PRIVATISATION HAS INCREASED STATE REGULATION

How much has the role of the nation-state as an agent of political and economic decision-making diminished? This was one of the central questions asked in the seminar on the "Elusive Concept of Sovereignty", held at the Finnish Institute in April 1996.

The British government has had a difficult balancing job in celebrating national sovereignty and liberating market forces from state regulation. At the centre of the latter has been the privatisation of state-owned companies. This has, however, increased state regulation. Dr. Jonathan Michie pointed out that this is manifestly true of the privatisation of public utilities.

"What we have is not a clear case of the state withdrawing as an economic agent but rather changing its role as such. Privatisation has created a need for very detailed public regulation of privatised industries. This has been quite at odds with what was expected by the government and its advisors."

On the other hand, the globalisation of economic activities has had a real tendency to diminish the role of the nation-state. Michie fears a nationalistic backlash.

"Just because there has been an increase in globalisation, it does not mean that it is irreversible. I am not saying that it would be a good or bad thing to reverse this tendency but there are dangers that unless appropriate new mechanisms and institutions at the internartional level are developed, these processes may be reversed in an unfortunate and nationalistic way."

Dr Jonathan Michie is a Lecturer at the Judge Institute of Management Studies, and a Fellow of Robinson College, Cambridge. He has recently edited "Creating Industrial Capacity: Towards Full Employment", published by Oxford University Press, 1996.