400 years of fear of private entrepreneurs

 Are profits in the welfare state a mistake or, on the contrary, a driving force needed for everyone's best? The current dispute has been debated since the beginning of the 17th century. This has been made obvious by a new dissertation which points to a remarkable continuity regarding both hope and suspicion.

 "These entrepreneurs do not undertake the task unless they are able to make a good profit themselves, and they are not interested in the wealth of the nation but rather want to create benefits for themselves at the cost of the people." Such opinions are very politically correct today. But these words are not pronounced by a contemporary politician but (in modernized language) written by Axel Oxenstierna (1583 - 1654).

 In other words, our view of private entrepreneurs and profits is not new, but seems to be typical of the political culture in Sweden. Even though the country in the early 1600s was very different in many respects, there were obvious similarities in attitudes and values.  A young historian at Stockholm University, Mr Linnarsson, has taken onto himself the task of examining how Sweden has regarded profit for a longer period of time, from the 1600s to the present day. Despite the extensive time span, Linnarsson has succeeded in summarizing the "Problem of Profits" in an essay: "Public and Public Duty Debates for 400 Years" (Nordic Academic Press). He has, of course, been forced to neglect lots of possible perspectives and insights. The source material has nevertheless been overwhelming.

Another student, Mats Hallenberg has in a earlier study - "State Power for sale", (2008) thoroughly elaborated the attempts by Axel Oxenstierna and the government leadership in the early 1600s to outsource tax collection. It proved to be a sensitive subject and aroused so much local dissatisfaction that it was soon abandoned. Linnarsson has chosen four instances in history, but he confined himself entirely to what has been negotiated in parliament.
 Common denominator of the four instances has been that they concerned the choice between government and private operations and that discussions always included the question of which choice would best benefit the public good. Oxenstierna's opinion is characteristic: the finding that the entrepreneurs wanted to make a profit was clear, but the core issue was whether this caused nuisance or loss to the general public. The answer was never obvious.  When the government had chosen to outsource the collection of taxes to a contracted private company, this was conditional upon the tax revenue for the state thus becoming larger and more secure. The public reaction against these "collectors" overly nitious and effective administrators, paradoxically, made this arrangement for political reasons impossible.
 Linnarsson, in his interesting survey, found out that the lines of debate were strikingly formulated on the question of what used to be the general rule. Although, in ancient Rome, the idea of ​maximum benefit (salus populi) for all citizens had been formulated (summum bonum), that was something that tore away with the imperial era and the Roman empire's later dissolution.  With the renaissance humanists' feedback to ancient culture and literature, this thought was again raised, even though it was not reflected in political reality as quickly. It is therefore of interest to note that such thoughts became natural in the Swedish parliament in the 17th century. Although you might include much less and narrower in the term public interest in the 1600s or 1700s compared to what we now do, the very fact that the term was also related to concrete choices between public and private matters.

The first example in Linnarssons study is about a debate in the first Swedish period of parlamentarism (1718-1772) around the general collection of customs duties. This had since 1726 benn outsourced to the private General Legislative Society. Customs and taxes are rarely popular. When the matter was discussed in the Parlament in 1765, the question was whether the state should take back the right to collect duties or if private entrepreneurs should continue to do this. In the latter case, it would mean, for the private entrepreneur, i.e. the General Legislative Society, a fixed lease to the Crown, regardless of how much this then practically entered into customs duties. The more duties that could be collected, the greater became the profit for society. It was basically the same system as Oxenstierna and the state had created for the collection of taxes in the 1600's.
 In our days, such a system would hardly have been possible, but paradoxically, one of the reasons that in 1726 the redemption of customs duties had passed to private administration was the crown's dissatisfaction with the efficiency of recovery. Several politicans therefore argued in the debate that the state would actually benefit by continuing to let private companies collect. Then you could also be sure of the size of the customs income. The result, however, was that the state took over the collection.  One could say that this 250-year-old parliamentary debate created a pattern for the following debates for and against profits in matters of relevance to the general good. On the one hand, there were those who claimed that private activities are most favorable in the long term also for the state or citizens. Others claimed, however, that private profits in practice drain the treasury and thus favored that the state collects taxes and duties.  Linnarsson has also downloaded a parliamentary debate from the 19th century and one from the turn of the century - 1900. The first was the extension of railroads, the other concerned the proposal to create a national telephone network.
As far as the extension of railroads are concerned, the question was promptly addressed to either party, state or private actors who would best serve the public interest. There was a lot of uncertainty about whether the state had sufficient competence and therefore should choose foreign railway builders. The decision was nevertheless that the building of railroads should be handled by the state.

The case became even more popular during the many years of debate on the telephone network. There, many MPs feared that the private company that controlled large parts of Stockholm's network could not be purchased without seriously hurting the public interests. The state simply lacked resources to buy and manage the private AB Stockholm phone business. It took many years for the state's telegraph company to reach such a level that a merger in 1918 could happen without inconvenience.
 In both of these debates it became even more clear that it was not only a matter of choice between state or private, but primarily about what best served the public interest. From the point of view of being more aware of the individual's interests towards the state, one later became more prone in safeguarding the government's interests towards the private. The modern state thus gained increasing importance for the general wellbeing. Linnarsson's last example takes us on to today's debate. He has studied the intense conflicts of the 1980s on private nursery homes, which heated the debate in all directions. In essence, the issue raised the advent of a new law "Lex Pysslingen", which intended to put a stop to government grants to private companies as  owners of nursery homes.                     Those who advocated the new law were convinced that private involvement was driven solely by the profits of the individual, which could be good for the business and also for the public. The bourgeois opposition argued instead that diversity benefitted freedom and that this in itself had a qualitative value. In other words, freedom of choice was regarded as an essential aspect of good welfare. Without it, the quality of care would be worse. There were those who argued that diversity and market would increase efficiency, but that was not the most public argument. Linnarsson's presentation reveals that the modern debate with emotional opinions is by no means new. Even far back in time, there has been suspicion against private profits, yet largely balanced against the requirement for efficiency in the business. The public good would not be served by a public system that did not work. Only mowadays has freedom of choice become an aspect of welfare. This is probably due to the fact that the concept of welfare covers many more areas than earlier. This presupposes confidence that the state always protects and favors everyone. Everyone pays taxes to get a share of the common welfare. But when you discover that not everyone gets the same quality of school, care or other services, many want to make their own choices. The nursery homes debate in the 80's and our current school debate clearly shows this. The idea of ​​the general good can of course not be justified with what we today put into our "concepts of welfare". The general good did not always mean an equal use of common benefits or the like. Instead, it was "the general best" more clearly linked to the interests of the state and only indirectly to the wellbeing of citizens. Linnarsson has highlighted a significant trait in the Swedish political discussion of centuries. The interesting lesson is not to be found in the details, which vary over the centuries, but in a suspicion that has always been present against profits for the individual  and the question on to what degree this favors or does not favor the general good. Certainly already Oxenstierna ventilated his disbeief in the profit interests of private players, but that did not prevent him from exploiting them when he thought it was good for the state. Is such a pragmatism possible in our time? 

 Erland Sellberg Professor em. in history of ideas  at Stockholm University --- The original article in Swedish is available at: https://www.svd.se/400-ar-av-radsla-for-privata-entreprenorer   Also check: http://axiom1b.blogspot.se/2017/10/do-elites-have-responsibility-for.html