Where privatization includes the removal of a Crown corporation monopoly in favor of a competitive market, the benefits to consumers are clear and immediate. Free of competitive pressures, monopolies charge higher prices and produce lower quantities than would be efficient. They have little incentive to respond to consumer preferences, or to discover or adopt lowest-cost production methods.

It could be argued that this applies as much to private monopolies as to public ones. Moreover, a state monopoly may be lifted without privatizing the corporation concerned, except insofar as one regards the loss of market share to incoming competitors as a form of privatization.

Much of the case for privatization rests squarely on the question of ownership. Privatization's most zealous proponents, such as Madsen Pirie, president of the Adam Smith Institute in London and the architect of Britain's massive sale of Crown equity, argue that any asset moved out of the public sector is an improvement in itself - regardless of market structure.

There is one bad argument to support this, and several better ones. The bad argument is that sale of state assets improves the Crown's finances. It does not. Privatization is a means of funding the deficit, not reducing it, and not an attractive one: for a one-time liquidity boost, all future revenues from the assets are forfeit.

The better arguments are based on efficiency, not on public finance. This is not because private managers are inherently more efficient than civil servants, but because once freed of public control, a firm has a greater ability and incentive to respond to market signals. In part, this ''state failure'' arises from too much political meddling; in part, from too little.

Crown corporations tend to be chronically undercapitalized. A private-sector firm vying for funding in the capital market can always trim the terms if investors are reluctant; a public-sector agency, once it has made its pitch to a cabinet with other ''priorities'' on its mind, must put its trust in political fortune. The Crown firm must similarly make pricing and production decisions not on grounds of economic returns, but political acceptability.

This presumes that Crown corporations have economic returns in mind to begin with. But even where they have been instructed by cabinet to make a profit, the fact remains that the public sector cannot go bankrupt, nor can it be taken over. There is hence no real imperative, privatization advocates argue, for a Crown corporation to minimize costs, or maximize revenue, even where it competes with private firms.

This is in large part owing to the tendency of public agencies to operate in the interests of their work force, rather than their consumers: the phenomenon known as ''producer capture.'' Whatever subsidies government provides are quickly eaten up in wage costs; whatever moves are made to rationalize production or improve, indeed maintain, customer service, run up against the need to save jobs and safeguard workers' rights. Few governments have the stomach to face public-sector unions head-on.

The success of the British privatization program (see article on next page), for example, has been precisely that it has avoided confrontation with public-sector workers and other interest groups that might be expected to oppose privatization. British authorities have taken care to give those groups the incentive to support privatization instead: for example, by giving shares free or at substantial discount to the firm's workers.

Pirie likens the process to defusing an unexploded bomb. ''Open up the plate, look where all the interest groups are, then devise your technique for dismantling it.''

There is a broader political dimension, too. A key aim of the Thatcher government's privatizations has been to broaden capital ownership: the number of shareholders in Britain has trebled since 1983.

Whatever this has done for the individuals involved, in terms of greater independence and economic power, it has greatly expanded the constituency for capitalism - and against renationalization.