On “Public-Private Partnership”

Some recent remarks debating a trendy model of doing things

A little while ago I was asked to speak at an event on the use of “public-private partnership” to implement policy goals. I found I had to be a bit disagreeable on the subject. Here are those remarks, transcribed and lightly edited, in case readers here also find them relatable or clarifying in any way. – N.S. Lyons

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We live in an era in which globalization and the geopolitical environment have arguably made a certain level of deliberate coordination between private corporations and nation-states – i.e. “public-private partnership” – a necessity for achieving the interests of both parties.

Nothing better supports this argument than the rise of China and its economic influence around the world. The Chinese economic model notably makes no clear distinction between corporation and state; its government lavishes support on corporate “national champions,” while those corporations act not only in the interest of profit but as agents of Chinese strategic national interests across the globe.

This model, it must be said, has been tremendously successful for China, helping to fuel its rapid economic expansion and allowing it to challenge American and European market dominance around the world. Even sectors traditionally considered critical to American national security, such as the defense and telecom industries, now see their supply chains dominated by Chinese companies.

In this context, the argument for some wise “corporate statecraft” – such as the concentrated application of industrial, technological, and trade policies to restore America’s defense-industrial manufacturing base – makes a lot of pragmatic sense. A degree of such coordination may simply be a necessity now in order to compete with China’s far more extreme use of the same model. Free-market principles are not a suicide pact.

However, I want to take on the responsibility today of warning that the public-private partnership approach also comes with some significant dangers and risks that we here – and our societies as a whole – ought to carefully consider and debate.

There are of course the traditional arguments against state-corporate coordination from both the political right and left that you’ve probably heard before. From the right, we are likely to hear warnings that state inference in the private sector risks undermining market mechanisms, and that “picking winners” risks creating significant inefficiencies and distortions. From the left, we are more likely to hear that corporate influence risks distorting the government’s responsibility to adequately regulate corporate behavior or to look out for the interests of workers or the poor – or that it enables corruption by the wealthy.

Both of these critiques and the risks they highlight are real. But I want to focus here on a different risk, and a different critique, which I believe is not only deeper and more relevant to us today, but which I’d argue we can already see producing significant and dangerous political and economic distortions across the Western world.

The key problem with the public-private partnership model is that, despite the word “public” appearing in the name, far too often in practice the actual public seem to be left out of the approach entirely. That is to say that the alignment of corporation and state that occurs through the public-private partnership model seems far too often to operate entirely outside the system of democratic governance. The interests of various “stakeholders” – corporations, NGOs, state bureaucracies, and numerous self-interested officials – may be consulted, but the demos notably is not.

In fact, often the advantage of the approach – as perceived by said stakeholders of both corporation and state – seems to be precisely that public-private partnership allows for a convenient end-run around the obstacle of the broader democratic process and any potential concerns that the voting public may hold. And, once they are shielded from democratic accountability, policies and priorities pursued through the public-private partnership model naturally become particularly ripe for rent seeking, regulatory capture, corruption, and abuse. Or, worse, there develops a gross distortion of basic interests between the “agents” involved and their true “owners” – that is, the public.

More and more often today, we see one particular distortion above all coming to the fore with use of the public-private partnership model. That distortion is the synchronized advancement of so-called “global” interests over national ones.

It is impossible, it must be pointed out, for those pursuing “global” interests to align them with the democratic interests of a particular people – a nation. There is no global democracy, only national democracies. So when multinational corporations and state bodies with supranational ambitions collude to pursue interests and objectives extending beyond the national level, the result is overwhelmingly likely to transgress and trample the interests of sovereign democratic polities. Which again far too often seems to be precisely the goal of such ventures.

Let me get specific with a few big examples. When millions of migrants illegally cross the borders of Europe or the United States each year, they do not do so without a vast, powerful network of institutional support that helps to facilitate that crossing. Hundreds of transnational NGOs guide, ferry, traffic, shelter, and run legal interference for these migrants every step of the way. These NGOs are in turn often funded by governments and international bodies, which seem to do almost everything in their power to enable – or even encourage – migrants’ entry and permanent residency as a matter of de facto policy.

In this they are aided and abetted by the corporate sector, which stands to benefit, either directly – as in the case of hotels, developers, and contractors who are funneled billions in taxpayer money to house and service new arrivals – or indirectly, as in the case of agricultural and other sectors that benefit from cheaper labor. Not coincidentally, corporate interests have been among the most influential stakeholders consistently lobbying against the implementation of readily-available mechanisms that could prevent illegal hiring and deter migration, such as universal e-verify requirements for employment.

As a result, there today effectively exists what might reasonably be described as an immense “migration-industrial complex.” And what is this complex, it must be said, other than what we can call a sweeping public-private partnership in action? It is a collusion of state and corporation, along with quasi-state-quasi-corporate NGOs that exist in parasitic relationship with both. All parties involved are working together to achieve a shared goal that stands to benefit each of them across an array of material, demographic, political, and ideological interests.

But of course what no part of this partnership ever bothers to do is to democratically consult or even at all concern themselves with seeking input from national populations about this migration project. Doubtless because those populations happen to vocally object. Through joint public-private action, however, such democratic objections are simply circumvented and rendered irrelevant via fait accompli.

Similarly, governments, corporations, and NGOs have taken it upon themselves to jointly act in response to what they characterize as a global emergency: climate change. In initiative after initiative, we have seen these actors align together to eagerly push “green” energy transition schemes developed without real public input. Whatever their stated intentions, what these public-private partnerships have served to do in practice is mostly to significantly grow the scope of state power while also leveraging government mandates and huge subsidies to force into life entirely new, otherwise unviable sectors – sectors in which corporate players may extract profits from a captive public. Simultaneously, an innumerable swarm of non-profits circle endlessly around this heaping pile, bloating themselves on an unending feast of public and private grant money.

Whatever the threat from climate change, this vast exercise in public-private partnership in the name of green energy transition has produced little to show for it – except for making a select subset of well-connected people a whole lot richer than they would be in actual free-market conditions.

Meanwhile, across Western nations, the common people suffer under an escalating tide of onerous and often absurd regulation, energy inflation, and deindustrialization. But, whether they are farmers in the Netherlands, factory-workers in Germany, or lorry drivers in France, their cries of protest tend to be met only by the mobilized forces of the state.

To them, what public-private partnership looks like in practice is the forced redevelopment of the family farm at the barrel of a police water cannon.

Finally, there could be no more shameful and glaring example of public-private partnership gone wrong today than the censorship-industrial complex. A vast, transnational, wholly unaccountable network of international bodies, government bureaucracies, technology and media companies, and zealously ideological NGOs now works tirelessly together to systematically remove and censor politically inconvenient information from the internet, manipulate search results, algorithmic feeds, and AI models, boost chosen propaganda narratives, blackmail advertisers and financial institutions into sidelining political adversaries, and, increasing, to justify the outright authoritarian criminalization of dissenting opinions – as  we’ve seen recently in places like Britain, Brazil, and of course Brussels.

Notably, the goal of this furious public-private effort seems overwhelmingly to be to manipulate and silence growing public criticism of, you guessed it… elites’ anti-democratic use of public-private collusion on controversial issues like migration and climate change.

But, for much of the public, the cat is already out of the bag. In fact, we ought to recognize that the growth of so-called “populist” movements across the Western world can be seen as, in large measure, a democratic backlash against the increasingly widespread use of public-private collusion to “solve” nearly every controversial issue that arises today – that is, to sidestep democratic debate and accountability on these issues in order to force through ill-considered “progressive” policy changes which all-too often actively harm the interests of national populations.

Such behavior is utterly corrosive to public trust and the democratic legitimacy of institutions of all kinds. Government and corporate leaders therefore had best be warned: if you don’t want to lose your heads – metaphorically, of course, though perhaps someday literally – you had best act now to regain that legitimacy by more carefully setting boundaries and safeguards on the use of public-private partnership as a tool.

Realize that if the West acts too much like China when it comes to the coordination of corporation and state, we risk becoming more like China in other ways as well – and much of the public already clearly recognizes this trend as a real threat to their liberty and way of life. After all, remember that we already have a word to describe when the fusion of corporation and state is taken to its ultimate, logical conclusion – and that word is “fascism.”

Yet, even so, this doesn’t mean that public-private partnerships are always bad and can never be used wisely. As I said to start, I believe some level of state-corporate cooperation on critical issues like industrial policy is both inevitable and potentially very beneficial. But how can this be done rightly? As a starting point, I would offer a few simple recommendations.

Those seeking to wield benign and genuine corporate statecraft ought, above all, to adopt as their guiding principle the idea that public-private partnerships must always put the interests of the nation first. To push multinational corporations into subsuming their multinational interests in favor of the sovereign nation’s interests may be democratically legitimate, and even find much welcome among the public. To use state power to advance the multinational interests of corporate stakeholders over those of the very nation which the state supposedly exists to serve can in contrast never be legitimate. Sticking to this principle alone would help prevent a good deal of the damage currently being done by the wayward use of public-private partnership.

Simultaneously, private corporations must realize that allowing states to coopt them into serving anti-democratic ends, as in the case of the censorship-industrial complex, only risks harming their long-term interests by generating festering public anger, undermining political and social stability, and eroding the very institutions that form the necessary foundation for free-market capitalism to function smoothly. It is in their long-term material interest to resist such pressure as firmly and publicly as possible, not to enable it.

Finally, all parties must strive to be as publicly transparent as possible about public-private partnerships, their intentions and actors, and how they operate. Secrecy breeds well-founded suspicions of conspiracy.

Overall, state-corporate coordination may at times be necessary, but it is best treated as a necessary evil, to be approached with all due caution – and never as an unalloyed good.