ABSTRACT
Privatisation as public policy arose from the 1970s due to ideological opposition to “socialism”, influenced by monetarist and neoliberal economics, leading to the belief that the state-owned enterprises were manifestly less efficient than private enterprise. Also, and more pragmatically, governments were attracted by the prospect of raising additional funds to help balance budgets through state asset sales. Consequently, privatisation was expected to lead to improved allocative efficiency, as prices are more closely aligned with long-run marginal costs of supply, and productive efficiency, as costs of production are minimised at any given output level to raise profitability. Today state ownership is reviving in popularity in the wake of the disappointing performance of a number of privatisations. The UK’s experience confirms that performance under both privatisation and nationalisation has been mixed. It also highlights that, consequently, industries move between public and private ownership dependent upon prevailing views in different time periods.
