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 Marketization is the use of market based solutions for social, political, or economic problems. This involves deregulation of economic controls, privatization of industries, and releasing wages and prices from government influence. These simple steps, it is argued, will lead to the creation of a functioning market system.
Aspects
Marketized solutions of government and market externalities
Here the government seeks to solve market and government externalities with market based solutions rather than government based regulations. Supporters argue that the market externality of pollution could be solved by the government selling pollution permits to individuals, groups, and corporations thus allowing the market to "see" the information and "realize" the harm by allowing the market to transmit pollution costs to society.
Marketizing of government agencies and branches
This is often described as "competitive federalism" or "limited government". Proponents argue that markets perform better that governments economically. Therefore, marketization seeks to make government agencies and branches compete with each other when government branches and agencies are absolutely necessary (ie remaining agencies and branches not privatized or liberalized away). For example, supporters argue that a voucher system for public education would make public schools compete with one another thus making them more accountable and efficient.
Theory
Critics of globalization, privatization, and liberalization have deemed that it is unworkable without major government regulations to balance the forces involved. They argue that marketization can result in market failure.
Free Market thinkers like Hayek, Friedman, von Mises, or the scholars within the Cato Institute, believe markets can work with far less government regulation. As they see it, the combination of liberalization, privatization, and marketization ensure that globalization fulfills the promises of peace, prosperity, and cooperation that its liberal scholars and philosophers have promised. Without marketization, supporters argue that government created externalities can distort the information available to the market which in turn makes the market not work as well as it could.
Examples
Milton Friedman offers examples of what marketized government solutions can look like. Friedman's proposed education voucher system promotes competition between public schools (and private) thus creating a market based solution to educational issues.
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