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Marketization (or Marketisation) is a restructuring process that enables state enterprises to operate as market-oriented firms by changing the legal environment in which they operate.[1]

This is achieved through reduction of state subsidies, organizational restructuring of management (Corporatization), decentralization and in some cases partial privatization.[2] These steps, it is argued, will lead to the creation of a functioning market system by converting the previous state enterprises to operate under market pressures as state-owned commercial enterprises.


Marketized solutions of government and market externalities[edit]

Here the government seeks to solve market and government externalities with market-based solutions rather than through direct administrative means. Supporters argue that the market externality of pollution can be addressed through the sale of pollution permits to companies and corporations, thus allowing the market to "see" the information and "realize" the harm done by allowing the market to transmit pollution costs to society. This is presented as an alternative to direct administrative means, whereby the government would use command and control means to direct state enterprises and private firms to comply with the guidelines.

Marketization of government branches[edit]

This is often described as "competitive federalism" or "limited government". Proponents argue that markets perform better than government administration. Therefore, marketization seeks to make government agencies and branches compete with each other when government branches and agencies are absolutely necessary (i.e. remaining agencies and branches not privatized or liberalized away). For example, supporters argue that a voucher system for public education would make public schools compete with one another thus making them more accountable and efficient.


Critics of globalization, privatization, and liberalization have deemed that it is unworkable without major government regulations to balance the forces involved. They argue that marketization can result in market failure.

Free Market thinkers like Hayek, Friedman and von Mises believe markets can work with far less government regulation. As they see it, the combination of liberalization, privatization, and marketization ensure that globalization fulfills the promises of peace, prosperity, and cooperation that its liberal scholars and philosophers have promised. Without marketization, supporters argue that government created externalities can distort the information available to the market which in turn makes the market not work as well as it could.


Milton Friedman offers examples of what marketized government solutions can look like. Friedman's proposed education voucher system promotes competition between public schools (and private) thus creating a market based solution to educational issues. See Private prison.

See also[edit]


  1. ^ Rolph van der Hoeven, György Sziráczki. Lessons from Privatization. (1997). International Labour Organization. ISBN 92-2-109452-9 p.101
  2. ^ Sarah Vickerstaff. The Transformation of Labour Relations. (1998). Oxford University Press. ISBN 0-19-828979-0 p.63

Further reading[edit]

  • Academic Entrepreneurialism and Its Related Concepts: A Review of the Literature by Hei-hang Hayes Tang; Published 2009, Research Studies in Education 7: 42-49;ISBN 978-962-8093-50-2.
  • Democracy, the Economy and the Marketisation of Education by Hugh Lauder; Published 1992, Victoria University Press; ISBN 0-86473-234-1.
  • Globalization and Marketization in Education: A Comparative Study of Hong Kong and Singapore by Ka-Ho Mok, Jason Tan; Published 2004, Edward Elgar Publishing; ISBN 1-84376-380-X.
  • Governance And Marketisation In Vocational And Continuing Education by Rudolf Husemann, Anja Heikkinen; Published 2004, Peter Lang Publishing, Incorporated; ISBN 3-631-50533-7.
  • Marketisation of Governance: Critical Feminist Perspectives from the South by Viviene Taylor; Published 2000, SADEP, University of Cape Town; ISBN 0-7992-2019-1.
  • Marketization and Democracy: East Asian Experiences by Samantha Fay Ravich; Published 2000, Cambridge University Press; ISBN 0-521-66165-X.
  • Marketisation of the Careers Service by Jane V.Helmsley Brown, Nicholas Foskett; Published 1998, University of Southampton, Centre for Research in Education Marketing; ISBN 0-85432-650-2.
  • Marketization, Restructuring and Competition in Transition Industries of Central and Eastern Europe by Marvin R. Jackson, Wouter Biesbrouck; Published 1995, Avebury; ISBN 1-85972-047-1.
  • Pluralism and Marketisation in the Health Sector: Meeting Health Needs in Contexts of Social Change in Low and Middle Income Countries by Gerald Bloom, Hilary Standing; Published 2001, Institute of Development Studies; ISBN 1-85864-361-9.
  • Politics of Marketization in Rural China by Wei Pan; Published 2001, Rowman & Littlefield Publishers, Incorporated; ISBN 0-8476-8572-1.
  • Social Welfare and the Market: Papers from a Conference on Marketisation by Frances Millard; Published 1988, Suntory-Toyota International Centre for Economics and Related Disciplines; ISBN 0-85328-115-7.
  • The Marketization of Social Security by John E. Dixon, Mark Hyde; Published 2001, Quorum/Greenwood; ISBN 1-56720-325-6.
  • Understanding Marketisation Within the Chinese Information Sector by Doris Fischer; Published 2003, Institut für Rundfunkökonomie (Institute for Broadcasting Economics, Cologne University); ISBN 3-934156-68-1.
  • The Marketization of Society: Economizing the Non-Economic by Uwe Schimank and Ute Volkmann; Published 2012; Bremen: Research Cluster “Welfare Societies”.