Privatization and the Democracy Problem in Globalization: Making Markets More Accountable through Administrative Law

By Aman, Alfred C., Jr. | Fordham Urban Law Journal, June 2001 | Go to article overview

Privatization and the Democracy Problem in Globalization: Making Markets More Accountable through Administrative Law


Aman, Alfred C., Jr., Fordham Urban Law Journal


INTRODUCTION

In this article I will analyze the privatization of traditional government services by placing such changes in governance in a global context. The connections between, for example, private prisons and globalization may appear, at first, somewhat tenuous. What, after all, do such intensely domestic institutions as prisons have to do with the global economy? I address this question in a three-part discussion. I will argue in Part I that the privatization of governmental services is very much of a piece with deregulatory trends in the United States and elsewhere in which state-centered approaches to a variety of regulatory problems increasingly have given way to markets and market discourses at all levels of government. (1)

The reasons for the shift from states to markets are many and complex. (2) They involve much more than simply a cyclical swing of the regulatory pendulum from liberal to conservative. Rather, this shift in perspective and the fundamental ways in which government conceives of and then carries out its responsibilities is closely tied to how decision makers at all levels of the public and private sectors conceptualize globalization. The privatization of governmental services resonates with primarily an economic conception of globalization based on markets and the competition they engender. These markets differ and often can be seen as more metaphorical than real. They are more often an alternative form of regulation than a substitution of something "wholly private" for what once was "wholly public."

Part II will consider the effects of such privatization trends on the public/private distinction itself, and its implications for democracy in general. The "democracy problem" under globalization involves the diminishment of transparency, public participation, and the information flows necessary to make public participation influential. This problem arises from the disjunction between global economic and political processes on the one hand, and local processes of democratic participation on the other. The global economy and the competition it engenders encourage cost-cutting on the part of both private and public sectors. When cost-cutting occurs by way of privatization in the public sector, however, the democracy problem can intensify, particularly when some approaches that delegate regulation to markets treat these markets as essentially "private," and the actions individuals take pursuant to market forces as voluntary or, in effect, merely administrative. Such an approach can undercut substantially public involvement in various policy-making processes. (3) Even more important, the information that can make public participation meaningful no longer may be available when government services are privatized. (4)

As I also note in Part II, there are many types of markets and various forms of democracy. New procedural approaches to decision making are necessary to make different kinds of markets appropriately accountable to citizens. To this end, I discuss various forms of public participation or democracy, including shareholder democracy, consumer democracy, and administrative democracy. To help explain how certain markets and forms of democracy are best matched, I develop the concept of "global currency." I argue that the more metaphorical the markets involved are, the more need there may be for public participation in decision making, lest illegitimate forms of currency be used in the various global economic competitions now underway.

Finally, in conclusion, I suggest that two related ideas are significant to understand fully the relationship of globalization to democracy: global citizenship and a global public interest. Making some domestic markets more accountable to the public can mitigate a significant externality of globalization--the "democracy deficit"--but global processes also can help shape and influence domestic law trends as well. Processes that are linked to a politics that transcends our own local views offer the possibility of new ideas and new avenues of change. …

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Privatization and the Democracy Problem in Globalization: Making Markets More Accountable through Administrative Law
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