Privatization of Public Services in Franco-German Comparison

Headed by:
Dr. Renate Reiter
Project Status:
2011 - 2017

Type of project: Habilitation project

Project Outline

Since the beginning of the 1990s, privatizing public services has become a widespread reform trend in the public sector of OECD countries. While the privatization of public services in technical areas (railroads, mail, telecommunications, energy) is already advanced and – at least at the municipal level – is being partly repealed, the trend towards privatization is unbroken in regard to public services in the social sector. Providing national populations with public services has come to be regarded as a “growth market”, be it the provision of constructed and technical social infrastructure or services in healthcare, nursing care, childcare, social advice, and aid in different life situations that require help from third parties. This market is increasingly penetrated by private, profit-maximizing actors, though the ideas of market economic production – efficiency, competition – are more difficult to implement than in other markets and even though the production of goods promises little profit, is labor-intensive and highly risky.

Based on these observations, this project applies a comparative perspective with a focus on France and Germany and examines to which extent social public services are privatized, how privatization policies can be explained, how sectoral and international differences concerning the form and extent of privatization can be accounted for and how corresponding developments affect the welfare state.

This enquiry focuses on two sectors that differ in levels of technological application and demand trends: hospital and nursing care. The combined case selection of these countries and these sectors enables the intended combination of a most-similar with a most-different design. The fact that both countries exhibit a high share of non-profit service provision (welfare mix) due to their history as traditional-Bismarckian welfare states is of particular interest to this project. These cases exhibit a two-fold, equilibrated privatization option: due to the specific institutional pre-disposition of their welfare states, instrumentally, organizationally, and institutionally reinforcing the not-for-profit sector is as feasible as strengthening the profit-oriented private sector. In both countries and both sectors, the causes of privatization are analyzed for the period from 1995 to the present day. Regarding the extent of privatization, these cases are compared within the broader international context of OECD countries. The specific research questions are:

  1. How does the division of labor in the provision of social services change between public and private actors, i.e., private non-profit and private for-profit providers, in the sectors of hospital services and nursing care?
  2. Which factors explain the policies of reorganizing social service production in the two sectors in France and Germany? Which factors explain international, intersectoral and intertemporal differences and similarities in national privatization policies?
  3. Which effects does the reorganization of social service production have on the welfare state in general? Can we observe a converging trend in the development of both welfare states regarding social service provision? Can we observe a withdrawal of the state or, to the contrary, a stronger commitment, e.g., through regulation?

Privatization of public services in the social sector has been treated intensively in social and political science literature since the 1990s, especially in comparative welfare state literature. It is all the more astounding that political science still knows little about the motives that cause state/public providers of social public services to transfer their responsibilities to private actors. This habilitation project intends to make a contribution to understanding the motives and causes, reducing the research gap concerning the (internationally comparative) explanation of privatization policies in the welfare state.

This study ties in to fundamental assumptions of actor-centred institutionalism and pursues the question which institutional effects national state and bureaucratic structures have on policy decisions about privatization in the sectors mentioned above. Regarding the methodological approach, this analysis elaborates a qualitative comparison of case studies.