Definition of Private Sector

The private sector is the whole of the economic activity It is not controlled by the state. While in the public sector the leading role is in the hands of the state, in the private sector the company is the fundamental element.

When we say that private companies are the engine of this sector, we must bear in mind that it does not matter what its volume is or what legal form it has. A company can be formed by an individual independently or by thousands of workers and legally has different organizational options (limited society, anonymous society, partnership, a temporary union of companies or UTE ...). In any case, the main objective of the private sector is the economic benefit through products or services that you intend to market within a market in which you compete with other companies.

With the goal of making money

The economic benefit is the fundamental aspect of the private sector, but not the only one. It must be borne in mind that the different companies create employment in the different economic sectors and employment has an obvious social and not exclusively economic dimension.

Another relevant issue in the private sector is its social responsability. In recent years, some companies have incorporated criteria that are not exclusively economic to guide their activity. It could be said that ethics and certain values ​​can be part of the entrepreneurial spirit. This reality receives a denomination, the Responsibility Corporate Social (CSR). The fundamental characteristic of these companies is that their social dimension (for example, their commitment to environment) is voluntary.

Private sector or public sector debate

There is a classic debate in the economy in relation to the importance of the two sectors. From some political positions, the role of the private or public sphere is defended. For some, the public sector must be maintained and strengthened, since it is a guarantee of equality, of social justice and allows social imbalances to not run so deep. For others, the public sector is ineffective, very expensive and interventionist, so they understand that it must bet on the private sector as the true engine of the economy and limit what is public to a minimum expression.

From an ideological perspective, the supporters of the private sector would be political formations of a liberal or neoliberal and the defenders of the public would be the social democratic ideologies.

In practice, the two sectors are related in the economic sphere, since some services Public entities are managed by private entities through concessions or subcontracting of services.