Britain has not done much to assist third world development after its former colonies received independence. Their elites were educated in the universities and colleges of Britain, and were taught ill-conceived and ultimately unsuccessful collectivist ideas. The example which Britain and other European countries provided was that centralisation was good, that government should solve problems, and that industry should be nationalised. it was entirely the wrong example for their countries to follow.
The inefficiency and low output of the nationalized industries in post-war Britain has been widely acknowledged, first in popular anecdote, and late in scholarly reports which compared their performance to private sector counterparts both in Britain and abroad.
Many ad hoc explanations were offered to account for this. It was first suggested that the second world war had destroyed their capital plant and equipment, making them labour under insuperable burdens of replacement. This provided a convenient explanation for their poor performance, but failed to deal with the cases for the nationalized industries laboured under the handical of not having had their capital equipment destroyed by the second world war, it was suggested that the other European countries, by being forced to replaced destroyed stock, had been able to modernize, leaving their British equivalents still using hopelessly datet equipment.
It was many years after the comparatively poor performance of the public sector had been well documented that these co-incidental explanations gave way before the understand that the public sector is inherently inferior in its ability to deliver goods and services. It is not the presence of accidental factors which accompany the public sector supply that undermine its efficiency, it is the fact of public operation itself.
Privatization has begun the systematic transfer of activity from the public to the private sector. It is already a world-wide movement, and is still accelerating. It shows every sign of making widespread and irreversible changes to the distribution between public and private sectors, and thus becoming on of the most potent economic facts of our age. It is a world event whose effect has barely begun to make itself felt.
Read the whole paper here.
Foreword by Dr Eamonn Butler
This report represents the most comprehensive review so far of the remarkably extensive replacement of state activities by private-sector alternatives that has occurred in recent years. But its main strength is not merely its listing of the countless examples of where private involvement - with its associated benefits of consumer choice and the stimulus of competition - has been introduced into areas once thought to be the sole prerogative of the state. Its principal contribution is to collate that wide experience into a unifying theoretical framework which helps us to identify and to understand the strategy and tactics of privatization.
The author explains that privatization arose not as a conscious strategy but as an approach to practical problems for a government that originally supposed budgetary restraints and the excision of waste to be its main policy tools. Such macropolitical ideas, says Dr Pirie, are doomed to failure: insensitive cuts remove vital services instead of administrative beneficiaries of existing programmes, and from the service providers themselves all combine to make the political obstacles overpowering. The privatization strategy, on the other hand, is techniques to each specific problem, making provision for the concerns of each interest group as it transfers activities from the public to the private sector. It is an approach which produces creative and innovative solutions to each problem, not a single solution that is imposed on each case.
From the wide range of innovative solutions that have been tested, Dr Pirie makes and impressive identification of twenty-two different techniques of privatization, and shows in the form of practical examples the numerous variations that have occurred upon each theme. The result is to clarify our thinking on what the strategy of privatization involves, the purposes and range of benefits it is expected to achieve, and how future problems might be tackled by its use.