THIS ARTICLE COMPARES THE US AND BRITISH EXPERIENCE OF privatization policies. In both countries there is no ‘proof’ that privatization has led to any empirically measurable benefit, or that the new structures are necessarily more consumer-oriented. First the perceived need for change in the public sector is explored, outlining the dynamic provided by the New Right. Next the importance of managerial and professional power to this process of change is explained, before the role of privatization as a ‘cutting edge’ used by liberal/conservative governments (that is governments conventionally labelled as conservative, but which have adopted ideologically liberal policies) is discussed. The paper concludes with an illustrative case study of the privatization of the British Electricity Supply Industry.

THE ‘NEW INSTITUTIONALISM’ HAS BEEN THE MOST VISIBLE movement in American political science during the last decade. It is a recoil from reductionism that is said to have dominated the political science of the previous decades. During the American Political Science Association presidency of Charles E. Lindblom in 1981, with Theodore Lowi and Sidney Tarrow as co-chairs of the Program Committee, it was decided that all titles of panels and round tables at the annual meeting were to have ‘and the state’ tacked on. The implication was that the behavioural revolution had resulted in the neglect of the power and autonomy of the state. But this adding on ‘and the state’ had very little effect on the content of the papers, and seemed primarily to have ‘buzzword’ significance. A second manifestation of this discomfort was an article in the American Political Science Review of 1984 by James March and Johan Olsen, entitled ‘The New Institutionalism; The Organizational Factor in Political Life’, followed by a book by the same two authors called Rediscovering Institutions: The Organizational Basis of Politics.

DURING ONE OF MY RECENT TALKS ABOUT THE MAIN problems in Hungary to foreign businessmen in the autumn of 1991, I was asked by a Japanese banker to enumerate the five most important issues that unite and divide Hungarians. It sounded like a simple assignment, and yet when I started to answer I came to realize that it was, in fact, a very difficult one. This was not because I was unable to list even ten issues; indeed, my problem was of a different sort. It was easy to talk about issues that were dividing the population, like Hungary's policies with respect to the market system, to privatization, to compensation for former property owners, and so forth. On the other hand, however, those issues which ostensibly unite the great majority of Hungarians — like democratization, freedom, national integrity, and human rights — are not necessarily understood by all to mean the same thing. There are stark differences of opinion on these issues; however, I added that this seemed quite normal and that it has not resulted in any sharp or violent confrontation.

THE PRINCIPLE OF ‘SOLIDARITY’ IN FRANCE HAS COME TO stand for a justification of social policy in terms of the protection of mutual interests. In the literature of social policy, ‘solidarity’ refers to the establishment of collective action and recognition of mutual responsibility. The principle is often related to egalitarian policies; but the prescriptions of ‘solidarity’ may tend in a very different direction to policies which pursue equality. Equality and solidarity are not necessarily incompatible objectives, but as commonly understood, there is a tension between them which means that each might undermine the other.

It is difficult in any pluralistic society to gauge the influence on governments or administrations of organizations which engage in policy studies even when those studies are the product of parliamentary bodies like select committees or other agencies. It is particularly difficult in the United Kingdom for example, where Parliament is, in practice if not in theory under the constitution, the unequal partner of the executive. Even where policy recommendations are followed by government there is often no way of telling whether or not they would have been pursued in any event, on the government's own initiative.