¹ See Flora, Peter and Heidenheimer, Arnold J., eds., The Development of Welfare States in Europe and America (New Brunswick, N.J.: Transaction Books, 1984)Google Scholar; and Olson, Mancur Jr., The Logic of Collective Action (Cambridge: Harvard University Press, 1971)Google Scholar.

² See Peacock, Alan T. and Wiseman, Jack, The Growth of Public Expenditures in the United Kingdom (Princeton: Princeton University Press, 1961)Google Scholar.

³ See Butler, Stuart, Privatizing Federal Spending: A Strategy to Eliminate the Deficit (New York: Universe Books, 1985)Google Scholar.

⁴ Butler, Stuart, “Privatization for Public Purposes,” in Gormley, William T., ed., Privatization and Its Alternatives (Madison: University of Wisconsin Press, 1991), 17Google Scholar.

⁵ In defining privatization this broadly, we are taking sides on an issue of some dispute. Many authors, especially those examining privatization in Europe, limit the concept to sales of nationalized firms and other state assets, whereas we locate the idea in the broader trends of policy advocacy, which emphasize a return to concepts associated with economic liberalism. See Henig, Jeffrey R., Hamnett, Chris, and Feigenbaum, Harvey, “The Politics of Privatization: A Comparative Perspective,” Governance 1 (October 1988)CrossRefGoogle Scholar; Suleiman, Ezra N. and Waterbury, John, eds., The Political Economy of Public Sector Reform and Privatization (Boulder, Colo.: Westview Press, 1990)Google Scholar; Kamerman, Sheila B. and Kahn, Alfred J., eds., Privatization and the Welfare State (Princeton: Princeton University Press, 1989)CrossRefGoogle Scholar; Starr, Paul, “The Meaning of Privatization,” in Kamerman, and Kahn, ; and Swann, Dennis, The Retreat of the State: Deregulation and Privatization in the U.K. and U.S. (Ann Arbor: University of Michigan Press, 1988)Google Scholar. These broader movements are linked by their reliance on similar ideological justifications and political constituencies. As we argue in the body of this paper, overemphasizing the distinctions between specific technological tools for privatization obscures the political dynamics that we hope to bring more fully to light.

⁶ See Savas, E. S., Privatizing the Public Sector: How to Shrink Government (Chatham, N.J.: Chatham House, 1982)Google Scholar.

⁷ See Reich, Robert, ed., The Power of Public Ideas (Cambridge, Mass.: Ballinger, 1988)Google Scholar; and Lindblom, Charles E., Inquiry and Change: The Troubled Attempt to Understand and Shape Society (New Haven: Yale University Press, 1990)Google Scholar.

⁸ See Marc Bendick, Jr., “Privatizing the Delivery of Social Welfare Services: An Idea to Be Taken Seriously,” in Kamerman and Kahn (fn. 5); Donahue, John, The Privatization Decision (New York: Basic Books, 1989)Google Scholar; Gormley, William T. Jr., “Two Cheers for Privatization,” in Gormley, , ed., Privatization and Its Alternatives (Madison: University of Wisconsin Press, 1991)Google Scholar; and Salamon, Lester, Beyond Privatization: The Tools of Government Action (Washington, D.C.: Urban Institute, 1989)Google Scholar.

⁹ See, e.g., Becker, Gary S., “Surprises in a World according to Adam Smith,” Business Week, August 17, 1992, p. 18Google Scholar.

¹⁰ O'Conner, James, The Fiscal Crisis of the State (New York: St. Martin's Press, 1973), 10CrossRefGoogle Scholar; Krieger, Joel, Reagan, Thatcher and the Politics of Decline (New York: Oxford University Press, 1986), 27Google Scholar.

¹¹ See Borcherding, Thomas, ed., Budgets and Bureaucrats: The Source of Government Growth (Durham, N.C.: Duke University Press, 1977)Google Scholar; Buchanan, James M., “Why Does Government Grow?” in Borcherding; Niskanen, William A., Bureaucracy and Representative Government (Chicago; Aldine-Atherton, 1971)Google Scholar; and Tullock, Gordon, “Why Politicians Won't Cut Taxes,” Taxing and Spending (October—November 1978), 12—14Google Scholar.

¹² The economics literature includes both advocates and critics of the notion that ownership affects performance. However, in determining the efficiency of an enterprise, more recent work by orthodox economists indicates that the difference between public and private ownership is less important than the degree of competition of a firm's market. See especially Caves, Douglas W. and Christensen, Laurits R., “The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads,” Journal of Political Economy 88 (October 1980)CrossRefGoogle Scholar.

¹³ See King, Desmond S., The New Right: Politics, Markets and Citizenship (Chicago: Dorsey Press, 1987)CrossRefGoogle Scholar; Martin Rein, “The Social Structure of Institutions: Neither Public nor Private,” in Kamerman and Kahn (fn. 5); Starr (fn. 5); and Swanstrom, Todd, “Beyond Economism: Urban Political Economy and the Postmodern Challenge” (Paper presented at the annual meeting of the American Political Science Association, Washington, D.C., August 18-September 1, 1991)Google Scholar.

¹⁴ See Barnekov, Timothy, Boyle, Robin, and Rich, Daniel, Privatism and Urban Policy in Britain and the United States (New York: Oxford University Press, 1989)Google Scholar; Feigenbaum, Harvey, “France: From Pragmatic to Tactical Privatization,” Business in the Contemporary World 5 (Winter 1993)Google Scholar; Henig, Jeffrey, “Privatization in the United States: Theory and Practice,” Political Science Quarterly 104 (Winter 1990)Google Scholar; and Starr (fn. 5).

¹⁵ Political choices are not the result of infinite options. Not every policy will work and reality is an ultimate constraint for decision makers who subscribe to even the most resilient ideologies. There are therefore outer, or technical, limits that constrain choice. However, within those technical parameters there is room for political discretion.

¹⁶ A similar typology is developed by Ben Ross Schneider, “Privatization in Brazil and Mexico: Variations on a Statist Theme,” in Suleiman and Waterbury (fn. 5). Schneider focuses primarily on decisionmakers and their motivations in Brazil and Mexico.

¹⁷ Categorization of policies may also be a function of timing: French tactical privatizations might have become systemic had the conservatives not lost the 1988 elections. We are grateful to Mark Kesselman on this point.

¹⁸ On the importance of think tanks, see, e.g., Nau, Henry, The Myth of the American Decline (New York: Oxford University Press, 1991), chap. 1Google Scholar. On the evolution of think tanks, see Weaver, Kent R., “The Changing World of Think Tanks,” PS: Political Science and Politics 22 (September 1989)Google Scholar.

¹⁹ Vernon, , ed., The Promise of Privatization: A Challenge for U.S. Policy (New York: Council on Foreign Relations, 1988), 19Google Scholar.

²⁰ Ibid., 16.

²¹ Schmidt, Vivian, “Industrial Management under the Socialists in France: Decentralized Dirigisme at the National and Local Levels,” Comparative Politics 21 (October 1988), 61CrossRefGoogle Scholar.

²² Simonian, Haig, “Little Push from the Market Will Speed Italy's Trains,” Financial Times, June 12, 1991, p. 4Google Scholar. Of course, as any accountant will note, the market alone offers no guarantees against profit skimming and unscrupulous behavior by managers.

²³ Henig (fn. 14), 657.

²⁴ Donahue (fn. 8), 216.

²⁵ Sales, Arnaud, “The Private, the Public and Civil Society: Social Realms and Power Structure,” International Political Science Review 12, no. 4 (1991)CrossRefGoogle Scholar.

²⁶ Of course, the French national administration has based its power on the notion that technocratic solutions are apolitical. See Suleiman, Ezra N., Politics, Power and Bureaucracy in France (Princeton: Princeton University Press, 1974)Google Scholar; and Elul, Jacques, The Technological Society (New York: Vintage, 1964)Google Scholar, for a statement of the creed.

²⁷ Schattschneider, E. E., The Semi-Sovereign People (New York: Holt, Rinehart and Winston, 1975)Google Scholar.

²⁸ Ibid., 7.

²⁹ See, e.g. Dawkins, William, “France's Restive State Sector Senses Freedom,” Financial Times, April 11, 1991, p. 3Google Scholar.

³⁰ See, e.g., the Financial Times editorial, “Dilemmas of Dirigisme,” April 8, 1991, p. 14. For an example of the gymnastics the state exercised to work within the ban, see Boucher, Eric Le “L'Etat actionnaire à la recherche des moyens pour soutenir l'aéronautique et l'électronique,” Le Monde, February 22, 1991Google Scholar, reprinted in the Selection Hebdomadaire du journal “Le Monde,” February 27, 1991, p. 11. In some instances, the political naivete of pragmatic privatizers may have unintended political effects on constituencies of the ruling political coalition; thus, the privatization in Mexico injured the labor unions supporting the Partido Revolucionario Institucionalizado (PRI). See Schneider (fn. 16).

³¹ See, especially, Rod Alence, “Moments of Truth: The State, Economic Institutions, and the Political Economy of Export Instability in Gold Coast/Ghana, 1937–1984” (Ph.D. diss., Stanford University, forthcoming).

³² See Don Babai, “The World Bank and the IMF: Rolling Back the State or Backing Its Role?” in Vernon (fn. 19).

³³ Feigenbaum, Harvey, “Democracy at the Margins: The International System and Policy Change in France,” in Foglesong, Richard E. and Wolfe, Joel D., eds., The Politics of Economic Adjustment (New York: Greenwood, 1989), 92–93Google Scholar. More recently, some industries, especially Bull and Thomsen, the state electronics groups, fell on harder times; see Le Boucher (fn. 30), 11. However, the problems of the enterprises had more to do with their respective sectors than with their ownership. This calls to mind a similar analysis of British industries by Pryke, Richard, The Nationalised Industries: Policies and Performance since 1968 (Oxford: Martin Robertson, 1981), 264Google Scholar.

³⁴ See Loriaux, Michael, France after Hegemony (Ithaca, N.Y.: Cornell University Press, 1991)Google Scholar.

³⁵ While the socialists liberalized the French economy largely because they could think of no alternative after employing state interventionism à outrance in the first two years of their mandate, they suffered from the fact that they pursued pragmatic privatizations in an arena that was highly politicized (national politics). They paid the price at the polls in 1986: their traditional constituency saw them as having abandoned socialism, while centrist voters simply reacted to the stagnation of the economy.

A similar case can be made for Mexico's abandoning its traditional dirigisme in the 1980s; that is, there was nothing left to try (we are grateful to Eduardo Margain of the Interamerican Development Bank for this point). However, the Mexican government, with its idiosyncratic form of “democracy,” did not have to worry about losing at the polls.

³⁶ Joel Wolfe, “Reorganizing Interest Representation: A Political Analysis of Privatization in Britain,” in Foglesong and Wolfe (fn. 33), 19.

³⁷ That is, investors or banks who might provide funds for capital goods or expansion in already private companies would instead take their money and buy shares in privatized firms.

³⁸ Ezra N. Suleiman, “Privatization in Britain and France,” in Suleiman and Waterbury (fn. 5), 114–15.

³⁹ See Michel Durupty, Les Privatizations en France (Paris: La Documentation Française, Notes et Etudes documentaires, no. 4857), 117–20; Le Monde, September 17, 1988.

⁴⁰ See Bauer, Michel, “State Directed Privatization: The Case of France,” West European Politics 11 (October 1988)Google Scholar.

⁴¹ Graham, Cosmo and Prosser, Tony, Privatizing Public Enterprises (Oxford: Clarendon Press, 1991), 105–29Google Scholar.

⁴² Self, , “What's Wrong with Government? The Problem of Public Choice,” Political Quarterly 61 (January-March 1990)CrossRefGoogle Scholar.

⁴³ See Letwin, Oliver, Privatising the World (London: Cassell Educational, 1988)Google Scholar.

⁴⁴ Self (fn. 42), 26.

⁴⁵ Butler, , “Changing the Political Dynamic of Government,” in Hanke, Steve H., ed., Prospects for Privatization (New York: Academy of Political Science, 1987), 10–11Google Scholar.

⁴⁶ See Babai (fn. 32).

⁴⁷ Ibid.

⁴⁸ Compiled from Babai (fn. 32), Annex 1, 276–81 (the annex was compiled from World Bank internal documents). Loans were made to the following countries (some more than once): Burundi, Côte d'lvoire, Guinea, Kenya, Malawi, Mauritius, Niger, Senegal, Togo, Bolivia, Chile, Costa Rica, Guyana, Jamaica, Panama, Philippines, South Korea, Thailand, Pakistan, Turkey, and Yugoslavia.

⁴⁹ As mentioned in the discussion above, tactical motives may be reinforced by pragmatic ones if the country in question is experiencing a balance of payments or budgetary crisis. Politicians who are unconvinced by neoclassical logic may nevertheless find their hands forced by the lack of alternatives. Here tactical and pragmatic privatizations merge empirically, even if we may analytically distinguish the sets of motives for such privatizations.

⁵⁰ We are grateful to Charles-Albert Michalet for pointing this out.

⁵¹ Wolfe (fn. 36), 20.

⁵² Hall, Stuart, “The Great Moving Right Show,” in Hall, Stuart and Jacques, Martin, eds., The Politics of Thatcherism (London: Lawrence and Wishart, 1983)Google Scholar, quoted in Wolfe (fn. 36), 18.

⁵³ Gramsci, Antonio, Selections from Prison Notebooks (New York: International Publishers, 1971), 260Google Scholar; Carnoy, Martin, The State and Political Theory (Princeton: Princeton University Press, 1984), 75–76Google Scholar.

⁵⁴ Pirie, , Privatization (Hants: Wildwood Press, 1988), 53Google Scholar.

⁵⁵ Wolfe (fn. 36), 17. This escape from accountability may be initiated for ideological reasons, but it also may dovetail with more tactical concerns of self-interested politicians. Political behavior in democracies is often explained by the desire of elected officials to avoid blame, rather than by their desire to achieve substantive results. See Weaver, Kent R., “The Politics of Blame Avoidance,” Journal of Public Policy 6, no. 4 (1986)CrossRefGoogle Scholar. Thus, for instance, by privatizing a national railroad, members of Parliament are absolved from complaints about poor or disappearing service. By privatizing a nationalized corporation, the government sheds responsibility for layoffs. Former French prime minister Raymond Barre told the authors that one of his reasons for not wanting to nationalize French industries that were in trouble was to avoid taking responsibility for layoffs. Personal communication with Harvey Feigenbaum, George Washington University, spring 1983.

⁵⁶ Alex Nove has argued, for example, that a public monopoly that is not subjected to a regulatory authority may be more prone to abuse its position than a private monopoly that is held rigorously accountable for its actions by a public utilties commission. See Nove, , Efficiency Criteria for Nationalised Industries (Toronto: University of Toronto Press, 1973)Google Scholar. We would argue, however, that a government shift from state ownership to a regulatory form of oversight with the intent of increasing its effectiveness as a protector of public interests constitutes pragmatic rather than systemic privatization. This is not because the state is less interventionist, but because it has changed the form of intervention. See Feigenbaum, Harvey, The Politics of Public Enterprise (Princeton: Princeton University Press, 1985)CrossRefGoogle Scholar. Whether the overall impact is, indeed, to increase the role of the state is, of course, important. Such examples highlight the need to pay attention to consequence as well as motivation.

⁵⁷ See Nancy Bermeo, “The Politics of Public Enterprise in Portugal, Spain and Greece,” in Suleiman and Waterbury (fn. 5); and Sofia Perez, “The Politics of Financial Liberalization in Spain,” in Michael Loriaux et al., “Financial Liberalization in Interventionist States” (Manuscript).

⁵⁸ In fact the very uncertainty generated by the transition to a market system seems to have resulted in a particularly resilient form of interest group found in market societies: the Mafia. To be fair to the proponents of privatization, however, this latter phenomenon must be viewed as an unintended consequence of policy.

⁵⁹ One way systemic privatizations can be identified empirically is by the time horizon of the privatizers. Where pragmatic privatizations attack an immediate practical problem and tactical privatizations are aimed at an immediate political problem, systemic privatizations are in for the long term. As a Czech official put it when he went to London in search of foreign investors in the newly privatized Czech economy, “So we seek partners for the rest of our lives, not just for one night”; Frankel, Glenn, “Czechs Head West to Pitch Privatization of Industries,” Washington Post, June 14, 1991, p. A-24Google Scholar.

⁶⁰ As Salamon notes, “Each instrument has its own distinctive procedures, its own organizational relationships, its own skill requirements—in short, its own political economy”; Salamon (fn. 8), 8.

⁶¹ Schattschneider (fn. 27).

⁶² Groups of privatized firms in France were clustered together around various financial institutions that became core stockholders, remolding French industry into something resembling Japanese “corporate groups.”

⁶³ See Feigenbaum (fn. 14).

⁶⁴ Although, as noted already, the substantial payoffs if successful may make pursuit of systemic changes rational nevertheless.

⁶⁵ See Hawkins, Richard A., “Privatisation in Western Germany, 1957 to 1990,” National Westminster Bank Review (November 1991)Google Scholar.

⁶⁶ “The Western Germany economy did not see a long-term extension of share ownership. Furthermore, Esser has argued that ‘people's capitalism’ is unpopular in contemporary Western Germany and does not win votes”; Hawkins (fn. 65), 21. Hawkins refers in this quote to Esser, J., “Symbolic Privatisation: The Politics of Privatisation in West Germany,” West European Politics 11, no. 4 (1988)CrossRefGoogle Scholar.

⁶⁷ Sometimes responsibility can be determined only by observation over time; for instance, we might consider government to be responsible for ensuring sufficient employment opportunities if a rise in unemployment level above some threshold mobilizes powerful political forces that induce governmental response.