The End of Public Enterprises in Europe?

  • Judith Clifton
  • Francisco Comín
  • Daniel Díaz Fuentes
Chapter

Abstract

Many analysts agree that the 1970s marked a rupture with the post-war economic model characterised by a mixed economy guided by State regulation based on Keynesian policies.1 The new model of global political economy that emerged was characterised by deregulation, liberalisation and privatisation policies. In this new regime, markets were promoted, while governments were encouraged to ‘roll back’ their intervention into business.2 Some of the most extreme interpretations of this change were that this new phase of globalisation meant the end of the Nation State and economic nationalism that had been dominant since the nineteenth century.3 Also, from a regional perspective, the policies of privatisation, deregulation and liberalisation within the EU (as well as the Americas and Asia) were explained by the redefinition of economic blocs in certain geographical zones, rather than by global market forces.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes

  1. 1.
    Maddison (2001).Google Scholar
  2. 2.
    Lieberman (1993).Google Scholar
  3. 3.
    Crafts (2000) and World Bank (2002).Google Scholar
  4. 4.
    Vickers and Yarrow (1988), Vickers and Wright (1989).Google Scholar
  5. 5.
    Parker (1998).Google Scholar
  6. 6.
    In comparison with the models in textbooks of privately-owned firms that seek profit maximisation. (Yarrow, 1999).Google Scholar
  7. 7.
    Yarrow and Vickers (199 1)Google Scholar
  8. 8.
    Price Waterhouse (1989), Megginson and Netter (2001).Google Scholar
  9. 9.
    Shirley (1983 and 1998).Google Scholar
  10. 10.
    Ramamurti (1996 and 1999).Google Scholar
  11. 11.
    Clifton, Comín and Díaz Fuentes (2001) and Young and Metcalfe (1995: 130).Google Scholar
  12. 12.
    In various examples of network services, privatisation without a previously established regulatory framework has been an obstacle to the introduction and growth of competition and structural reform. See OECD (2002).Google Scholar
  13. 13.
    Heald (1989) and Hulsink (1999).Google Scholar
  14. 14.
    Millward (2000: 175).Google Scholar
  15. 15.
    For details about Conservative ideology and influence, see Millward (2000:177) and Yergin and Stanislaw (1998).Google Scholar
  16. 16.
    Feigenbaum (1998: 60) and Chick (2002).Google Scholar
  17. 17.
    According to the European Trade Union Institute (1989) the UK Treasury lost some £3.2 million through undervaluing shares only with the sales of British Gas, BT, British Airways and Rolls Royce. The Institute of Fiscal Studies estimates 26 percent of possible income was lost (cited in the European Trade Union Institute 1989).Google Scholar
  18. 18.
    Heald (1989) has claimed this period saw the victory of the ‘radicals’ over the ‘consolidators’ within the Conservative Party.Google Scholar
  19. 19.
    See Millward (2000: 175–9), Steel and Heald (1985), Murie (1985) and Parker (1993).Google Scholar
  20. 20.
    Jenkinson (1998: 90).Google Scholar
  21. 21.
    Price (1994) and Yarrow (1994).Google Scholar
  22. 22.
    This allowed the government certain rights over the sale or liquidation of privatised companies, restricted certain foreign acquisitions, limited voting rights, conferred the right to designate directors, and to allow the vetoing of hostile takeovers or undesired corporate changes.Google Scholar
  23. 23.
    Clarke (1993) and Hulsink (1999).Google Scholar
  24. 24.
    The government explicitly outlined one of its main aims was to promote a broader and deeper shareholding society, for workers and the general public. HMS Treasury (1995: 4).Google Scholar
  25. 25.
    The number of individual shareholders increased from 3 million to 11 million between 1979 and 1991, then declined to 9 million by 1993 (Jenkinson 1998: 92). According to the organisation Pro-share created by the Conservative government, 72 per cent of shareholders hold shares in one of two companies in 1993.Google Scholar
  26. 26.
    Feigenbaum (1998:75–79). The Economist, ‘Britain: The end of privatisation?’ 13 June 1998, and Millward (1998: 175).Google Scholar
  27. 27.
    The Labour government dropped Clause Four (advocating nationalism) prior to coming to power.Google Scholar
  28. 28.
    The BBC, however, has been subject to internal management changes including Producer’s Choice, under John Birt, whereby a percentage of work is contracted out. Clifton (2000).Google Scholar
  29. 29.
    In addition, nationalisation was continuous because steel making was ‘prenationalised’ in 1978 by a right wing government that wished to avoid its total collapse. See Fridenson (1987: 145–6).Google Scholar
  30. 30.
    See Chadeau (2000: 198–201), Catta (1990), Thullier (1987) and Zinsou (1985).Google Scholar
  31. 31.
    In the French case of the 1980s, there were authentic public multinational companies. See Hamduch (1989: 30–31).Google Scholar
  32. 32.
    Durand (1993).Google Scholar
  33. 33.
    Together, the internal and external advisors constituted a ‘noyau dur buclé’ (circular hard core). The stated explicit aim of the government in the constitution of this hard core was to protect companies from hostile takeovers that destroyed accumulated shares or constituted a simple acquisition of markets rather than enterprises. The central idea was that industrial groups and national financial institutions would be in charge of the upkeep and continuity of the privatised enterprise. See Morin (1998). On the State of influence, see Hamdouch (1989).Google Scholar
  34. 34.
    Morin (1998).Google Scholar
  35. 35.
    Chadeau (2000: 202)Google Scholar
  36. 36.
    See Feigenbaum (1998) and Morin (1998).Google Scholar
  37. 37.
    Such as the case of Mexico. See Clifton (2002).Google Scholar
  38. 38.
    Posner and Wolf (1967) and Cianci (1977).Google Scholar
  39. 39.
    A good example is AGIP created in 1926 with Mussolini’s support to reduce energy dependency. See Toninelli (2000: 7).Google Scholar
  40. 40.
    On the complexity of the case of Italy, Toninelli (2000:5) claims: ‘This reaches an apogee of fantasy and ingenuity in the terminology and legal forms used in Italy, where state companies, state shareholding companies, state concerns and so on have coexisted throughout the twentieth century.’ See also Segnana (1993).Google Scholar
  41. 41.
    Toninelli (2000: 11–4).Google Scholar
  42. 42.
    Amatori (2000:132–3).Google Scholar
  43. 43.
    Toninelli (2000: 19).Google Scholar
  44. 44.
    For the Draghi reform of 1998 see Amatori and Colli (2001: 43).Google Scholar
  45. 45.
    Price Waterhouse (1989) and Megginson and Netter (2001).Google Scholar
  46. 46.
    Esser (1999: 120).Google Scholar
  47. 47.
    As put graphically by Wengenroth (2000: 125).Google Scholar
  48. 48.
    The rhetorical volte-face about privatisation occurred in 1982 with the policy of ‘great change’ of Helmut Kohl, but privatisation only became a distinctive characteristic of the political economy in 1987. Until the 1980s privatisation had been limited to isolated instances such as the environment and drainage services. Esser (1989) described it as ‘symbolic’ privatisation.Google Scholar
  49. 49.
    Esser (1989) and Woll (1987).Google Scholar
  50. 50.
    In March 1990, the DRG government created the Treuhandanstalt. This was comprised of 40,000 facilities in 8,000 enterprises. Some 1,900 infrastructure utilities were transferred to the East municipalities creating the local form of state ownership prevalent in the West. Although this was the largest instance of privatisation in the history of Germany, the specificities of the case mean it does not help to gain a general understanding of the processes of nationalisation and privatisation of public enterprises in a market context. See Bös and Kayser (1997:77) and Wengenroth (2000:122–3).Google Scholar
  51. 51.
    Other explicit objectives were the extension of share ownership, a more equitable distribution of productive property, an opening and deconcentration of markets. See Leaman (1994).Google Scholar
  52. 52.
    Esser (1989: 70, 108).Google Scholar
  53. 53.
    See Bös and Kayser (1995 and 1997) and Schnabel (1996).Google Scholar
  54. 54.
    Hulsink and Schenk (1998).Google Scholar
  55. 55.
    Van der Linde (2001).Google Scholar
  56. 56.
    In Fokker, the State was involved in its management until the dissolution of the company in 1996.Google Scholar
  57. 57.
    The government promised to keep a third of KPN shares until 2004. Brinkhorst (1996: 161).Google Scholar
  58. 58.
    Hulsink (1999: 208).Google Scholar
  59. 59.
    See Davids and van Zanden (2000: 261–70), and OECD (2001, 2002).Google Scholar
  60. 60.
    OECD (1988/1989:56).Google Scholar
  61. 61.
    Schrans (1994: 115).Google Scholar
  62. 62.
    Devroe (1997: 128).Google Scholar
  63. 63.
    Brooks (1995: 107).Google Scholar
  64. 64.
    In 1995 the government sold 49.4 per cent of its stake in Belgacom to ADSB, a consortium led by the American company Ameritech (35 per cent) and that included TeleDenmark (33 per cent) in which Ameritech owned 42 per cent, Singapore Telecom. (27 per cent) and other institutional investors (KBC, CC/GK and Sofina with 5 per cent). See De Bandt, Van Hecke and Lagae (1996).Google Scholar
  65. 65.
    Willner (1998), Kjerult (1998: 125).Google Scholar
  66. 66.
    Knudsen and Kjerult (1995: 112).Google Scholar
  67. 67.
    Dalsgaard (1994: 120).Google Scholar
  68. 68.
    Finansministeriet (1996).Google Scholar
  69. 69.
    Richter (1994: 152).Google Scholar
  70. 70.
    Stein (1995: 154).Google Scholar
  71. 71.
    Willner (1998:177).Google Scholar
  72. 72.
    Sweden’s Finance Minister, Bosse Ringholm (2000).Google Scholar
  73. 73.
    Swedish Government Offices (2000).Google Scholar
  74. 74.
    OECD (2002). Advisory Group on Privatisation. Fourteenth Plenary Session: Managing Commercial Assets under State Ownership.Google Scholar
  75. 75.
    The policy of active management of the public portfolio has given rise to new investment such as that in OM Gruppen AB (7.7 per cent stake) which owns and runs the marketplace for securities, financial futures and options in Stockholm. Another example is the acquisition by Posten in transport company ASG. In addition, the Swedish-Finnish banking group MeritaNordbanken acquired Christiani Bank and Kreditskasse of Norway. New investment of public enterprises are oriented to technological development and reinforcing their position in international markets.Google Scholar
  76. 76.
    The initial efforts of privatisation occurred during the 1980s, however, they were limited, since the State transferred total ownership of only two companies. The first was the sale of the majority of capital of the telecommunications company Televa to Nokia in 1982 and the remaining capital in 1987. the operation was justified by technological factors. The second was the sale of the transport operator Ajokki Oy which was transferred to the private sector in 1986 into a competitive environment. See Tapio (1997b: 136).Google Scholar
  77. 77.
    In February 1988, the IPO of Finnish Air was launched. In June of the same year, Valmet Oy shares were issued for 182 million dollars. In May 1989, Outokumpu issued shares for 81 million dollars and, in October the steel works Rautaruukky Oy generated 14 million dollars. See Bergendahl (1995: 117).Google Scholar
  78. 78.
    Tapio (1997b: 136) and Kalliomaki (1999: 85).Google Scholar
  79. 79.
    Käärianinen (1994).Google Scholar
  80. 80.
    Bergendhal (1995: 120), Tapio (1997a) and Bonar and Elo (1998).Google Scholar
  81. 81.
    The government manifesto for the period 1995 to 1996 established that the resources generated for privatisations should be used for industrial reconversion, the support of finance through SME capital risk, and the promotion of investment in innovation, with the objective of reinforcing competition in sectors that were intensive in technology. Bonar and Elo (1998: 128).Google Scholar
  82. 82.
    Kalliomaki (1999: 86) and Willner (1998: 186).Google Scholar
  83. 83.
    Barrett (1998).Google Scholar
  84. 84.
    Barrett (1998: 141–2).Google Scholar
  85. 85.
    Lee (1989), Keogh (1994).Google Scholar
  86. 86.
    O’Gorman (1997: 155).Google Scholar
  87. 87.
    Parker (1998: 16).Google Scholar
  88. 88.
    Condon (1996: 153).Google Scholar
  89. 89.
    Aiginger (1998).Google Scholar
  90. 90.
    Müller (1989: 106).Google Scholar
  91. 91.
    Hofkirchner (1994: 111).Google Scholar
  92. 92.
    Kubik and Rauscher (1997: 125).Google Scholar
  93. 93.
    Kubik (1999: 80).Google Scholar
  94. 94.
    Sassoon et al, (1996: 131).Google Scholar
  95. 95.
    Aiginger (1998).Google Scholar
  96. 96.
    Parker (1998: 16).Google Scholar
  97. 97.
    OECD (1999).Google Scholar
  98. 98.
    Kyriazi (1994: 144).Google Scholar
  99. 99.
    Financial Times, 19 June 1998.Google Scholar
  100. 100.
    Avgeropoulos (1999: 91).Google Scholar
  101. 101.
    Charalambous and Schneider (1996); Haritakisn and Pitelis (1999: 132).Google Scholar
  102. 102.
    During the Estado Novo, in 1933, State intervention in business was restricted, while the mixed ownership of the energy, transport, communication and steel sectors was promoted. In the post-war period, direct intervention was quite rare, but good example was the Bank of National Development for managing the Marshall Plan funds. See Nunes et al (2001).Google Scholar
  103. 103.
    Freire and Salgado (1994: 143).Google Scholar
  104. 104.
    Nunes (2001: 24).Google Scholar
  105. 105.
    Vilão (1995: 147).Google Scholar
  106. 106.
    Vilar et al (1998).Google Scholar
  107. 107.
    Sérgio (1993: 58).Google Scholar
  108. 108.
    Caiado Guerreiro and Caetano de Freitas (1997: 173).Google Scholar
  109. 109.
    Cary and Dantas (1998: 162–3).Google Scholar
  110. 110.
    See Comín (1999 and 2000), Comín, Martín Aceña and Jiménez (1992), Jiménez (1994), de la Dehesa (1992) and Montoro (1991).Google Scholar
  111. 111.
    It was thought the SEPI could be listed on the stock exchange in 1996, but this did not occur due to the changes in the direction of privatisation policies by the PP.Google Scholar
  112. 112.
    See Comín and Martín Aceña (2002).Google Scholar
  113. 113.
    See OECD (1998).Google Scholar
  114. 114.
    Individual shareholding was overlooked in the sales of Gas Natural (1996), Aldeasa (1997). See Cuervo (1998), Gámir (1998) and Mañas (1998).Google Scholar
  115. 115.
    According to the Privatisation Advice Board (1998).Google Scholar
  116. 116.
    See Lasheras (1999).Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2003

Authors and Affiliations

  • Judith Clifton
    • 1
    • 2
  • Francisco Comín
    • 3
  • Daniel Díaz Fuentes
    • 4
  1. 1.Universidad de OviedoSpain
  2. 2.Open University and University of LeedsUK
  3. 3.Universidad de Alcalá de HenaresSpain
  4. 4.Universidad de CantabriaSpain

Personalised recommendations