Privatization as a reformers’ illusion
The paper suggests that efficiency considerations do not explain why privatization
policy is so appealing to the centre-left parties in Europe. Divestitures of
state owned corporations in the UK and elsewhere were implemented by right
wing parties with the over-arching objective to defeat trade unions . The producitivity
and welfare changes were modest or negligible, sometimes negative. Why
reformers of the left support privatization? The paper suggests that efficiency motivations
are weaker than usually said by a mostly biased privatization empirical
literature and by free-market apologetics. The reason lies in the nature of the privatized
coroporation, wich is very far from a competitive enterprise. The paper
conjectures that the centre-left seeks by its support to privatization to gain political
rents. This implies to surrender financial rents to the globalized financial actors,
to be paid out by political support or neutrality to centre-left governments.
This strategy is at high risk of be captured by the financial èlites and poses a threat
to democracy. A state without ownership, with a marginal role in service provision,
becomes a tax -and -transfer, law -and -order state, with little democratic legitimacy.
Public provision of services should be reformed as an explicit social inclusion
mechanism, based on clearly stated policy goals and involvement of users.
The Eu should not adopt a rigid privatization-liberalization-regulation paradygm,
and should instead build on flexible tools to achieve common goals in terms of
citizens’ access to those services that have a community-building content.