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The limits of market-based governance and accountability - PFI refinancing and the resurgence of the regulatory state

Beck, M., Toms, S. and Asenova, D. (2007) The limits of market-based governance and accountability - PFI refinancing and the resurgence of the regulatory state. Working Paper. Department of Management Studies, University of York

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Abstract

The refinancing of PFI (Private Finance Initiative) projects currently represents one of the most contentious aspects of Public Private Partnership in the UK. The negative publicity associated with UK PFI refinancing deals is associated with two main factors, namely evidence of massive private sector profit making in connection with past refinancing deals, and the ‘failure’ of private sector financiers to share refinancing profits with public sector organisations in line with government recommendations. This paper examines the ongoing ‘dance of non-regulation’ associated with PFI refinancing on the basis of traditional Marxist notions of ‘contradictions of capitalism’. Our analysis commences with the argument that PFI represents a prototypical case of an alliance between finance capital and the state, which has been created with the principal purpose of establishing a new source of profits for the private sector. A Marxist analysis of state-business relationships would predict such an alliance to show tendencies towards instability which could arise from a number of factors. These include, among others, the inherent lack of legitimacy of such an alliance vis a vis established policy goals and the stakeholders associated with them; a lack of a credible regulatory framework which, as a systemic prerequisite of private sector profit making, further exacerbates existing problems of legitimation; and, perhaps most importantly, the potentially self-defeating attempt by capital to maximise gains from the exploitation of the existing alliance without concern for the possibility of a political or regulatory backlash. Examining the recent history of PFI refinancing we find evidence of most of these destabilising tendencies which we expect to trigger calls for a greater regulation of PFI projects in the future.

Item Type: Monograph (Working Paper)
Institution: The University of York
Academic Units: The University of York > The York Management School
Depositing User: Sherpa Assistant
Date Deposited: 05 Dec 2007 16:58
Last Modified: 14 Oct 2014 08:47
Status: Published
Publisher: Department of Management Studies, University of York
Refereed: No
Related URLs:
URI: http://eprints.whiterose.ac.uk/id/eprint/3474

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