Exploring the Limits of Privatization

When administrative historians some years hence study the 1980s, they are likely to conclude that was the single most influential concept of the decade. Their studies will undoubtedly portray public administration as being profoundly altered by several ideas that collectively have become known as privatization. These same historians are also likely to conclude that public administration, as an intellectual field and profession, was in disarray and decline with relatively little capacity to direct its own destiny in the 1980s. All in all, the story will not provide pleasurable reading for public administrationists. Privatization has its intellectual roots in free market economic theory, and its promoters have a world view that admits of few limitations. Public administration, as a field of study not sharing the perspective of the free market economists, first ignored, then resisted, the privatization challenge. The resistance has tended to take the form of defensive tactics to defeat specific proposals rather than viewing the challenge of privatization as an opportunity to develop a comprehensive theoretical position justifying the distinctive character of the public sector. This essay suggests that public administrators have been relatively minor players in the unfolding drama of privatization because they no longer have the capacity to draw upon their own theoretical and intellectual roots. These neglected roots of public administration are to be found in its public law tradition. Public administrators know, or at least believe, that there are limits to privatization. But they have been unable to articulate those limits and thus have difficulty in defining what is unique to the public sector that makes it distinctive from the private sector. Exploring the limits of privatization should not be construed as tantamount to hostility toward the concept and use of privatization. All too often the relationship between the public and private sectors is viewed as a zero-sum game where increased prosperity for one sector must be achieved at the expense of the other. The reality of the modern nation state, however, is that the prosperity of the two sectors is inextricably linked. To understand the potential of privatization, therefore, it is first necessary to understand its limitations.