Privatization, that is, the transfer of ownership rights from the public to the private sector, is one of the main events of the economic and financial history of the post-war period.
The milestones of privatization history can be sketched briefly as follows. One of the first privatizations in modern times was undertaken by the Adenauer government in the Federal Republic of Germany. In 1961, the German government launched a policy of denationalization of the economy and sold a majority stake in Volkswagen through a public offering, mainly earmarked for small investors. This was followed by the sale of Veba shares in 1965. Both offers were well received initially but, at the first stock market slump, the government was forced to bail out investors, and reversed the stated policy. Other failed attempts occurred in Chile and Ireland at the beginning of the 1970s.
The story picks up in 1979 in the United Kingdom under Mrs Margaret Thatcher's Conservative government, which, indeed, coined the term 'privatization' in place of the less attractive 'denationalization'. 1 Interestingly, privatization had not been one of the prominent themes of the electoral campaign that brought the Conservatives to victory. Nevertheless, the Thatcher government's policy of SOEs (state-owned enterprises) assets disposal left a lasting mark on the economic history of the twentieth century.
At the beginning, the programme met with the scepticism of economists, the media, and commentators in general, so much so that the opposition Labour Party promised to return to public ownership the assets privatized if it returned to power. Within a few years, thanks to the success of many privatizations, the Conservatives obtained a wide political support which allowed them to accomplish the process. At the end of the fourth Conservative legislature in 1997, virtually all SOEs were sold out, with their value accounting for a marginal share of GDP (Vickers and Yarrow 1988 ; World Bank 1995).
During the 1990s the privatization policy became a fundamental element of global economic orthodoxy, spreading out in developed, emerging, and less developed countries.
The rationale for a privatization policy can be found in recent economic literature but it can be also be traced back to Adam Smith (1776 : 771). Smith observed that 'characters do not exist who are more distant than the sovereign and the entrepreneur', in that people are more generous with the resources of