Posted on December 11, 2010


Raksts laikrakstā “Diena” un gaidāma LMT,Lattelecom privatizācija rosināja sākt rakstu sēriju par privatizāciju.Īstermiņā tas arī būs mūsu sabiedrības galvenais uzdevums nosargāt šos uzņēmumus.


Privatization and the practice of neoliberalism

Since the mid-1980s privatization has figured as the lynchpin of internationaldevelopment policy. The push to privatize followed a massive privatization drive inEngland under Thatcher and in the United States under Reagan (Vickers and Yarrow,1995). Driven by international financial institutions, more than 100 countries haveprivatized state-owned enterprises (SOEs) representing, as of 1998, a market value ofUS $735 billion (Nellis, n.d.: 1). In Eastern Europe and low-income countries,privatization has been part of a political strategy to redefine the role of the state(Feigenbaum and Henig, 1994; Appel, 2000). The economic arguments forprivatization, embedded in the assumptions of neoliberalism, are simple. Private firmshave greater incentives to operate efficiently and therefore can process information,respond to markets and allocate resources more efficiently than public ones. The moreefficient allocation of resources at the firm level, when translated to the nationaleconomy, will lead to faster economic growth. SOEs are also susceptible to corruption,offering opportunities for rent-seeking public employees to enrich themselves at publicexpense, which proponents argue will not happen in private firms operating in acompetitive, well-regulated free market. Privatization, then, should perform the triplefunction of creating more efficient firms, reducing corruption, and leading to fastereconomic growth (World Bank, 1996).To date, however, the benefits from liberalizing state-controlled economies have notspread automatically to the broader society. While increases in the efficiency ofindividual firms are common, average annual GDP growth from 1989±95 was negativethroughout Eastern Europe and inflation exceeded 1,000% per year in some countries(World Bank, 1996: 18). Privatization typically results in net job loss, which should notbe surprising as private managers strive to cut costs. In Mexico, for example, hundredsof thousands of jobs were lost after the sale of SOEs (RamireÂz, 2000). Privatization frequently takes place in an environment where weak supporting legal and politicalinstitutions are incapable of monitoring and regulating firms, leading, in the case ofRussia and China, to what some authors call `gangster capitalism’ (Holmstrom andSmith, 2000).Schamis (2002), focusing on the institutional aspects of privatization and economicrestructuring in a study of five countries in Latin America and Europe, demonstrateshow privatization failed to eliminate rent-seeking behavior. He argues that newopportunities for rent-seeking arise when firms with political connections acquire publicassets at a discount or buy inadequately regulated monopolies that provide publicservices (ibid.: 4). Privatization does not reduce corruption, but, instead, privatizes it ashas been the case in Pinochet’s Chile and Russia’s `nomenklatura privatization’. Otherscholars agree, pointing to cases from Latin America (RamireÂz, 2000) to EasternEurope (Tarkowski, 1990; Nellis, n.d.).While the World Bank, perhaps the greatest booster of privatization at a global level,acknowledges the inherent problems, it accepts them as part of the cost of achievingbroader political agendas (Nellis n.d.; World Bank, 1996; 2002). The Bank identifiesthe rewarding of `insider stakeholders’ as one of the key difficulties. Nellis (n.d.: 3), anex-bank staffer, writes that in Eastern Europe this was accepted `for what seemedexcellent political reasons . . . The reasoning was that one needed to cut the linksbetween the enterprises and the state, and to create swiftly a mass of private propertyowners; and that the only feasible way to do this was by offering substantial ownershipstakes to workers and managers in the firms being privatized’. In many cases thisquickly led to a concentration of ownership as a few individuals accumulated massiveeconomic power (Holmstrom and Smith, 2000). Nellis explains that the Bank believed aproblematic transition, with regressive redistributive aspects, was still preferable to thecontinuation of a communist-controlled eastern block.As a key component in the broader project of neoliberal economic and politicalrestructuring, privatization is seen by some scholars as a means to `shrink’ the state(Feigenbaum and Henig, 1994; Strange, 1996). Schamis (2002) poses a counter argument that as privatization is consolidated as a broader part of marketrestructuring, states expand their role in protecting private property, enforcingcontracts, collecting taxes to pay for services and controlling economic policy. Hemaintains that this process `can hardly be associated with less state but, rather, withmore’ (ibid.: 177±8) as state institutions develop their ability to protect the propertyrights needed for markets to function. In this context privatization is one componentof `marketization’, which Schamis sees fundamentally as an `institution building’project (ibid.: 178). While a state may strengthen or develop institutions as marketsare given more power in an economy, it is not clear if this is really `more’ state orsimply a `different’ one.In a more nuanced analysis, Feigenbaum and Henig (1994: 51) describe threedimensions of what they refer to as `systemic privatization’. First, a `power shift’,where privatization leads to `a substantial and not readily reversible decrease in thepower of working classes relative to that of economic elites’. Second, a `perceptualshift’ that serves to change the arenas that citizens perceive are proper for stateintervention. The effect here is to `delegitimize the public sector’ and break downclass bonds. Third, an institutional shift that moves policy decisions from thepublic to the private sector and from the sphere of politics to the sphere ofeconomics. For example, a state-owned water company can choose to subsidizewater as a social good Ð a political decision Ð whereas a privately-ownedcompany may choose to set higher tariffs based on marginal cost of service Ð aneconomic decision.While they may disagree as to whether the state is growing or shrinking, theinstitutional shift in policy decision-making from the political to the economic spheredescribed by Feigenbaum and Henig (1994) fits with the `re-formed’ state Schamisdescribes. Privatization leads to new institutional arrangements needed not only toprotect certain types of property but also to limit the areas of action deemed appropriatefor state intervention.2Turning control of investment from the public to the privatesector may not so much shrink the state as change its mission, and reinforce certainclass relations and privileges.
New opportunities for rent-seeking

In general, the newly installed private owners used similar strategies to increaseprofitability: they reduced or rebalanced the workforce; increased capital investment;introduced new management techniques and productive technologies; and raised ratesfor basic services. Unlike the government, private companies had the freedom to focuson the economic maximization of the firm as an independent unit, rather than the needto negotiate with diverse political actors demanding job security, low-cost services, orrevenues for the treasury. While the government had used its ownership of the SOEs asa way to subsidize electricity and water for urban consumers and rail service forresidents of small towns built along rail lines, private firms were under no obligation toprovide such unprofitable services. In some cases after capitalization, in telecommu-nications for example, the government specified service goals and rate-setting formulas.In others, such as the transportation sector, however, the government proved it wasunable to provide adequate regulatory provisions to protect people dependent uponthese services.

Rezumējot:Ar Latvenergo privatizāciju varētu panākt vienu fantastiski vērtīgu lietu – ieviest patiesu ekotūrismu latvijas laukos. Jo viņiem noteikti nebūs elektrības. Šodienas izpratnē – nekad.

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