Privatization in Europe: Systemic Left-Wing Strength, Power Resources and Productive Efficiency

I present a theoretical account of the politics of privatization that leads to predictions regarding the effect of partisanship that are contingent on the long-run strength left-wing parties in a political system. However, in marked contrast to predictions derived from a traditional interest group approach, my claim is that a stronger Left constituency will make it more likely that left-wing parties will engage in privatization programmes that are likely to be at least partially detrimental to traditionally left-leaning interest groups. At root, left-wing parties face a trade-off between protecting the basis of their electoral strength and enhancing macro-economic performance. The balance of this trade-off varies based on the prevailing level of left-wing strength. A two-stage tobit approach is used where the first stage estimates systemic left-wing strength and the second employs this estimate as an explanatory variable in models of privatization effort. Results from 14 Western European countries over the period 1980--2000 lend support to the theoretical claims.