The Forces Influences Privatization


  • Vladimiras Obrazcovas, Samuel Steve Savas Mykolas Romeris University


privatization, privatization forces, government, service.


The word govern comes from a Greek root „kybern“, which means to „steer“ (The same root appears in
cybernetics, the science of control.) The job of government is to steer, not to row. Delivering services - whether
repairing streets or operating an airline - is rowing, and government is nor very good at this task. Privatization is a
pragmatic policy for restoring government to its fundamental role, steering, while relying on the private sector to
do the rowing.
Privatization can be defined broadly as relying more on the private institutions of society and less on government
to satisfy people’s needs. It is the act of reducing the role of government or increasing the role of the other
institutions of society in producing goods and services and in owning property. In general, both the public and
private sectors play important roles, and it is increasingly common to refer to „public-private partnerships“, a less
contentious term than „privatization“. A public-private partnership is defined as any arrangement between a
government and the private sector in which partially or traditionally public activities are performed by the private
The distinction between public and private is elusive. We speak of a park or government office building as
being publicly owned, but we use the same term to describe Microsoft because it has many stockholders and any
member of the public may buy part of the company; it is a private firm that is publicly owned. In the same way, a
public restaurant is one that caters to the public at large, although it may be owned by a sole proprietor. Confusingly,
we use the same word, public, to describe three very different conditions: government ownership, widespread
ownership, and open access. Their semantic confusion is nevertheless instructive, for it implies that government
ownership - and by extension, government action - is not necessary to achieve widespread (i.e., „public“) benefits.
Privatization capitalises on this underappreciated truism and takes advantage of the full array of ownership and
operating relations to satisfy people’s wants and needs and thereby to serve the public interest.
The term service or public service refers not only to a narrow task such as maintaining street lights, delivering
mail, running a bus service, or operating a telephone system, but to broad functions as well, such as assuring
pensions for retirees, defending a nation against external threats, clothing the populace, supplying food, manufacturing
goods, and protecting endangered species and the environment.
Several major influences have propelled the privatization movement: pragmatic, economic, philosophical, commercial,
and populist. The goal of the pragmatists is better government, in the sense of a more cost-effective one.
Economic affluence reduces people’s dependence on government and increases their acceptance of privatized approaches.
The goal of those who approach the matter philosophically - some would say ideologically - is less government,
one that plays a smaller role vis-à-vis private institutions; government which governs least governs best.
The goal of commercial interests is to get more business by having more of government’s spending directed
toward them. And the goal of the populists is to achieve a better society by empowering people so they can satisfy
their common needs, while diminishing the power of large public and private bureaucracies. We try to analyse all
three forces to influence privatisation process.
The purpose of privatization is to improve government performance and thereby improve the lives of those
dependent on government, while saving money and improving services for all taxpayers and thereby improving
their lives as well. Moreover, poorly performing private firms tend to go out of business, while poorly performing
public institutions are often given more money to try to overcome their shortcomings.