Difference Between Commercialization and Privatization

Commercialization and privatization are two commonplace words or concepts having clear cut meanings. Hitherto free activity, when commercialized, becomes a source of income for some. On the other hand, privatization refers to limiting or annulling government control or interference in an activity and allowing private control to benefit individuals or corporations. Despite such clear cut difference, there are some who feel that there is much overlapping between commercialization and privatization, and hence cannot differentiate between the two. This article tries to highlight the features of both concepts to make the concepts clear to all the readers.

All over the world, even in capitalist countries of today, it was common to see government keeping most of the resources in its hands and erecting the infrastructure for the benefit of the population. Only later, when managing production and distribution of utilities for the people became too cumbersome and a loss making venture for the government, it decided to do away with many activities. For example, in some countries, populist government keeps the supply of water and electricity under their control as they are run by state held companies. Even banking is kept under government control with nationalization of banks so that they become tools or instruments to fulfill government policies. However, it has been observed in all such countries where government keeps many departments under its control that eventually public sector companies, because of lack of competition and job security of its employees, become stagnant and loss making ventures. This is the stage when government sells its stake in public enterprises and makes government companies private. This is what is referred as privatization, and in effect refers to selling of public sector companies to private people and organizations.

Commercialization is the practice of making an activity profitable that was totally free and not under anyone’s control. For example, there may have been a product that is natural and not sold because it is available to all. If someone uses his brain to make something worthwhile out of the naturally available substance in such a manner that he creates a need for that product, he has successfully created or commercialized a product. For example, there is a building housing artifacts from an ancient time, and it is free for all to come and see. Then suddenly the owner of the building decides to set up admission tickets to let people see all the items housed inside, he has commercialized the activity to benefit himself. The policy of capitation fee accepted by private colleges, to grant admission to students, is a process referred as commercialization of education.

The game of cricket was very popular among the masses in India. The board that controlled cricket in the country realized the potential of the game and commercialized it largely making it a money-spinner. The process of course benefitted the players as they started to earn much more than they did before commercialization of cricket.