---
title: "Nationalization, Privatization and the Boundaries of Voluntarism"
slug: natsionalizatsiya-privatizatsiya-i-granitsy-volyuntarizma
tags:
  - "About Economics"
weight: 104
---

It is no secret that the terminology in the "social sciences," to put it mildly, limps on both legs. What is worse, terminology is a weapon of political struggle, and nobody particularly hides this. Hayek, in his "The Fatal Conceit," devoted an entire chapter to tracing how terms evolve and arrived at rather disappointing conclusions. In this column we will talk about two such terms. Unlike others, whose meanings have changed and eroded (as happened, for example, with "inflation"), these were problematic from the start.

As you have guessed, we will talk about privatization and nationalization. What does ordinary consciousness see behind these words? Privatization (called "prikhvatizatsiya" in popular parlance) is the appropriation of something "common" by something "private." One imagines some villainous Kolomoyskyi dragging a tasty morsel of public property into his hole, enjoying it solely, and giving nothing to the offended workers. In opposition to privatization, nationalization is when it is for everyone. A kind and patriotic government takes away from Kolomoyskyi what he has grabbed for himself and gives it to everyone. After which everyone enjoys it. Just as everyone now enjoys the subsoil and waters that belong to the people, and not to some Kolomoyskyi.

Though, if one looks at this process more carefully, the reality turns out to be not just different, but directly opposite. For example, here we have a certain factory belonging to a private individual and producing a certain product. Who buys this product, that is, who receives necessary goods in exchange for money? Whoever needs this product. What happens is what we call exchange, since the factory owner also receives money in exchange for his goods. But who, ultimately, regulates what should be produced and how? The buyer. If the owner was mistaken and produced the wrong product, he will suffer losses. Worse, if he does not understand at all what the consumer expects from him, he will go bankrupt, and another owner will take his place. That is, the consumer always wins, and the producer (the owner of the enterprise) is forced to work in the consumer's interests.

Now let the factory be the property of everyone. But that doesn't happen, you will say. Indeed, the state manages things on behalf of everyone. And this is also not entirely so, you will say, and you will be right, because everyone knows that bureaucrats manage the factory on behalf of the state. Unlike a private individual, the managing bureaucrats and everyone who works at the factory receive money not from the buyer, but from the state—that is, from the taxpayer. You pay for their "work" there, even if you do not consume their products. The buyers of the product have no influence on the process of its production, volumes, range, or quality. The products may be unnecessary to anyone at all, but they will be produced if the state apparatus decides so. Whether a bureaucrat manages the factory and for how long depends not on the demand for the products, but on the arrangements within the bureaucratic apparatus. At the same time, "factory" in this example can be replaced by anything—a road, a mine, a street. Bureaucrats own and manage this property, but, unlike a capitalist, their income comes not from its use, but from the violent seizure of property from citizens (taxation). Which of the two heroes can be characterized as a "clever bug," "well-established," and other, more indecent definitions? In which case can we speak of national interest, and in which case—of purely private selfish interest?

Obviously, what should properly be called "nationalization" is the transfer of property from the hands of bureaucrats into private hands, after which its use begins to be regulated by "national needs"—that is, the needs of buyers. Accordingly, what should be called privatization is the opposite process: when property passes from the hands of a private individual into the hands of a bureaucrat and ceases to work in the "interests of the nation"—that is, the buyer.

Following this same logic, we can talk about another important point, perhaps even more important than our play with terminology, namely people's ideas about the limits of voluntarism on the part of the private individual and the state. The state always looks poor and pitiful, incapable of anything. Only individual corrupt bureaucrats wallow in luxury and behave provocatively, but on the whole, the state is a defenseless little angel in need of sympathy and help. The private individual, in the layman's imagination, can "do whatever he wants," but the state cannot.

You have certainly encountered this attitude. It is very widespread and constantly comes up, for example, in the famous argument against selling land, which consists in the fact that "they will buy up all the land." Using the same reasoning as in our transposition of privatization and nationalization, let us say a couple of words about this attitude.

Since we are on the subject of land, let us imagine that in some hypothetical free society, a rich man bought a large piece of land. For example, a beach. The value of the land is determined by the income that can be extracted from it—in the case of a beach, this is income from those who come to swim and sunbathe. But our rich man bars everyone from it and simply walks there alone. That is, In the perception of a modern Ukrainian, he behaves incorrectly and in a purely voluntaristic manner. How long can our rich man "mock common sense" by meditating on the seashore? The answer is obvious: exactly as long as he can afford to do without the income that could be derived from the land by selling its use to swimmers and sunbathers. And now—attention—what does this depend on? Correct: on how long he will remain rich, that is, on how long he will be able to bring benefit exceeding the market value of the land. It turns out that (a) even when using the land "not as intended," the rich man still brings benefit to "society"; (b) his ownership directly depends on the benefit he provides.

Now let us imagine the same piece of land belonging to the state. For example, a closed sanatorium for senior officials has been built there, and swimmers and sunbathers "from outside" are also not allowed. How long will this continue, and what does it depend on? This depends exclusively on the arrangements within the political-bureaucratic mechanism. The state experiences no pressure from the land market, since its "income" depends on taxation, not on the benefit provided. Thus, all of this can continue forever, while you, as a taxpayer, pay for the maintenance of this land. Thus, The possibilities of private voluntarism are closely tied to the benefit brought by the voluntarist to all other members of society. The private individual is constrained by a host of circumstances beyond his power to influence. State voluntarism is in no way connected with public benefit and is limited only by the size of the state budget and the course of bureaucratic games.