From its inception, New York City's Central Park has reflected, internalized or played host to many of the contradictions characteristic of an urban capitalist environment: uneven and unequal geographic development; intense struggles over class, race/ethnicity, gender, and sexual orientation; clashes between various forms of capital (e.g., financial and merchant); and, conflicts regarding “appropriate” social and political behavior. This essay brings to light another contradiction: the park's ostensible status as one of the nation's most famous and treasured public goods against its production as a capitalist commodity. In highlighting this contradiction this essay develops a unique class approach to reconceptualize the park's privatization.

This class approach to privatization yields four benefits. First, it serves to underscore the limitations of the hegemonic cost-efficiency calculus that has long informed the municipal privatization discourse. Second, it prompts important questions regarding the troublesome relationship between democratic principles and capitalist production relations. Third, it offers an alternative to a wage-led approach to privatization. Unlike that approach, a class approach facilitates the articulation of a consistent political position on privatization. Finally, and seemingly paradoxically, it provides a framework for theorizing “progressive” privatizations.

Municipal Privatization: Theory and Discourse

Despite the different forms municipal privatizations may take (e.g., contracting, franchise concessions, managed competition, etc.), they involve transfer of the production of a public good or service to a private entity—in most cases to a for- or nonprofit one. Thus, privatizations are often understood and described conceptually in locational or spatial terms, viz., production no longer takes place “inside” the public sector but “in” the private sector. In the context of the theory of privatization that underlies the existing municipal privatization discourse, the theoretical importance imputed to this locational/spatial transfer derives from the fact that it is held to result in substantive changes in the environment within which the production of public goods and services takes place. While these changes are many and diverse, the municipal privatization discourse places primary emphasis and focus on two: the managerial process and the competitive process.

The focus on the managerial process reflects the public-choice theoretical tradition that informs the theory underlying this privatization discourse. This theory's groundwork was laid in the 1950s and 1960s by Milton Friedman, William Niskanen, Gordon Tullock, and Anthony Downs.Footnote ¹ Central to this theory was the development of an analogy between the budget-maximizing bureaucrat and Homo economicus. A departmental commissioner was theorized as trying to maximize his budget just as (in neoclassical economic theory) an individual or firm was assumed to maximize utility or profit. Due to asymmetries of information between the commissioner and her boss (the mayor), the result of this maximizing behavior was inefficiency and oversupply in the public sector. This result stood in sharp contrast to the perfect information case in neoclassical economics which begets efficiency. That budget-maximizing behavior lay at the heart of bureaucratic inefficiency and/or oversupply became widely accepted during this period, especially by public-choice theorists and many economists.

The privatization discourse's focus on the competitive process reflects the seminal work of Charles Tiebout who sought to characterize local governments as firm-like.Footnote ² According to Tiebout, the local governments comprising metropolitan areas could be thought of as offering various packages of services to consumer-voters that would move to the community that best satisfied their given preferences, i.e., they would, “vote with their feet.” Tiebout's work suggested that local governments shared common characteristics with industrial firms. Each local government produced particular products (services), enjoyed different economies of scale, serviced voter-consumers, and acted under various constraints. The result was a novel and powerful conceptualization of the system of municipal government. The import of this conceptualization for Tiebout stemmed from the fact that it provided a solution to the theoretical problem of how the optimal level of local expenditures on public goods was to be determined. Competition between local governments, Tiebout hypothesized, similar to the benefits it assured in the private sector (under certain conditions), would create efficiency in the public realm. The import of Tiebout's work for the theory of privatization, meanwhile, rested squarely on the analogy he drew between government entities and industrial firms. This suggested that competition (and the efficiency its presence was thought to produce in the private sector) could be replicated (in various ways) within the public sector.

These two analogies came to serve as the foundation upon which the modern theory of municipal privatization and the discourse it spawned rests. Specifically, because they are understood to invoke substantive changes in the managerial and/or competitive processes associated with the production of public goods and services, privatizations should, in theory, increase the efficiency or cost-effectiveness of the production of many public goods and services. Thus, a powerful and decidedly deterministic/reductionist conceptualization of privatization processes emerges. Privatization acts are placed in the first position of a simple logic chain, viz., privatization increases competition and/or alters the managerial environment, and this alteration begets a set of outcomes. While efficiency has most often been the principal outcome variable of interest (especially in public policy arenas), other widely analyzed outcomes include municipal expenditures, public-sector wages and employment, and service quality and quantity.

In the context of the municipal privatization discourse, the result of this conceptualization-cum-reductionism is that analytical attention has inevitably been directed towards this circumscribed set of outcome variables. As a consequence, most analyses of municipal privatizations reflect this focus and concentration on these outcomes. These outcomes (often grouped into “costs” and “benefits” in order to rationalize policymaking) are presumed to be not only identifiable but also (and, more heroically) calculable. Policy debate inevitably reverberates around questions concerning the post-privatization direction (and magnitude) of change in these types of variables, viz., a privatization will increase/decrease: the efficiency of public service delivery, municipal expenditures, public-sector wages or employment levels, etc. The predictable result is a litany of studies with contradictory findings that, nevertheless, share a common ontological framework.

There is an important corollary of this conceptualization of privatization. Namely, the private for- and nonprofit entities that become responsible for the production of a public good or service upon its privatization are of little theoretical or empirical interest. At moments when these entities do become objects of focus it is often due to prior interest in some element of the outcome set. Explicit theoretical and/or empirical investigation of these entities is rare. This neglect means that the entities central to municipal privatizations rarely figure prominently in broader interpretations and understandings of municipal privatizations.

The analytical neglect of these entities reflects and is reinforced by the influence of neoclassical economics' approach toward the enterprise on the theory of privatization. On the assumptions that a municipal privatization process generates or replicates a set of constraints (i.e., a specific managerial and/or competitive regime), and that the entity involved in the privatization is a for-profit one, the neoclassical profit-maximization assumption short-circuits theoretical or empirical interest in the entity. If the entity involved in the privatization is a nonprofit, it is assumed that its mission (understood in contradistinction to that of a for-profit) works to obviate any additional theoretical or empirical investigation. In both cases, these entities' behavior and relation to the larger urban environment within which the privatization process takes place are assumed to be adequately represented by their characterization as for- or nonprofit. The result is that analytical attention is invariably directed away from the entities that lie at the center of privatization processes and toward a heavily circumscribed set of outcome variables such processes are presumed, in theory, to alter.

A Class Approach to Municipal Privatization

Three concepts structure a class approach to municipal privatization: the class process, reproduction, and overdetermination.Footnote ³ A class process is understood to be an economic (as opposed to a natural, political, or cultural) process that involves the production, appropriation, and distribution of surplus labor. Unlike many approaches to class, the class approach to municipal privatization developed here understands class as an adjective describing a specific process, i.e., class is not understood as a referent. Depending upon the form that the surplus labor takes as well as the commodity/noncommodity status of the product it gives rise to, and the type of remuneration its performer receives, a class process may be further specified as a feudal, ancient, capitalist, or communist one.Footnote ⁴ Further, class processes may be classified as either fundamental or subsumed. The former relates to the production and appropriation of surplus labor, while the latter pertains to the subsequent distribution of realized surplus labor to specific entities. The distribution of cuts of realized surplus to these entities is vitally important as it ensures that such entities (e.g., banks, the state/municipality, shareholders, advertising agencies, consultants, etc.) continue to perform functions (or, provide conditions) that allow surplus labor to be produced in the first place. This distributive (or, subsumed class) process allows the fundamental class process (and, thus, the entity, e.g., a typical industrial capitalist firm, “hosting” it) to be reproduced. A different way of conceptualizing the reproduction process is to see it as a means of analytically connecting or relating a capitalist commodity producer to her larger social environment. A portion of the surplus value the capitalist realizes upon the sale of her commodity is subsequently distributed to the many entities in the social totality which provide the conditions that enable the capitalist to produce and appropriate surplus value.

The third concept central to a class approach toward privatization is overdetermination. This concept flows from a specific conceptualization of the social totality that sees it as comprised of sites (e.g., the enterprise, state, or household) of bundled processes (economic, political, cultural, and natural ones). This vision imparts an understanding of ceaseless movement or change to the social totality and the sites within it. It follows that the processes comprising any site not only “overdetermine” that site, but they simultaneously overdetermine one another. This implies, for example, that the fundamental and subsumed class processes that help constitute a capitalist commodity-producing enterprise not only necessarily overdetermine one another but also overdetermine (and are overdetermined by) all of the other many processes constituting the site.

Overdetermination implies considerably more than mere mutual effectivity or causation, e.g., two or more independent processes mutually influencing one another. Instead, the crux of the concept is constitutivity—an idea that renders problematic the independence notion upon which the idea of mutual effectivity rests. The concept therefore entails a distinct approach to and understanding of causality: no one process may be understood to be the unique effect of one or some subset of other processes. And, no single process, or subset of processes, may be deemed the unique cause(s) of any other process. This approach to and understanding of causality is referred to as an antiessentialist or antireductionist social theory or ontology. Unlike essentialist and reductionist social theories, an antiessentialist social theory holds that no one process or site in the social totality can be explained by reducing it to some essential single (or, set of) process(es) or cause(s). The next section explains what the adoption of these three concepts implies in regard to analyzing privatization processes.

From a class perspective, the interest in any privatization process lies in considering the class changes it invokes. Specifically, the privatization of a public good or service means it is no longer produced as a mere use-value. A public park, for example, is consumed by the public and is therefore useful. It does not generally have exchange value, however; it is not produced as a commodity for exchange.Footnote ⁵ Municipal workers generally produce parks. Because these workers' labor does not yield an exchangeable commodity, and because they exchange their labor-power against revenue (they receive a wage from the municipality out of collected tax revenues) not capital, the production of a public park, like municipal goods and services in general, does not involve a class process as no surplus is produced.Footnote ⁶

Once a public good or service is privatized it becomes an object of exchange (a commodity), i.e., it represents both a use-value and an exchange value. Regardless of the institutional form the privatization takes, this exchange occurs between the municipality undertaking the privatization process and the entity that comes to produce the good or service. From a class perspective, this means the public good or service is produced under starkly different social relations. In particular, its production now requires a class process. There are three possibilities regarding this class process's origins. First, a municipal privatization may generate a new enterprise. The creation of public authorities and public-private partnerships are representative examples. In this case, the class process brought into being via a municipal privatization would occur together (simultaneously) with the creation of a new enterprise. Second, a municipal privatization might transfer production to an existing enterprise that did not (prior to the privatization) host a class process. In this case, the privatization would generate (bring into being) a class process within an existing enterprise. As discussed below, Central Park's privatization was representative of this type of privatization. Third, a municipal privatization might transfer production to an enterprise that already hosts a class process. Contracting with a capitalist producer represents the paradigmatic example of this type of privatization process. Unlike the first two cases, this type of privatization would not generate a new class process but would support an existing one.

Two points flow from this focus on the class dimension of privatization. First, from a class perspective, a municipal privatization means a public good or service is no longer a mere use-value. Following privatization the good or service is commodified and its production involves a class process. In the vast majority of the municipal privatizations carried out in the US over the past quarter-century, these class processes have tended to be capitalist ones. In other words, after privatization, municipal public goods and services represent capitalist commodities containing surplus value. This means these goods and services—goods and services a democratically-elected body decides to provide its citizens—will henceforth be produced via a capitalist class process that will yield a surplus from which a profit may be derived. What is the import of this from a class perspective? Capitalist class processes exclude those who produce surplus (productive workers) from participating in deciding how the fruits of their labors will be distributed (These distributions constitute the subsumed class process, described above). In most cases, such distributions are carried out by a board of directors or trustees (often in conjunction with management input). This exclusion implies that capitalist class processes are inherently undemocratic. The undemocratic nature of capitalist class processes provides a basis for deeming them exploitative (The exploitation theme and its connection to undemocracy is returned to below).

Second, recognition of the class dimension of privatization processes constitutes the beginning point for a class analysis of the process. Once the class process has been recognized, understanding how it is reproduced becomes the central task of the class analysis. For example, the class analysis of Central Park's privatization analyzes how the reproduction process of the organization that came to produce the park following its privatization (the Central Park Conservancy (CPC)) impinges upon various agents and institutions in New York City. In this way, the park's privatization is analytically related to the larger social environment within which it took place. In other words, analysis of the CPC's reproduction process provides a vehicle for explicating some of the complex and heretofore little-recognized effects the park's privatization may have given rise to.

Important implications flow from this approach toward municipal privatization. In particular, the presumption that municipal privatizations have some unique or singular outcome, a presumption that pervades the existing municipal privatization discourse, is jettisoned. An overdeterminist class approach toward municipal privatization reconceptualizes the process as an ensemble of overdetermined and contradictory class processes. This reconceptualization reflects a nondeterminist or nonreductionist way of thinking about privatization. As a result, the types of determinist ontological logic that inform the existing municipal privatization discourse are displaced.

The approach's embrace of an overdeterminist ontology and class process focus, and the subsequent displacement of the traditional discourse's reductionist ontology and closely-related focus on the efficiency outcomes of municipal privatization process, moreover, represents a critical shift. The point of any class-analytic study is to examine one particular process—the class process—and how it complexly impinges upon and reacts to many other processes with the purpose of constructing a class-based knowledge of the object in question—here, municipal privatization.Footnote ⁷ In contrast, the mainstream discourse's general fixation on the efficiency outcome (or, a very narrowly circumscribed set of similar outcome variables) has meant that many processes involved in any municipal privatization are either discounted or ignored. In contrast, a class approach toward municipal privatization not only seeks to recognize and explore (but some of) these many processes, but also realizes that their social effects will, “endlessly ramify in overlapping and interacting ways.”Footnote ⁸

New York City's Fiscal and Park Crises

New York City's 1970s experience came to symbolize the depth and severity of the urban fiscal crisis that cascaded across the country during the decade. Between 1969 and 1976, New York City lost 588,000 jobs—a startling 15.5 percent decline.Footnote ⁹ Its manufacturing sector shed 285,000 jobs, a decline of thirty-five percent, over the same period. The city lost 51,500 public-sector jobs in 1976 alone. As employment opportunities shrank, the city's population plummeted, declining 10.4 percent (a loss of over 800,000 persons) during the 1970s. Despite the associated decline in its labor force, the city's unemployment rate rose from under five percent in 1970 to twelve percent by mid-1975, before receding to 8.5 percent in late 1979.

The city's fiscal crisis hit its park system hard. Under the austerity program the city was forced to adopt following its bankruptcy, the Parks Department's (Parks) budget declined $40 million between 1974 and 1980, a sixty-percent cut in real terms.Footnote ¹⁰ The number of full-time permanent park workers dropped from a late 1960s peak of nearly 6,100 to 4,800 in the early 1970s, and then declined to 2,600 by 1979.Footnote ¹¹ Central Park may have lost as much as forty-four percent of its full-time workforce during the decade.Footnote ¹² Between fiscal year 1975 and 1976 Parks' capital budget was slashed to $5 million from $24 million.Footnote ¹³ Unsurprisingly, the quality of the city's parks, including Central Park, deteriorated dramatically. The extent of Central Park's deterioration led New York State Senator Daniel Patrick Moynihan to threaten then-Parks commissioner Gordon Davis with a federal takeover of Central Park unless something was done about the “national disgrace.”

The city's fiscal crisis' effect on its park system, moreover, came on the heels of a period during which the demand for Central Park had increased dramatically. This increase reflected the political and cultural movements that had altered the use of Central Park during the 1960s.Footnote ¹⁴ “Love-ins,” “be-ins,” and “fat-ins” became regular features infusing the park's social, cultural, and increasingly political atmosphere (the park was used for large-scale antiwar rallies during this period). These trends, moreover, coincided with policy decisions to reallocate park spending toward programs and away from maintenance and capital improvements.Footnote ¹⁵ Both developments meant that the city's park system was in dire shape before its fiscal crisis began.

The Emergence of the Central Park Conservancy

In 1979, Davis appointed Elizabeth Barlow Rogers Central Park administrator. Rogers, who held a degree in city planning from Yale University, was an avid park activist and author of books and articles on parks and Frederick Law Olmstead, one of Central Park's codesigners. In the years prior to her appointment, Barlow had launched efforts to save the park, raising private monies for restoration, and recruited volunteers to do maintenance and horticulture in the park.Footnote ¹⁶ Davis asked Rogers to raise her own salary as administrator. In December 1980, New York City Mayor Koch officially recognized the formation of the Central Park Conservancy (CPC).

The Conservancy's board of trustees comprised thirty-four individuals, many of whom were executives of major corporations located in the city. The board included six public trustees, three appointed by the mayor, and three city officials that served ex officio. Rogers served as both the Conservancy's chief executive officer as well as Central Park administrator. The administrator is appointed by the mayor and reports to the Park's commissioner, but is paid by the Conservancy. The Parks Commissioner retained official control over park policy. While the Conservancy's ostensible mandate was (and, continues to be) fundraising and park stewardship, it began to play (in tandem with its success at fundraising and restoration) a significantly greater role in the park's operations. By 1990, the Conservancy was supplying half the park's annual operating budget, half the funds for its capital improvements, subsidizing half of the park's staff, and providing almost all of the park's recreational and cultural programming.Footnote ¹⁷

Soon after the CPC's formal recognition, Davis issued a report declining Bulgarian artist Christo's request for a two-week permit to install an unprecedented twenty-five mile long exhibit consisting of apricot-colored fabric banners hung from metal frames throughout the park. Davis's report was more than a denial of a park permit, however. The document set out Davis's intentions to affect a shift in park policy. While acknowledging the good intentions of his predecessors who had embraced policies that placed a high value on the park as a place for recreation, education, and cultural activities, Davis argued that limits on how the public used Central Park were long overdue.Footnote ¹⁸

Davis's policy dovetailed with the Conservancy's focus on restoring the park during the 1980s. At the center of this restoration process laid Rogers's deep commitment to an Olmsteadian ideology, which viewed the park as, “a scenic retreat, a peaceful space that would act as an antidote to urban stress.”Footnote ¹⁹ Guided by a series of studies carried out during the early 1980s, the CPC embarked on an ambitious restoration plan.Footnote ²⁰ The CPC also began efforts to program the park, inaugurating a host of exhibitions, music series, and educational programs. By the end of the 1980s, the CPC had raised more than $65 million for the park's restoration. While the CPC's fundraising efforts were important to the park's widely acknowledged and trumpeted rebirth during the decade, it remained true that the city paid for nearly three-quarters of the park's improvements.Footnote ²¹

The CPC's restorative program continued during the 1990s, fueled by a five-year capital campaign during 1987-1991 that raised $50 million. The CPC's influence over Central Park policy and usage grew in tandem with its fundraising success. This influence and the CPC's focus on restoration also led to growing differences with various public groups' visions of the park's proper usage.Footnote ²² Moreover, the city's severe early 1990s recession, which resulted in deep cuts in park's budget, forced a reluctant CPC to redirect its privately-raised funds away from restoration toward subsidizing the park's maintenance personnel.Footnote ²³ These events not only furthered the CPC's influence over the park, but also heightened the city's reliance on the CPC.

The city and the CPC continued to jointly operate Central Park under a rather loose agreement until 1993, at which point, this agreement was transformed into a more formal memorandum of understanding (MOU).Footnote ²⁴ This MOU established policies and procedures of mutual concern regarding the park and its operations. It did not require either party to obligate funds and did not create a legally binding commitment between the two parties. The agreement between the CPC and the city soon morphed again, however, under the mayoralty of Rudolph Giuliani.

The Mayoralty of Rudolph Giuliani and the Privatization of Central Park

The election of Rudolph Giuliani as New York City's mayor marked a turning point for New York City government. Giuliani made privatization a key platform of his 1993 campaign.Footnote ²⁵ While privatization was hardly new to New York City government—many services provided by the city had long been provided under contract—Giuliani's privatization program was not only a response to fiscal constraints, but, more pointedly, strategically aimed at improving the overall performance of city agencies.

While the successes and failures of Giuliani's privatization initiatives are debatable, it is undeniable that he delivered on his campaign promise. This is true despite the fierce opposition he often faced as well as the important defeat he suffered in an attempt to privatize the city's hospital system. During his eight years as mayor, Giuliani implemented sixty privatization initiatives.Footnote ²⁶ These included contracting out fleet management in Parks and custodial work at public schools, franchising private ferries, divesting radio and television stations, and crafting a public-private partnership for new school construction. By far the most high-profile privatization Giuliani implemented, however, was Central Park's.

Until early 1998, the MOU governed the relationship between the CPC and the city. In February 1998, Giuliani changed this relationship by entering into a renewable eight-year contract with the CPC. Under the contract, the CPC was obligated to perform, “responsibilities associated with maintaining and repairing Central Park for the benefit of the public, including the provision of programs and activities that will increase public interest in and awareness of Central Park.”Footnote ²⁷ The contract also specified the two parties' respective financial commitments.

Beginning with the fiscal year that began July 1, 1997 (the first year of the eight-year contract), the CPC was obligated to raise and expend annually a minimum of $5 million with respect to maintenance, repairs, programming, landscaping, and the renovation and rehabilitation of existing facilities in Central Park.Footnote ²⁸ In consideration of these services, the city paid the CPC $1 million in the contract's first year. In the second year of the contract, the city paid the CPC an amount equal to $1 million if the $5 million threshold was met in the prior fiscal year, and $0.50 for each additional dollar raised and expended by CPC in excess of $5 million (up to a maximum equal to an additional $1 million). The structure of the contract in the third year was identical to year two except that the city also agreed to pay the CPC an amount equal to fifty percent of annual net concession revenues generated in the park above $6 million (up to a maximum of an additional $1 million). The remaining years of the contract were similar save for an increase to $2 million in the maximum paid for concessions.

Central Park's privatization was clearly not designed to foster competition. Instead, the official policy rationale for the park's privatization centered on the managerial process underlying the park's production. In the run-up to the park's privatization, CPC Trustee and benefactor, Richard Gilder, wrote, in an essay urging the city to turn the park's management over entirely to the Conservancy:

Gilder's remark is noteworthy as it echoes one of the aforementioned focal points of the municipal privatization discourse. From a public policy standpoint, the rationale for the park's privatization turned on the management process (in this case, as that process related to managing human resources).

A Class Interpretation of Central Park's Privatization

From a class perspective, once the contract between the CPC and the city was signed, Central Park—the 840 acres that arguably comprise the nation's most famous urban space and which lie at the center of the world's financial capital—became a good that no longer constituted a mere use-value, but one that also comprised exchange value. Thus, the privatization process commodified Central Park. The CPC became the producer and seller of the “Central Park commodity” while the city became its buyer.Footnote ³⁰ As explained, the import of this commodification-cum-privatization from a class perspective rests on the idea that following privatization, the park's production came to involve a class process. Because the surplus this class process generates takes the form of surplus value, the class process spawned by the park's privatization and which yields Central Park qua commodity is a capitalist one. This implies that the productive workers employed by the CPC are exploited. Similar to typical industrial wage laborers, the CPC's workers are excluded from participating in decisions regarding how the fruits of their labor (once realized) are subsequently used or distributed. In the case of the CPC, such distributive decisions are made exclusively by the CPC's board in conjunction with management.Footnote ³¹ To reiterate, this exploitative capitalist class process reflects the exclusion the CPC's workers endure; this exclusion represents a specific type of undemocracy—one unique to the economic (class) process those workers participate in.

To what uses might the surplus produced by the CPC's productive workers be put, or how is it distributed? The answer to this question necessitates exploration of the CPC's reproduction process.

The CPC's Reproduction Process

As explained, capitalists, like the CPC, must reproduce their class processes if they are to survive. They do so by distributing portions of realized surplus value to those that provide them with conditions of existence, (e.g., dividends to shareholders, interest payments to bankers and bondholders, rents to landlords, fees to advertising agencies, salaries to managers, and taxes to government entities).Footnote ³² Surplus value is realized via the sale of commodities. It is out of these sale proceeds that capitalists make such distributions. Whatever is left over after this distributive process constitutes profit.

Unlike many capitalists, the CPC's sale of the Central Park commodity has never allowed it to cover its necessary distributions. In fact, proceeds from the sale of the Central Park commodity have been insufficient to cover the park's production costs.Footnote ³³ In other words, the CPC produces the Central Park commodity at a loss each year. For fiscal years 1998 to 2003, the city paid the CPC for the Central Park commodity: $1 million, $2 million, $2.176 million, $2.477 million, $2.677 million, $2.853 million. The park's production costs for these years totaled: $13.9 million, $16.6 million, $16.5 million, $15.8 million, $13.2 million, and $12.6 million.Footnote ³⁴ Despite these shortfalls, the CPC has thrived, producing a commodity widely heralded as being virtually unrivaled (among urban parks) in both aesthetic and programmatic terms. How has the CPC managed such a feat—or, how has it managed to reproduce itself or, its capitalist class process?

Notwithstanding Gilder's claim, one activity, distinct from its daily production of the Central Park commodity, has driven the CPC's success: fundraising. The centrality of fundraising to the CPC's reproduction (and the park's “successful” privatization) process raises an important question. Namely, what are some of the potential implications of this fundraising, and how might consideration of them necessitate a rethinking of the common interpretation that holds the park's privatization as an exemplary model of privatization?Footnote ³⁵

In many respects, the CPC's success at fundraising is not surprising. Central Park is not only New Yorkers' “backyard” but also the backyard of one of the most densely packed groups of rich people in the world. While it is hard to dismiss the effects this fundraising has had on the park's quality, the CPC's fundraising success has not been universally embraced by New Yorkers. Those who have raised questions regarding the park's privatization have tended to couch their critiques in equity terms. As many have pointed out, the park's privatization has effectively resulted in a two-tiered park system.Footnote ³⁶ Visits to the city's other parks amply testify to the veracity of this notion. Moreover, the park's privatization insulates Central Park from budget constraints. As long as the CPC meets its fundraising obligations, the city is obligated to buy the Central Park commodity from the CPC. Other city parks do not enjoy such insulation. The city and the CPC have responded to such fiscal equity concerns by pointing out that other parks (and, their neighbors) are free to imitate the CPC model.Footnote ³⁷

While the visibility of the city's parks has helped push the question of fiscal equity to the forefront of critiques of the park's privatization, there are other effects (related to the CPC's fundraising activities and its role in reproducing the CPC's capitalist class process) that are arguably just as, if not more, troubling.

Following the park's privatization, the CPC significantly expanded its fundraising efforts and increased its fundraising-derived revenue. In the six-year period prior to the park's privatization (1992–1997), the CPC's fundraising revenue averaged $10.7 million annually. During the first six years following the park's privatization (1998–2003), these revenues jumped to $16.9 million annually. This increase was undoubtedly heavily influenced by the fact that following the park's privatization fundraising became critical to the CPC's ability to reproduce its capitalist class process. The CPC's fundraising success (or, Central Park's successful privatization) holds important implications for the city's nonprofit sector.

New York City has a vast nonprofit sector. The city has over 27,000 registered nonprofits, of which 9,078 file annual reports with the Internal Revenue Service.Footnote ³⁸ These filing organizations expend $43 billion annually, and employ an estimated 528,000 persons, or fourteen percent of the city's resident employment base. The sector receives thirty percent of its revenues from contributions, while the average nonprofit receives fifty-three percent of its revenues from contributions.Footnote ³⁹ While the reliance on and sources of contributions varies widely across the sector's segments, fundraising undoubtedly constitutes a key condition of existence for the majority of the city's nonprofits.

Clearly, Central Park's privatization and the role the CPC's wildly successful fundraising efforts have played in its success heightened the demand for donations. Put otherwise, the park's privatization increased competition among the city's nonprofits for fundraising donations. Whether the CPC's fundraising success undermined the ability of other nonprofits to secure fundraising dollars is of course in principal unknowable. On one hand, many new non-profits are created every year in the city. Many of these, presumably, rely on donation revenue. This suggests that competition for donations is tied to the nonprofit sector's overall growth. On the other hand, it is unclear whether or not the post-privatization fundraising dollars the CPC captured would have been captured by some other nonprofit. The larger point thus is not to suggest that the CPC's fundraising success can be tightly linked to other nonprofits' fundraising failures.Footnote ⁴⁰ Rather, the point is to underscore the fact that the park's privatization served, by design, to heighten this type of competition. This point has rarely, if ever, been acknowledged.

Competition for fundraising donations among nonprofits is not well understood—there is scant academic research on the topic.Footnote ⁴¹ Two studies that speak to the issue, however, are noteworthy. Susan Rose-Ackerman shows that competition for fundraising donations reduces the level of service provision relative to funds raised for all charities.Footnote ⁴² More recently, Inkyung Cha and William Neilson have argued that, “when more charities attempt to raise funds from the same pool of donors, the charities must work harder to get a given individual's donation.”Footnote ⁴³ As a result of this heightened competition for donations, the premium associated with the extra time, effort, or incentives a charity must provide to garner contributions increases. This increase, “causes dead weight loss, so that the total amount of charitable services provided falls after a new charity enters into the market.”Footnote ⁴⁴

Given evidence of a decline in the proportion of operating expenses that contributions cover within the nonprofit sector, there is reason to believe that competition for donations among nonprofits has become increasingly more intense.Footnote ⁴⁵ To the extent that privatizations like Central Park's increase the demand for donations within a locale's nonprofit sector, they heighten such competition. Tougher competition for donations likely forces some nonprofits (in particular, those least successful at fundraising) to seek alternative revenues. Two potential sources of revenue are noteworthy.

Unsuccessful nonprofit fundraisers may attempt to make up their fundraising shortfalls by raising the prices of the commodities they produce. In many cases, such commodities are sold to a government entity. For example, many human services nonprofits contract with the City of New York to provide various human-services commodities. In New York, fundraising contributions account for forty-four percent of human services nonprofits' revenues. These types of nonprofits, the majority of which are small, are often unable (like the CPC) to support full-time fundraising staff, hence, their ability to compete in an increasingly competitive fundraising arena is limited. Thus, to the extent they exacerbate fundraising competition, Central Park-like privatizations could play a role in increasing the nonprofit sector's call on public resources via increases in the prices of some of the commodities it sells to the public sector.Footnote ⁴⁶

Alternatively, some nonprofits, faced with stiffer fundraising competition, may pursue commercial activities. This would bring them into direct competition with for-profits.Footnote ⁴⁷ Thus, to the extent they exacerbate fundraising competition, Central Park-like privatizations could play a role in contributing to an increasingly common but poorly understood form of competition.Footnote ⁴⁸

The point of the foregoing discussion is to underscore the limitations of the ontological framework that pervades the existing municipal privatization discourse, and which has contributed to its general fixation on a narrowly circumscribed set of outcome variables, especially efficiency. As suggested, the discourse on municipal privatization has long sought to group these outcomes into costs and benefits—generally in order to justify or oppose privatization initiatives. In the case of Central Park's privatization, a class approach's focus on the class dimension necessitates an investigation of the CPC's reproductive process. This investigation reveals that fundraising, which is not a production-related activity, allows the CPC to reproduce the capitalist class process which yields the Central Park commodity, and has thereby underwritten the park's successful privatization. The effects of this fundraising-cum-reproduction are hardly neutral, however. It necessarily impinges in important concrete ways on the city's nonprofit sector, i.e., it gives rise to potentially real and important costs that have previously gone unacknowledged.

A class approach to privatization thus demonstrates the contradictions inherent in all privatizations. It does so by anchoring its analysis of privatization processes in the reproductive efforts of the entities involved in these processes. From this point, it reaches out and begins to connect these efforts, and thus a privatization process, to the larger social environment within which a privatization takes place. As it does so, it brings to light a host of these processes' less visible effects; effects rarely considered in assessments of their efficiencies or costs.Footnote ⁴⁹

While the foregoing discussion highlighted one of Central Park's privatization's less visible effects, there are other implications of the park's privatization that are equally as troubling as those related to the CPC's fundraising activity. In considering these, the next section picks up the theme of exploitation introduced earlier.

Back to Exploitation

The previously introduced concept of an exploitative capitalist class process motivated an exploration of the CPC's reproduction process. As stated, the basis for the determination of a class process's characterization qua exploitative hinges on the question of whether productive workers have a say in how the fruits of their labors are distributed. In cases in which workers do not, they are exploited. As a consequence, an exploitative class process can be characterized as one involving a specific form of undemocracy in a specific economic process (the class process). While the exploitation-cum-undemocracy endured by the CPC's productive workers is troubling in its own right from a class perspective, recognition of its existence is intimately linked to another form of undemocracy within the CPC's reproduction process.

In addition to its fundraising revenue, the CPC also relies on returns to its endowment portfolio in order to reproduce its capitalist class process. The CPC's board of trustees permits the use of total return (interests, dividends, and realized gains, net of investment management expenses) on the portfolio at a per fiscal year rate of up to five percent of a three-year moving average of the portfolio's fair market value. A significant portion of the portfolio derives from fundraising donations that donors or the board designate for long-term investment. The CPC's portfolio fiscal year-end market value for the years 1997 to 2003 equaled: $42.9 million, 53.6 million, $84 million, $113.6 million, $93.9 million, $89.9 million, $101.8 million.

The exclusive control the CPC Board exercises over the portfolio points back to the paradoxical relationship noted at the outset of this essay: namely, that between the park's production as a capitalist commodity and its ostensible status as a treasured public good, a status of locational, cultural, and aesthetic uniqueness which allows it to capture and capitalize significant resources. There is little doubt that the CPC board has done a fine job at protecting the portfolio's value. What is less clear is whether or not the park's privatization ought to have simultaneously granted the CPC exclusive control over the significant resources the park captures. Put otherwise, does the CPC's control of the portfolio fly in the face of a valid, democratic-based, public claim to participate in decisions regarding how the monies “its” park captures might be used? Indeed, there is good reason to believe that some of these resources might be put to other uses (e.g., redistributed throughout the city's park system) if the public had a genuine say in such decisions.Footnote ⁵⁰

In addition to the specific forms of undemocracy that surround Central Park's privatization—one tied to the class process that yields the park qua capitalist commodity, the other linked to its capitalist producer's exclusive control over the vast resources the park captures—there is yet another democracy issue worth mentioning. This issue came to light in the summer of 2004 amid attempts by an advocacy group (United for Peace and Justice) to secure a permit to hold a large protest rally on Central Park's Great Lawn during the New York City-hosted 2004 Republican National Convention.

As is well known, Mayor Michael Bloomberg successfully denied the permit after an intense court battle (as noted, the Parks' Commissioner retained full control over park policy when the park was privatized; thus, the City retained authority over the issuance of permits). As debate over the permit raged, the CPC, sensing a need to make its position on the matter clear, weighed in. In a statement posted on its website, the CPC explained why it sided with the administration. While acknowledging its support of First Amendment rights, the CPC wrote, “Our concern is that an event of this magnitude, with 250,000 people expected to attend, would severely damage not only the Great Lawn but also other areas of the Park.”Footnote ⁵¹ The CPC went on to cite the history of Central Park's deterioration in the 1970s and early 1980s and its subsequent restoration, noting that the Great Lawn had been restored at a cost of $18.2 million.

While it is difficult to relate this event directly to the park's privatization (the permit debate would ostensibly have arisen regardless of how the park is produced), the CPC's statement nevertheless calls attention to the need of all capitalists to protect their investments. Historically, such protection has often been secured by capitalists through political processes. In the CPC's case, such protection takes the form of policies that limit the type of activities that take place within the park. Such limitations are of paramount importance to the CPC. To the extent such policies did not exist, and to the extent this implied a reduction in the park's aesthetic quality, the ability of the CPC to demonstrate to donors that their investments are well used and protected, could be undermined. This could imperil the organization's fundraising efforts—efforts which allow it to reproduce the capitalist class process upon which the park's successful privatization has been built.

The forms of undemocracy surrounding Central Park's privatization are deeply ironic, as the park has, since its inception, been widely considered one of the greatest American experiments in social democracy ever undertaken. As Davis once remarked, “Of all its great achievements and features, there is none more profound or dramatically moving than the social democracy of this public space.”Footnote ⁵² In highlighting the specific forms of undemocracy that surround the park's privatization, the class approach developed here underscores the contradictions inherent in attempts to square democratic principles with capitalist relations of production.

The Wage Question and Progressive Privatizations

A class approach to privatization yields two further benefits. First, unlike a wage-led approach, it facilitates articulation of a consistent political position on privatization. Second, it provides, paradoxically, a vehicle for theorizing progressive privatizations.

Labor's post-privatization wage outcome has been a longstanding concern of the left, as lower labor costs are presumed to play an important role in driving private producers' alleged cost advantages vis-à-vis public producers. Two studies conducted in the 1980s that have figured prominently in the literature suggest there is considerable ambiguity surrounding the post-privatization wage issue. A 1989 report by The National Commission on Employment Policy (NCEP) analyzed the effects of thirty-four separate city and county privatizations by tracking the employment and wage outcomes of more than two-thousand affected workers.Footnote ⁵³ The report found that private contractors hired more than half of affected public-sector workers. Twenty-four percent of affected workers were transferred to other government jobs, seven percent retired, and three percent were laid off. The study also concluded that there were more instances in which affected workers' wages increased than decreased. Differences in benefits were found, however; government benefits were often more generous than those provided by the private sector. A 1984 US Department of Housing and Urban Development study that compared wage levels for eight services in twenty California cities—half of which produced the service in-house, and half relied upon private production—revealed little difference in the wage levels in the two sectors.Footnote ⁵⁴ Comparable benefit levels were also found.

Reflecting its experience with privatization under former Prime Minister Margaret Thatcher, more extensive investigation of the pre- versus post-privatization wage question has been carried out in the UK. The findings emanating from this body of research have also proven decidedly mixed on the wage question. According to Andrew Pendleton, “Anecdotal evidence collected by the Trades Union Congress on companies privatized in the early years of the Thatcher Government uncovered some unfavorable developments for workers…but there was no evidence of a generalized downward movement in either rate of pay or total pay.”Footnote ⁵⁵ M. Bishop and J. Kay's study of pay in the public and private sectors and in privatized companies between 1979 and 1988 found that the average level of pay increased most in privatized companies.Footnote ⁵⁶ I. Haskel and S. Szymanski's comparative study of fourteen public-sector firms (four of which were privatized during the study period) and the economy as a whole, found that the growth in wages during the 1980s was similar in the two groups.Footnote ⁵⁷ Kieron Davis and Howard Walsh's survey of compulsory competitive tendering in forty local authorities found that only seven percent of successful contractors reduced basic pay and less than fifteen percent abolished the bonus system or cut holiday entitlements.Footnote ⁵⁸

The ambiguity surrounding the post-privatization wage question hinders the articulation of a consistent political position on privatization, as any particular privatization may prove beneficial or detrimental to labor on wage grounds. This is not the case if privatization is approached from a class perspective.

A class analyst's political position on any privatization hinges on the class form the privatization takes. If a privatization generates a new class process or relies upon an existing class process that is exploitative it is viewed negatively on the grounds that the public good or service is, post-privatization, produced via an undemocratic class process. Thus, a class analyst could support a privatization in which workers' wage was observed to decline, but which allowed them to participate in decisions regarding how their surplus was distributed. In this way, a class approach to privatization, unlike a wage-led approach, greatly aids in the articulation of a consistent political position on privatization.

Progressive Privatizations? As noted, the majority of municipal privatizations that have occurred in the US over the past twenty-five years have either supported capitalist class processes or generated new ones. However, from a class perspective (and a left perspective, more generally), an important consideration is whether or not municipal privatizations must yield capitalist class processes. Could they be designed to spawn or encourage noncapitalist production processes? While the details and conditions that would yield such a privatization lie beyond this essay's scope, the question holds far-reaching policy implications for the left.Footnote ⁵⁹ In particular, it suggests that privatizations might afford viable opportunities for pursuing democratic (i.e., noncapitalist and nonexploitative) enterprise formation. The vast sums of monies (pensions) public unions have at their disposal provide a source of funds that could be tapped to help bring such possibilities to fruition. The fact that the majority of privatizations carried out over the past twenty-five years in the US have been (from a left perspective) anything but progressive is in part a reflection of a failure to recognize their class dimension and possibilities, which is to say that the positing of progressive privatizations is hardly utopian fantasy. Indeed, there is evidence in the global context that privatizations may afford progressive opportunities.Footnote ⁶⁰ Such opportunities, should they come to fruition, would, of course (from a left perspective that placed class at the center of its privatization analyses), constitute the quintessential dialectic moment so many analysts sympathetic to class have sought in an era seemingly dominated by ever-widening and deepening capitalist relations of production.