Marketization
Encyclopedia
Marketization is the process that enables the state-owned enterprises to act like market-oriented firms. This is achieved through reduction of state subsidies, deregulation
, organizational restructuring (Corporatization
), decentralization
and in some cases privatization
. These steps, it is argued, will lead to the creation of a functioning market system.
with market based solution
s rather than government based regulations. Supporters argue that the market externality of pollution
could be solved by the government selling pollution permits to individuals, groups, and corporations thus allowing the market to "see" the information and "realize" the harm by allowing the market to transmit pollution cost
s to society
.
system for public education would make public schools compete with one another thus making them more accountable and efficient.
, privatization
, and liberalization
have deemed that it is unworkable without major government regulations to balance the forces involved. They argue that marketization can result in market failure
.
Free Market thinkers like Hayek
, Friedman
and von Mises
believe markets can work with far less government regulation. As they see it, the combination of liberalization, privatization, and marketization ensure that globalization fulfills the promises of peace, prosperity, and cooperation that its liberal scholars and philosophers have promised. Without marketization, supporters argue that government created externalities can distort the information available to the market which in turn makes the market not work as well as it could.
offers examples of what marketized government solutions can look like. Friedman's proposed education voucher system promotes competition between public schools (and private) thus creating a market based solution to educational issues.
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
, organizational restructuring (Corporatization
Corporatization
Corporatization refers to the transformation of state assets or agencies into state-owned corporations in order to introduce corporate management techniques to their administration...
), decentralization
Decentralization
__FORCETOC__Decentralization or decentralisation is the process of dispersing decision-making governance closer to the people and/or citizens. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy,...
and in some cases privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
. These steps, it is argued, will lead to the creation of a functioning market system.
Marketized solutions of government and market externalities
Here the government seeks to solve market and government externalitiesExternality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
with market based solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s rather than government based regulations. Supporters argue that the market externality of pollution
Pollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...
could be solved by the government selling pollution permits to individuals, groups, and corporations thus allowing the market to "see" the information and "realize" the harm by allowing the market to transmit pollution cost
Cost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
s to society
Society
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...
.
Marketizing of government agencies and branches
This is often described as "competitive federalism" or "limited government". Proponents argue that markets perform better than governments economically. Therefore, marketization seeks to make government agencies and branches compete with each other when government branches and agencies are absolutely necessary (i.e. remaining agencies and branches not privatized or liberalized away). For example, supporters argue that a voucherVoucher
A voucher is a bond which is worth a certain monetary value and which may be spent only for specific reasons or on specific goods. Examples include housing, travel, and food vouchers...
system for public education would make public schools compete with one another thus making them more accountable and efficient.
Theory
Critics of globalizationGlobalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
, privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
, and liberalization
Liberalization
In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation...
have deemed that it is unworkable without major government regulations to balance the forces involved. They argue that marketization can result in market failure
Market failure
Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...
.
Free Market thinkers like Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...
, Friedman
Friedman
Friedman, Friedmann, and Freedman are surnames of German origin, and from the 17th century were also adopted by Ashkenazi Jews.They may refer to:-Art:* Arnold Friedman , an American painter* Drew Friedman, cartoonist...
and von Mises
Von Mises
von Mises may refer to:* Ludwig von Mises Institute* von Mises distribution, named after Richard von Mises* von Mises yield criterion, named after Richard von Mises- People :* Dr...
believe markets can work with far less government regulation. As they see it, the combination of liberalization, privatization, and marketization ensure that globalization fulfills the promises of peace, prosperity, and cooperation that its liberal scholars and philosophers have promised. Without marketization, supporters argue that government created externalities can distort the information available to the market which in turn makes the market not work as well as it could.
Examples
Milton FriedmanMilton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
offers examples of what marketized government solutions can look like. Friedman's proposed education voucher system promotes competition between public schools (and private) thus creating a market based solution to educational issues.
See also
- DeregulationDeregulationDeregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
- PrivatizationPrivatizationPrivatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
- LiberalizationLiberalizationIn general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation...
- GlobalizationGlobalizationGlobalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
- CapitalismCapitalismCapitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
- Free marketFree marketA free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
- Classic liberalism
- Milton FriedmanMilton FriedmanMilton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
- F.A. Hayek
Further reading
- Academic Entrepreneurialism and Its Related Concepts: A Review of the Literature by Hei-hang Hayes Tang; Published 2009, Research Studies in Education 7: 42-49;ISBN 9789628093502.
- Democracy, the Economy and the Marketisation of Education by Hugh Lauder; Published 1992, Victoria University Press; ISBN 0864732341.
- Globalization and Marketization in Education: A Comparative Study of Hong Kong and Singapore by Ka-Ho Mok, Jason Tan; Published 2004, Edward Elgar Publishing; ISBN 184376380X.
- Governance And Marketisation In Vocational And Continuing Education by Rudolf Husemann, Anja Heikkinen; Published 2004, Peter Lang Publishing, Incorporated; ISBN 3631505337.
- Marketisation of Governance: Critical Feminist Perspectives from the South by Viviene Taylor; Published 2000, SADEP, University of Cape Town; ISBN 0799220191.
- Marketization and Democracy: East Asian Experiences by Samantha Fay Ravich; Published 2000, Cambridge University Press; ISBN 052166165X.
- Marketisation of the Careers Service by Jane V.Helmsley Brown, Nicholas Foskett; Published 1998, University of Southampton, Centre for Research in Education Marketing; ISBN 0854326502.
- Marketization, Restructuring and Competition in Transition Industries of Central and Eastern Europe by Marvin R. Jackson, Wouter Biesbrouck; Published 1995, Avebury; ISBN 1859720471.
- Pluralism and Marketisation in the Health Sector: Meeting Health Needs in Contexts of Social Change in Low and Middle Income Countries by Gerald Bloom, Hilary Standing; Published 2001, Institute of Development Studies; ISBN 1858643619.
- Politics of Marketization in Rural China by Wei Pan; Published 2001, Rowman & Littlefield Publishers, Incorporated; ISBN 0847685721.
- Social Welfare and the Market: Papers from a Conference on Marketisation by Frances Millard; Published 1988, Suntory-Toyota International Centre for Economics and Related Disciplines; ISBN 0853281157.
- The Marketization of Social Security by John E. Dixon, Mark Hyde; Published 2001, Quorum/Greenwood; ISBN 1567203256.
- Understanding Marketisation Within the Chinese Information Sector by Doris Fischer; Published 2003, Institut für Rundfunkökonomie (Institute for Broadcasting Economics, Cologne University); ISBN 3934156681.