The document discusses options for privatizing state enterprises, including full corporate privatization, partial privatization, or converting enterprises into cooperatives ("co-oprivatization"). It outlines the pros and cons of state enterprises, corporate privatization, and co-oprivatization. Co-oprivatization involves converting state enterprises into cooperatives owned and governed by their stakeholders. This balances social and economic goals better than full privatization by giving workers and consumers democratic control while also introducing market incentives. However, co-ops also face limitations from access to capital and resistance to change. Overall, the document analyzes the tradeoffs between different privatization approaches.

1. Generating
Choices
Between State
Enterprise &
Corporate
Privatization
Co-oprivatization
Joffre Balce

2. Reviewing the Options
State Enterprise Corporate Privatization
 State’s Entrepreneurial  The transfer of ownership,
Role to provide public governance & management
goods: i.e., that which of a public enterprise into
everyone wants but no corporate hands
one wants to invest in or  This transfer is
provide  total or partial
 sub-contract or joint venture
 Assume natural  share issue or asset sale
monopolies of economic  immediate or gradual
activities whose capital  By negotiation, auction or
investment is too large or negotiated auction
not feasible for private
initiatives

3. Pros & Cons of State
Enterprise
 Transparency,  Inefficient
Responsibility & Performance to
Accountability: Investor & Public
Control, Oversight, Due to Civil Service
Checks & Balances Security of Tenure
 Social Goals over  Prone to Political
Entrepreneurial Pressure: Populist
Profits or Partisan
 Social Equity over  Primary Agent Risk:
Market Politicians &
Segmentation Bureaucrats

4. Pros & Cons of Corporate
Privatization
 Performance Driven  Primacy of
by Shareholder Shareholder
Accountability Accountability
 Profit Incentive  Primary Agent Risk:
Driven Research & Management &
Development Directors
 Relieved Pressure  Social Inequity from
on Non-Patronizing Market
Taxpayers Segmentation

5. Unresolved Economic
Dilemmas
 Consumers/Patrons want the best quality
for the lowest price
 Investors/Providers want to charge the
highest price at the lowest cost
 Civil Rights & the Exploitation of
Information Asymmetry Are at Risk in Both
Options
 Neither Raise Financial Market Efficiency:
 Government as Risk-Free Borrower
 Strategic Enterprises Are Prone to Bail Outs

6. What Is A Co-op?
 A social response of a group, community or
society to respond to their socioeconomic
needs that neither current market conditions
nor the government is able to provide in a
manner that raises their quality of life to their
satisfaction through the formation of a jointly
owned & autonomously governed private
enterprise
 Owners are the consumers & workers of the
enterprise & continue to provide capital:
 Consumers through the price they pay for
patronage & workers though shares of stock
incorporated in their compensation

7. Co-op Principles
 Openness & Voluntarism  Education, Information &
 No one is coerced or Communication
discriminated  Members are informed &
 Democratic Control educated on the economics
of their enterprise, the market
 One member, one vote; & good governance
limited single ownership &
directors’ tenure  Mutual Cooperation Among
 Member Economic Co-ops
Participation  Co-ops strive for mutual
synergy via joint ventures &
 Consumers, workers & other co-op means
members in general are
entitled to rebates, dividends  Concern for Community
& compensation, respectively  Co-ops & their communities
 Autonomy & Independence are in economic symbiosis
 Members/stakeholders are
accountable to each other

8. Co-op Privatization is
 Converting the State Enterprise into a Co-op
Owned & Governed By Its Very Stakeholders
 It is a step beyond the “voucher privatization”
exercised in the Eastern Bloc Countries many
of which were regarded as failures where the
public “owns” the enterprise but politicians &
bureaucrats govern & manage the enterprise
still.
 Government negotiates a graduated buy-out
based on current economic market conditions
so as not to contribute to a deficit.

9. Pros & Cons of
Co-oprivatization
 Market Compulsion to  Limited Access to
Resolve Economic Financial Markets
Dilemmas  Tendencies to Hubris
 Relieves the & Parochialism
economic burden of  Resistance from the
state enterprise on Vested Interests in
taxpayers the Status Quo
 Better education &  Proneness to
representation in Temptation to De-
governance Mutualise for Capital
Gains