States privatization has taken the form of a transfer of managerial responsibility for public assets to the private sector. Programs in Russia, Central and Eastern Europe often
involve the transfer or sale of part or all of an enterprise to its
have developed in example, the use
many of a
of these countries voucher system
employees. In addition, involving forms of mass to ensure broad public
participation in the ownership of more than 600 investment funds (St. Giles & Buxton, 1994).
privatized assets in Russia has facilitated the offering diversified investment in privatized
creation of enterprises
The Intellectual Underpinnings of Privatization
Privatization is often justified as increasing the efficiency of government and reducing its size. For example, the Malaysian Ministry of Finance (1992) articulates the objectives of privatization to be:
relieve the financial and administrative burden of the government;
improve efficiency and increase productivity;
facilitate economic growth;
reduce the size and presence of the public sector in the economy; and
help meet national development targets.
The objectives of privatization in Brazil have been described as:
correcting the fiscal imbalance;
focusing the government’s activities on the social area;
transferring to private management many activities considered “strategic” in the country’s previous developmental model;
stimulating the modernization and restructuring of the country’s industrial sector; and
strengthening the capital market by broadening its base (Landau, 1996).
What appears to be missing from all the statements of philosophy regarding the privatization of public assets is the goal of broadening capital ownership. And yet, broadened capital ownership is an appropriate and necessary government goal. Restrictive capital ownership is an impediment to economic growth, the growth of personal income, and an increase in the standard of living. The broadening of access to capital and the income produced therefrom contributes directly to the achievement of these objectives. As such, the broadening of capital ownership is an objective which can readily be adopted by any government seeking more rapid growth in a market economy. Conversely, broadening of capital ownership does no violence to other state interests such as the preservation of private property, the protection of the public fisc, or the fundamental obligation to treat citizens fairly. While it would clearly not be appropriate to confiscate capital and redistribute it to others in the economy, a violation of the rights of private property, it is perfectly acceptable to broaden the access to capital through expanded access to credit.