Re-Evaluating The Underlying Premises Of Free Market Privatization In Current Dispensation

Abstract

The contextual framework or policy orthodoxy persuading the implementation of privatization was the prevalent thinking that economic systems functioned best in a “free market”, with little or no government intervention. In the same vein was the belief that a more productive allocation and rationalization of factors of production will dictate a wholesale transfer from public to private sector of the ownership and control of productive assets, their allocation and pricing, including the residual profits flowing from them. The most effective vehicle for such implementation of free market privatization was adjudged to be unfettered deregulation. To the extent that it enabled the untangling of bureaucratic impediments to the inflow and retention of capital to the countries by way of foreign direct investment (FDI) and portfolio investment (PI), including the repatriation of resultant profits, it was a welcome outcome. Unfettered deregulation, as clearly manifested in recent years, particularly in well-known developed economies, appears to have produced an outcome substantially inconsistent with the traditional suppositions, begging the obvious question in the minds of academicians and policymakers alike. Where to, from here? The answer to the apparent conflict and/or contradiction is more urgent in the developing and emerging economies where privatization, and in a broader sense, the ideas and practices based on free market principles and on free market prescriptions have been promoted and sold as sacrosanct, if not necessary for their economic growth and survival. Given the current state of the global financial market which, at best, can be said to be in a state of flux, and the myriads of supposedly economic development initiatives invoking the likes of privatization and deregulation, we are tempted to ask the following questions: Are there any fixes? Could there be better, more accommodating alternative assumption(s), doctrine(s) or paradigm(s)?