an abstraction it’s an implicit metaphor for the political compromise of previous generations. It can’t be conclusively divided into two categories; there is only the whole. Society is the circle in which we can find private ‘Yin’ and public ‘Yang’; the two are inseparably connected no matter how much we attempt to abstract or reason a separation into being.

Even though it was artificial, it did not mean that the divide was unworkable in its historic use; we work with abstractions all the time. If anything, it is central to human existence to act as if certain things are real and to act as if other things are not real. The problem with the public-private divide now is that society has developed from a position where the compromise might reasonably be treated as real to a position where this approach is harmful and no longer defensible.

Changing social conditions and the obsolescence of the public-private divide

From the 1970s onwards, in accordance with free market doctrines, we have seen progressive increases in promoting the capacity of corporations, wealthy individuals and institutions to invest and make decisions around the world. Additionally we have seen the deregulation of social and environmental protections and other forms of organisation in favour of free market approaches. This deregulation, privatization, marketization and commodification of society may be symbolically expressed as the private sphere devouring the public sphere; ‘Yin’ eating ‘Yang’.

Chomsky offers a helpful view of the public-private divide: the public sphere is where decisions are made by one person, one vote. The private sphere is where decisions are made by one dollar, one vote. This roughly corresponds to the compromise of wealth on the one hand and democratic capacity on the other. As one dollar, one vote encroaches on one person, one vote we find that the public sphere shrinks and that the scope for government regulation and democratic decision-making capacity progressively diminishes. This is a common refrain: the governance gap, the weakening nation state’s inability to regulate transnational corporations and the race to the bottom in terms of social and environmental protections.

We currently find ourselves in a short-term rationality trap where governments implement privatization and growth-oriented policies because they fear capital flight in the context of a liberalised global economy. Global finance and investment has become an economic sword of Damocles which hangs over every government seeking to introduce an element of counterbalance to the globalised economy. Any politician or government that points out the irrationality and presence of this sword is mercilessly punished by other governments hoping to benefit from acts of the wealthy corporate and individual beneficiaries of this ridiculous situation. Liberalised capital is fickle and sensitive, fleeing instinctively, instantaneously and digitally from any nation with a policy environment that is not ‘conducive to economic growth’, crippling that nation in the process. Despite the attention paid to the global economy and proclamations towards its superior and efficient nature, it is in fact undemocratic, dysfunctional and marked with crises varying from environmental mismanagement, consumer misinformation and inequality to stagnant incomes and high levels of unemployment.

The public-private separation could only ever operate effectively within the limited regulatory boundaries of a single nation state, with capital subjected to public decision-making. With globalisation, the economy has blended into a global private sphere even as the public sphere remains national and fractured. The public-private divide assumption has become irrelevant because the private has come to dominate the public. The realities of our political compromise have changed.

The contradictions manifested in this broken compromise are numerous. A corporation’s potential investment decisions, protected through private rights, now penetrate the heart of public sphere decisions on social and environmental policy; how can we still view the public and private as separate under these conditions? Another example: a corporation or wealthy individual is not allowed to directly bribe government officials; but they are legally protected in case they decide to buy newspapers, TV or radio stations and propagandise the population and pressure the government into accepting whatever policy position they wish to promote. How does the private sphere in this instance stand as a separate thing in relation to the public sphere? It does not; it undermines it totally. The public-private divide is also at the heart of reality for many people who live in ‘free and democratic’ societies but nonetheless enter a hierarchical, private property dictatorship where they have no meaningful impact or influence over their work. Untenable under any conception of meaningful democracy, these perversions arise due to insistence on the public-private divide. It is a broken and harmful concept, holding us back; unfit for current and future realities.

We need new theories and concepts to describe reality and address escalating global crises

Legal and other social scientific work, accustomed for over 100 years to work within the assumedly fixed constraints of the public-private divide, has failed to recognise precisely how fundamental this shift of circumstances is. We are not simply dealing with the weakening of the nation state’s regulatory capacity; the state itself is increasingly becoming a mere instrument for the private sphere to gorge itself, shedding public responsibility as the public realm disappears into symbolism and ritual. While the state is supposedly ‘powerless’ to implement social and environmental regulation due to the sword of Damocles, we nonetheless find broad state adoption of totalitarian surveillance systems and the retooling of education in favour of private interests. Examples of the still-powerful state abound, just not in the realm of public sphere interventions. Rather than focusing on a supposedly weakening nation state, social scientists should instead examine the practical death of the public-private divide.

Positivistic approaches, which seek to find a ‘law of gravity’ for social science within the constraints of the liberal democratic model with its public-private divide, are increasingly missing the point and losing validity, even turning harmful. Once a reliable source of social scientific and political stability, this flat earth concept is now at the heart of much social scientific and political impotence in dealing with contemporary social, political and environmental problems. The rules of the game have been rewritten. Social scientific work needs to abandon the positivist confines of the broken political compromise and view the public-private divide as part of the problem.