The so-called capitalist model is under pressure these days for many reasons, but perhaps most importantly because privately owned and operated businesses that provide essential services, while driven by profit and improving shareholder value, are seen to have failed generally in delivering socially acceptable outcomes.

The aged care royal commission has exposed shameful negligence and abuse. Credit:Jessica Shapiro

Most recently, banks, energy companies, aged care operators, private health operators and insurers, have been a particular focus. However, similar concerns have been expressed about a host of others: vocational training, prisons, toll roads, airports and hospital services such as parking, public/private partnerships skewed in favour of private operators, and about those who profit personally by exploiting privileged market positions and restrictive trade practices, including many accountants, lawyers, insolvency practitioners and surgeons who we know are ripping us off and offering poor service.

Ironically, many of the now privately owned businesses that provide essential services resulted from past privatisation of public assets. While these were mostly justified and sold at the time as a mechanism to achieve market discipline, lower costs and greater efficiency, they were driven much more by political and budgetary consideration of maximising the selling price, usually ignoring the market circumstances into which they were being sold, and failing to specify the required services to be provided by the privatised entity.

Markets are only as good as the institutional and regulatory frameworks within which the market forces are to be "free" to operate. Regulatory frameworks set to achieve a maximum selling price are usually unlikely to provide an appropriate competitive structure, nor guarantee socially acceptable service outcomes, in the longer-term.