Privatization

The English word private traces to Latin privatus, meaning withdrawn from public life, and earlier privare, to deprive or to separate.1 For centuries it simply described things belonging to an individual rather than the state.

The concept of transferring government-owned enterprises to private ownership needed a new word. The Economist used reprivatization in 1936 to describe the Nazi German government's policy of selling state-owned enterprises to private parties.2 The German economist Germa Bel traced the policy back to the early years of the Third Reich.

The modern form privatization gained global prominence in the 1980s through the policies of British Prime Minister Margaret Thatcher. Between 1979 and 1990, Thatcher's government sold British Telecom, British Gas, British Airways, and other state-owned corporations to private investors.3

The Washington Consensus, a set of economic policy recommendations formulated in 1989 by economist John Williamson, included privatization as one of its ten pillars for developing nations.4 The term spread across Latin America, Africa, and the former Soviet bloc during the 1990s.

In Russia, the rapid privatization of state assets in the early 1990s transferred vast industrial holdings to a small number of individuals who became known as oligarchs. Economists later debated whether the speed of the process had concentrated wealth without generating the competitive markets that privatization was supposed to create.5