Globalization, privatization and the future of modern governance: a critical assessment.

AuthorFarazmand, Ali


There is a close but hitherto little-studied relationship between globalization and privatization. This article explores the connection between them from a political economy viewpoint. On globalization, it identifies several theoretical approaches to understanding the phenomenon, notes the various ways in which the word is used, and considers causes and consequences. In exploring the connection with privatization, it is essentially concerned to view the privatizations of the later 20th century as a strategic instrument of the globalization of capital, and a number of reasons are advanced to support this view. The article then looks at the implications of what has gone before for the education of public managers, which has also reflected these late 20th century tendencies. It seeks a reorientation of such education, as we move into a new century, to restore the spirit of public administration as an agent of "public trust".


Globalization and privatization have been the subject of innumerable studies in the last two decades. A monstrously growing body of knowledge has emerged about both, through research and scholarship in all areas of social sciences--economics, political science, sociology, and public management, to name a few. However, while most of these studies overlap in themes and explanations, very few, if any at all, offer new insight on the interrelationship between globalization and privatization. This neglect is unfortunate, for both have significant implications for governance and public management in the new century.

Most of the studies on privatization have focused on the commonly argued and frequently rationalized reasons familiar to students and scholars of economics, political science and public administration. Useful as many of the available explanations are, they are inadequate in explaining the two phenomena in a broader context, and offer very little to inform us deeply on the political economy of the interrelationship between privatization and globalization, or to identify the interests that are primarily being served.

This article addresses this neglect in scholarship and argues that the phenomenon of privatization should be understood in a direct correlation with globalization of capital under late capitalism. It argues that privatization has been conceived by design, and not by chance and haphazard events, and that its implementation has been pursued purposely, deliberately, and vigorously around the world as a strategic instrument for promoting the globalization of corporate capital. This has been happening despite clear evidence of extremely successful experiences with public enterprise management and government-owned enterprises around the world.

With sweeping privatization of public enterprises and other major governmental functions, the capacity and ability of governments in public management are seriously diminished even as challenges and crises multiply in both number and intensity. Globalization has not ended the state and public administration, but it has caused a major qualitative change and alteration in the nature, character, and role of the state and public management; in fact, state continuity persists because it is instrumental to the functioning of capitalism. A key feature of this qualitative change has been privatization, which has resulted in a paradigmatic shift in the nature and role of the state from the former welfare-administrative state to a "corporate/coercive-administrative state" supportive of corporate capital.

To understand this direct relationship between privatization and globalization, we must first understand what globalization means, and then explain its corollary strategy of privatization worldwide. The novelty of this argument and such a theoretical presentation is many-fold, as for the first time it employs a new political economy approach in order to explain the relationship between the two phenomena. In addition, this approach and the novelty of the analysis produces discussions that put the phenomenon of sweeping privatization in a much broader, macro context of analysis at a global level. This global macro-level of analysis is essential to developing a better understanding of the multidimensional features and challenges of globalization worldwide. Such an understanding also suggests far-reaching implications for the theory and practice of, and especially for education and training for, governance, public administration and public management in the 21st century.

Understanding Globalization: I

Change and Continuity

It is important at the outset to elaborate on the relevance of the changes that have been sweeping through governments, economies, and societies around the world. Change has always been a dialectical feature of human progress and natural history, providing dynamics to the continuity of living systems. Not all changes are, however, progressive in a qualitative sense. Qualitative changes are long-term, transformational, and bring about social-system change in all aspects, including government, administration, economic systems and social relations. But not all change is qualitatively progressive in this way. Simple policy actions such as workforce downsizing, organizational structure alteration, government reorganization and the like can produce reversals with negative social effects. This appears to be happening now, with global capital imposing major setbacks on century-long progress. But there is reason to believe the reversal will not last too long, as the internal contradictions within global capitalism will cause its own breakdown from within.

Progressive/qualitative change occurred over the centuries it took for feudalism to break up into mercantilism and capitalism. Similarly, it took centuries for colonialism to be broken up into nation-state organization, albeit with the continuing effect of neocolonialism dominating world systems for much of the 20th century. In between such major qualitative and historical changes, other changes occurred, some with positive social effects, such as the abolishing of slavery in the US along with some formal relief for the blacks or reduction of working hours as a result of the intensive struggle by the labor movement during the late 19th century and the 1930s.

None of these quantitative changes replaced the capitalist state; indeed the capitalist state persisted with continuity, but its character and role experienced some alteration in favor of a balanced welfare state caused by internal pressures of the labor militancy and regulatory and other reform movements as well as the internationally emerged global power of the socialist system, under the leadership of the USSR, as an alternative social system spurred on by the 1917 Bolshevik revolution--itself a major historical qualitative change. Both domestic and international factors caused a major qualitative change in American social and political system in which the continuity of the capitalist state persisted but its character and role were moderated by the necessity of the welfare administrative state, which functioned as a tool of social control and a lubricant of the wheels of the corporate state in America and around the world. With the fall of the world's leading socialist system and expanding neo-colonization of the third world countries, the leading corporate power structure did not see a need for the welfare state any more and abolished it altogether in favor of a shrunken state with the core functions of protecting and promoting the corporate capital, of maintaining social control, and of establishing order out of market-produced disorder and chaos--for example, unemployment, massive poverty, environmental degradation, labor exploitation, racial and ethnic violence, class and gender repression, and the like. It is arguable that the result has been a major qualitative change, but not a progressive one, in the character and role of the state with unprecedented expanding power of the police, security, and other repressive forces to maintain law and order in order to protect and promote the interests of the globalizing corporate capital around the world.

Thus the world is now experiencing major changes at the turn of the new millennium. A great transformation is taking place and a new civilization appears to be dawning, while the established and traditional industrial civilization fades. The term "rapture" has replaced "rapid" to describe change, which has become constant. Rapturing changes are extremely difficult if not impossible to predict, and they have potential consequences for both devastation and development. They are full of surprises and potentially chaotic consequences.

These rapturing changes leading to the global transformation have been the subject of many studies, for and against, defying the possibility of any single attempt to comprehensively explain the phenomenon. For example, Huntington (1996) speaks of "clash of civilizations," Fukuyama (1992) predicts the "end of history and man," Korbin (1996) argues about a "return back to medievalism," Korten (1995) refers to loss of citizens' democratic rights, and Picciotto (1991) points to the loss of territorial sovereignty among nation-states. Other concepts that have emerged and become subjects of numerous studies worldwide are those of the "global village" and "world government" with a "global management" (Wilson, 1994), creating a new world order beyond nation-states (Reich, 1991). This new order will be ruled by transnational corporate elites (Korten, 1995) through a "global bureaucratic web-system" (Farazmand, 1994: pp. 78), facilitated by an army of "global soldiers or 'subsidiary agents' of world capitalism" (Farazmand, 1999a). (1)

The hallmark of these rapturing worldwide changes is the process of globalization, through which worldwide integration and transcendence take place. All these related concepts evoke a great variety of...

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