Vanderbilt Law Review


E. S. Savas

First Page



"Privatization" means increased governmental reliance on the private sector, rather than on government agencies, to satisfy the needs of society. Since the word was first used in 1969,' privatization has gained broad recognition and widespread acceptance, and,in recent years, a major trend toward privatization has developed in the United States and abroad. The reasons for this trend are both pragmatic and ideological. Pragmatists advocate privatization because it offers a more efficient way to provide goods and services. Ideological opponents of big government support privatization be-cause it reduces the role of government. Privatization is therefore an important movement in East and West, in developing and developed countries, in communist and capitalist nations. It has taken root even in China and the Soviet Union.Privatization in the United States has taken a different form than it has in other countries. Outside the United States, in both developing and developed countries, the principal form of privatization is denationalization-the divestment of state-owned enterprises (SOEs). In the United States, which has relatively few SOEs, state and local governments are implementing privatization primarily through contracting and, to a lesser degree, vouchers,franchises, free-market arrangements, and voluntary efforts. Contracting, however, is the primary method governments use to privatize prisons.