Privatization: The Road to Democracy?

Abstract:     
Privatization has been something of a watchword in the years since the fall of the Soviet Union. The rationales for privatization are usually economic, stressing the comparative advantage of market regimes over bureaucratic ones: that private property gives owners the incentives to make better investment decisions, and that a market economy is more flexible and nimble in satisfying people's wants.

This article, however, leaves the economic arguments to one side and instead takes up the political arguments for privatization, many of which have a long history. The paper maps modern deregulatory efforts onto a series of six longstanding arguments to the effect that property and commerce are the most important rights of all in supporting democratic governance; the idea is to see whether the modern efforts tend to confirm or disconfirm the arguments for private property's centrality in a democracy. The paper concludes that the picture is somewhat mixed: some privatization measures support the political arguments for property, while others do not. The lesson is that political reform cannot rest on property and privatization alone, but needs to take place on a variety of fronts, of which, of course, privatization may be an important component.

Number of Pages in PDF File: 44

Keywords: privatization, property, political reform

working papers series