Marketization

Marketization (or Marketisation) is the process that enables the state-owned enterprises to act like market-oriented firms.[1] This is achieved through reduction of state subsidies, deregulation, organizational restructuring (Corporatization), decentralization and in some cases privatization.[2] These steps, it is argued, will lead to the creation of a functioning market system.

Contents

Aspects

Marketized solutions of government and market externalities

Here the government seeks to solve market and government externalities with market based solutions rather than government based regulations. Supporters argue that the market externality of pollution could be solved by the government selling pollution permits to individuals, groups, and corporations thus allowing the market to "see" the information and "realize" the harm by allowing the market to transmit pollution costs to society.

Marketizing of government agencies and branches

This is often described as "competitive federalism" or "limited government". Proponents argue that markets perform better than governments economically. Therefore, marketization seeks to make government agencies and branches compete with each other when government branches and agencies are absolutely necessary (i.e. remaining agencies and branches not privatized or liberalized away). For example, supporters argue that a voucher system for public education would make public schools compete with one another thus making them more accountable and efficient.

Theory

Critics of globalization, privatization, and liberalization have deemed that it is unworkable without major government regulations to balance the forces involved. They argue that marketization can result in market failure.

Free Market thinkers like Hayek, Friedman and von Mises believe markets can work with far less government regulation. As they see it, the combination of liberalization, privatization, and marketization ensure that globalization fulfills the promises of peace, prosperity, and cooperation that its liberal scholars and philosophers have promised. Without marketization, supporters argue that government created externalities can distort the information available to the market which in turn makes the market not work as well as it could.

Examples

Milton Friedman offers examples of what marketized government solutions can look like. Friedman's proposed education voucher system promotes competition between public schools (and private) thus creating a market based solution to educational issues.

See also

References

  1. ^ Rolph van der Hoeven, György Sziráczki. Lessons from Privatization. (1997). International Labour Organization. ISBN 9221094529 p.101
  2. ^ Sarah Vickerstaff. The Transformation of Labour Relations. (1998). Oxford University Press. ISBN 0198289790 p.63

Further reading