State reform perspectives revisited

I need to take a short break from my weekly commentary on Nigeria’s power struggle to address a global and broader theme–that of state reform within and across countries. While the article would first appear to be targeted at my academic colleagues, the issues raised therein will resonate with the general reading public.

There is no country which has not at one time or the other experimented with a variety of state-led development strategies. However, while some states have something to show for their involvement in the economy, others merely have their word—the word that, yes, the state did intervene, but alas, not much came out of the policy choice.

As it is with state intervention so it is with public sector reform. While practically every country designed, and went on to implement wide-ranging public sector reform programmes, not all can point to substantial gains from the efforts. This immediately raises the question “Why”. Why is it that state intervention and reform brought substantial gains to some countries but nothing, except possibly, poverty, destitution and misery, to others?
As argued in the article, what makes the difference between success and failure in reform is not the wish to be seen as intervening or privatizing like any other state, but the determination by government and public service leaders to conceptualize, own, and build a consensus around, on-going change processes, while at the same time replicating what works and quickly abandoning what does not.

In arguing the case for an alliance of reforming minds within each state and public service agency, the article looks at reform from three broad theoretical angles–the structuralist, with its implicit faith in the developmental capability of the state, the neoliberal along with its advocacy of private-led growth, and the “corporatization” model which seeks to apply private sector techniques to right public sector wrongs.

A typology of public sector reform

At least three reform perspectives are discernible, with each corresponding to the conception of the role of the state at any particular period. The first is the structuralist, “development administration”, or maximalist perspective. This approach to reform presupposes the capacity of the state to rectify private sector imperfections and to engineer as well as sustain growth. The second is the minimalist, neoliberal model that touts the ability of the Invisible Hand to correct “state failure” and to ensure efficient allocation of resources. The third is the “corporatisation” ideal-type which sees a role for the state, but insists on the state insulating economic and quasi-economic decisions from partisan political considerations, and applying private sector techniques while formulating and managing public policy.

Structuralism and public sector reform

Keynesianism may be in retreat today, but not too long ago, its explanation of the trade cycle was so gripping as to ignite a revolution in economics and influence public policy directions worldwide. Unlike his contemporaries that sought to restrict the supply of money (and keep the economy from “overheating”), Keynes (1995:322) was firmly of the view that:

“The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.”

Keynes holds that private sector decisions frequently precipitate undesirable macro-economic outcomes. To lessen the impact of “market failure”, he advocates public sector intervention, including the adoption of monetary policy by the central bank to control the money supply and to check inflation, and fiscal policy by the government to stimulate economic activity and employment in slack times.

Keynes commanded a lot of respect in policy circles during the latter part of the Great Depression and after the Second World War. His advocacy of state intervention was favourably received not only in the Western industrialized economies, but also in transitional societies. Thus, besides the Harrod-Domar formulation which regarded fixed capital investment as the critical variable in economic growth, Keynes General Theory exerted considerable influence on the development models and planning techniques adopted in the developing countries of Asia, Latin America, the Middle East, and Africa.

For the developing economies of Africa, the absence of an entrepreneurial middle class further increased the appeal of Keynesian economics. The prevailing view in the region (based on the Presbisch-Singer hypothesis) was that without the state leading the way and lessening the dependence on export of primary commodities, neither growth nor self-sustaining development was likely to happen. This explains the attention accorded to the establishment of ministries, departments and agencies to handle matters (like industry, manufacturing, and trade) which in other societies would be the exclusive preserve of the private sector. It also accounts for the proliferation of all-purpose ‘development corporations’, commodity marketing boards, retail and wholesale trading companies, and other state-owned enterprises. With the expansion in the scope of government, however, came increased staff complements, rising wage bills, and growing public expenditure.

‘Development administration’ and reform

Where the state is assigned a significant developmental role and entrusted with a steadily rising proportion of national resources, reform efforts would naturally target the capacity of executing agencies—notably, the agencies’ capacity to engineer growth, to manage large-scale innovation, and to overcome the traditional forces’ resistance to change. Yet, simple as the task would first appear, it could not be undertaken without adequate theoretical guidance. At least four schools of thought proffered different solutions to the reform challenges encountered by post-colonial “development administration” regimes (Ilchman, 1965:315; Riggs and Weidner, 1963; Wamalwa and Balogun, 1992).

The first two (the structural-innovative, and the structural-consolidative) schools responded directly, albeit in different ways, to the immediate post-independence challenge, that is, the challenge of how to manage the “revolution of rising expectations”. The last two (the integral-consolidative, and the integral-innovative) schools were ahead of their time, more so, as it is only in later years that public management scholars and practitioners began to address the questions raised by the two schools (notably, the questions whether the state has any role in development, and, if so, what changes it needs to make to acquit itself creditably).

Structural-innovation strategy

Meanwhile, the discourse on the immediate post-independence public sector reform was dominated by two rival schools—that is, by the advocates of structural innovation vis-à-vis their opponents in the structural consolidation camp. The first, the structural-innovative, school proceeds from the premise that the post-colonial public administration starts grossly disadvantaged. As a creature of the departing colonial powers, the public service lacks the wherewithal (including the expertise) to tackle the mammoth challenges facing the society. Its institutions were liable to be too immature to uphold the underlying values of integrity, professionalism, competence, and efficiency, and too fragile to withstand internal and external cross-pressures.

However, in place of the “unbalanced” administrative reform strategy favoured by the gradualists, that is, by the adherents of the structural-consolidation school, the structural-innovative school argues that anything less than a Big Push in the directions of change would simply not do. From the radical school’s standpoint, shortage (or even total lack) of “executive capacity” was not sufficient reason to abandon plans for rapid and wholesale modernization of post-colonial administrative systems. As the structural-innovative argument goes, the challenges facing the typical post-colonial society were so enormous as to require wholesale and across-agency assimilation of innovative structures, processes, techniques, and competencies.

Where structural innovation prevails, the core elements of reform would include, but not limited to: the clarification of ministerial and departmental responsibilities, along with the internal accountability and reporting linkages; enhancement of capacities for development/strategic planning, policy development, coordination, and implementation; revitalization of human resource management processes, including payroll and records management, and management of incentives; design and installation of programme planning and budgeting tools; adoption of value-for-money auditing and accounting practices; and introduction of modern management processes and techniques (such as project/matrix management, management-by-objectives, critical path planning, and project evaluation and review technique).

Overall, structural innovation suffers from one major limitation—the predominant focus on structures to the neglect of the environment in which these structures are to function, along with the failure to interrogate the mindset or predisposition of leaders towards the structures. The omissions explain the mixed results of the experiments in structural innovation across countries and regions. Whereas post-colonial efforts at public service modernization yielded substantial dividends for the Asian Tigers and the Little Dragons, the same attempts merely set many African states up for economic disaster and, inevitably, downsizing and structural adjustment. We shall return to this later.

Structural-consolidation’s pragmatism

For their own part, adherents of the structural consolidation school do not dispute the monumental nature of the challenges facing the post-colonial societies. The challenges were of such magnitude that mere adaptation of administrative systems would simply not do. The solution lay in an all-out modernization of the systems. After all, where the colonial administration was basically oriented towards the maintenance of law and order, its post-independence counterpart had to acquire the capacity for novel challenges, notably, for diversity management, and for development planning and management. Besides laying down the law and processing offenders through the courts and the penal system, the post-colonial state was obliged to process demands from diverse communities, build schools, run clinics and health centres, construct dams and reservoirs, generate electricity for domestic and industrial consumption, and maintain or rehabilitate the highways and the railways needed to sustain economic activity. These and other demands on the post-colonial bureaucracy could not be met without the reform of the inherited structures and practices.

However, from the structural-consolidation standpoint, there is a limit to the development, and therefore, innovative capacity, of newly emerging public administration systems. Such systems lack the skills needed to respond effectively to complex socio-economic development challenges. Large-scale importation of skills is not a viable option, as this would place further pressure on the already scarce resources, and deny local personnel the opportunity to “learn by doing”. Besides, the skill gaps would always manifest as the public service imports the techniques and “knowhow” that indigenous staff could neither fully master nor instantly and independently apply.

The structural-consolidation school is not totally averse to innovation, but it counsels caution in embarking on the project. Instead of relying on the indiscriminate “importation” and large-scale diffusion of modern management techniques and processes, the school advises relatively young public administration systems to invest its limited resources on targeted innovation projects–projects with minimum implementation risks and maximum overall pay-off. In place of the “balanced”, across-the-board, innovation strategy advocated by the structural-innovative school, structural consolidation canvasses support for change in a few but strategic institutions, particularly, central coordination organs with cross-cutting mandates. Examples of such institutions are the Ministry of Finance, the Central Bank, Establishments and Human Resources Management Departments, as well as Audit, Accounting, Organization and Methods Units. The assumption is that minimal investment in these key organs would yield maximum results in the entire machinery of government. To put it differently, innovation in a few critical organs would trigger, “induce” or “cause” innovation (along with effectiveness and efficiency) in the public sector as a whole.

In effect, structural consolidation warns against going beyond strengthening selected, change-leveraging agencies to an all-out modernization of the entire public sector. Among the risks in proceeding hastily with an overly ambitious plan for public sector innovation/reform are:

• failure of institutional “heart transplants” (as reflected in the sometimes weird or bizarre behaviour of Western institutions in non-Western developing societies, and in the frequent “rejection” by the recipients of the hearts “donated” by modern, economically prosperous states);
• erosion of local institutions’ confidence, due to weak “absorptive capacity” and widening performance gaps;
• tendency towards ‘paper plans’ stockpiling (reflected in serial but midway abandonment of development plans and projects, that is, projects launched with fanfare and at huge cost one day and left to rot the next);
• accumulation of “white elephants” (projects that consume lots of scarce resources but bring little productivity or welfare gains); and
• perpetual reliance on foreign aid and expertise.

Appealing as the gradualist argument might sound, it too is badly flawed. For a start, its fixation on structures prevents it from appreciating the impact of the environment and of the role of political leaders and the senior cadres of the career service in shaping both the environment and the structures. Secondly, to argue that lack of capacity entails confining reform to a few agencies ignores the possibility of the untouched agencies perceiving the process as “alien” when it is their turn to implement change. Reform has the best chance of succeeding where its underlying values and messages are imbibed, nay, internalized, by all the actors.

Integral-consolidation and minimalism

The third perspective in public sector reform goes beyond acknowledging the obstacles to successful transfer of “management technology”, to questioning the logic underpinning “development administration” as a concept. In a twist of irony, it was a leading public administration scholar, F.W. Riggs, who aimed the first salvo at the discipline, and gave its opponents in the neoliberal camp the opening and the ammunition they needed to mount sustained attack on the very essence of organized government. Before examining the implications of his prismatic theory for public sector reform, it is necessary to start with the case made by public choice theorists against structuralism, and, by implication, “development administration”.

Public Choice Theory

Public choice theory proceeds from the underlying assumption that the tools of economic analysis are directly applicable to the study of politics, and by extension, to the analysis of public policy. Contributors to public choice literature fall under two broad headings–-the mainstream, neo-classical and the neo-Marxist schools.

Public choice theory springs directly from market theory. As such, and like the latter, it employs economic analytic tools and methodology in the study of political and policy sciences. It also highlights the limitations of the democratic process–- emphasizing instead the role of market competition in “correcting imperfections” in state-led resource allocation systems, and warding off the risks of “state failure” (Niskanen, 1971; and Black, 1987).

Public choice theory has been touted as a “powerful new paradigm” on the proper scope and limits of government (Peter Self, Government by the Market?). In reality, it is hardly “a new paradigm”, let alone a “powerful” one. At the most, what the so-called mainstream scholars have done is to employ the rhetoric of change and give a semblance of academic respectability to right-wing conservatism. With neo-classical economics as a spring-board, public choice theorists elevate Thatcherism and Reaganomics to the status of economic and political science. In the process, they committed fatal taxonomic-cum-conceptual errors.

The main contentions of public choice theory are as follows:

(a) Political behaviour is analogous to economic behaviour;
(b) Understanding both (political and economic behaviour) requires the application of a common methodology, the methodology of micro-economics;
(c) The individual (rather than the group or society of which s/he is part) is the only unit and object of analysis;
(d) This individual is a rational, economic being–-one who looks out for her/himself always, and whose worship of “self-interest” neither threatens nor cancels out the interest of others;
(e) The self-seeking individual is more rational than the state, even though the latter most frequently pretends to be ‘rational’ by hiding behind altruism, or to be precise, false altruism;
(f) Democracy (based on majority rule) is an illusion, in so far as the method applied in obtaining the mandate of this majority is, at best, suspect, at worst, grossly irrational;
(g) When decisions are taken collectively, there is plenty of room for mischief-making–-that is, for oligarchic monopoly of access to information, for the exploitation of mass ignorance and/or apathy, for misuse/abuse of power and bureaucratic authority, and for gross misallocation of resources and corruption;
(h) In light of the ‘imperfections’ in the state system, the less the decision-making power that is entrusted to it the better for the cause of ‘rationality’ and development;
(i) By the same token, the market (made up of ‘rational’, ‘economic’, and ‘competitive’ individuals) should have an increasing share of resource allocation power/authority.

In neo-classical economics, the individual is presumed to be a “rational”, economic being–-one who seeks to maximize returns on marginal allocation of resources. In competing with other individuals (either on the demand or the supply side of the market), s/he ensures that s/he derives maximum utility from the allocation of the last unit of resources at her/his disposal.

Seizing upon this individual quest for maximization of returns on outlays, mainstream contributors to the public choice theory hold that the best (and most rational) state of affairs is that which empowers the individual to take decisions on resource allocation (Buchanan and Tullock, 1962; Olson, 1965). The Invisible Hand is, they insist, to be preferred to the meddling and irrational hand of the state leviathan. The free market is thus perceived as a better method of satisfying human needs and aspirations than reliance on government.

The neo-Marxist school does not dispute the fact that the individual plays a key role either in economics or politics. However, while downplaying the historical determinist contention in the Marxian dialectic, the neo-Marxist scholars hold that the individual most frequently finds it ‘rational’ to suppress egoistic impulses and instead use group identity to pursue own interest. Besides, rather than leave her/his fate in the Invisible Hand of the market, the individual would network with others in the same underclass status, and, in the process, get the state to redress inequities.

Minimalism’s “Prismatic” ally

Like the contemporary public choice theorists, Riggs proceeds from the methodology and underlying assumptions of micro economics (supplemented with the techniques of multi-disciplinary analysis) to argue the proposition that, at least, in developing societies, the tendency would be towards the concentration of power in the hands of the bureaucratic class. In contrast to other social institutions, the bureaucracy enjoys undue advantage—including privileged access to technology, information, and organizational capacity. It is this ‘heavy weight of bureaucratic power’ that accounts for ‘ego-centric normlessness’ (a euphemism for corruption and abuse of power).

In his 1964 book, Riggs starts by grouping societies under three broad headings—the fused, the refracted, and the “prismatic” (Riggs, 1964). The fused ideal-type corresponds to traditional, agrarian societies—that is, societies in which one structure exercises multiple mandates and performs several different functions simultaneously. The authority of the traditional ruler, for instance, extends beyond law-making and includes law enforcement, and adjudication. The ruler owns the land and the wealth that flows from it. By virtue of his presumed proximity to the gods (and considering the other supernatural attributes he is invested with), he is entitled to parts of animals, like the head of a sheep, or the thigh of a chicken, offered for sacrifice by his subjects.

The lack of specialization in a typically fused society contrasts sharply with the division of labour in modern, refracted societies. As the economy of the traditional society grows, the chances are that new occupational groups (with specialized capital formation knowledge and skills) would emerge to challenge the monopoly of the ruling class. Over time, the power to legislate will be separated from the authority to execute, and both from the power to adjudicate. Separation of Powers may have reached its apogee with Baron de Montesquieu’s tract of 1748, but the refraction process began much earlier.

Societies making the transition from “agraria” to “industria”, as Riggs terms both, fall under the “prismatic” heading. As a society suspended between tradition and modernity, the prismatic ideal-type combines the best (and the worst) of both worlds. On the one hand, its social structures are rooted in the past, meaning those holding positions of authority would continue to be held in awe and treated as gods-incarnate. On the other hand, the modern institutions that the authority figures inherit from the colonial rulers require the former to eschew old ways (like belief in superstitions; clannishness/sectionalism; acceptance of bribes and gratifications which, as “tributes”, were formerly regarded lawful; fictive thinking and evasion of responsibility; lax attitude to work and time; tolerance of mediocrity and slippages). At the same time, the new age obliges the rulers (and officials) to imbibe and personify “modern” values (among them, those of reason, universalism, objectivity, professionalism, meritocracy, accountability, non-partisanship, loyalty to the state, “scientific management”, and unending search for perfection).

As products of a split personality, the prismatic society’s public administration systems cannot but be pulled in two different directions at the same time—that of tradition and that of change. In Riggs’ view, it is well-nigh impossible for public officials in prismatic societies to break free of traditional hold and implement change that is beneficial to the economy and to the people at large. Riggs attributes the “egocentric normlessness” and “administrative prodigality” to the imbalance between the public sector, on the one hand, and the rest of society (including the political establishment and the private sector) on the other. The bureaucracy may be staffed by individuals from traditional backgrounds, but, in Riggs’ view, it has a monopoly of management knowledge and skills, and exercises near total control on modern technology and means of communication. The rest of society, by contrast, is not only intimidated by the power and methods of the bureaucracy, but lacks the means to hold the later to account.

Unfortunately, instead of applying the skills (as well as modern technologies, processes, and techniques) acquired on the job to serve society, public officials are likely to divert these capacities to personal or sectional ends. In other words, the monopoly that the public sector enjoys (over skills, knowledge, and application of modern processes and technology) is likely to be turned into a personal advantage rather than deployed to society’s (or the economy’s) benefit.

Convinced that the “heavy weight of bureaucratic power” breeds nothing but corruption (and inefficiency), Riggs cautions against investing in the expansion and modernization of the public sector. The sector is, according to him, already too powerful, and needs to be caged. This is the background to the balanced social growth strategy that he forcefully argues and stoutly defends. Instead of further strengthening the public sector, Riggs advises that steps be taken to lift society to the bureaucracy’s level. This balancing process is assured when steps are taken to enhance the oversight capacity of the political wing, the private sector, and civil society.

Rebuttal to minimalism

Is there any merit in the argument that what the world needs is less government and more robust private sector leadership in resource allocation? What is the guarantee that whatever innovation the private sector spearheads will not later end up in the hands of a power-hungry bureaucracy? How the security agencies in the developed world hijack the advances in information and communication techniques to invade privacy and abridge individual liberty should give the advocates of the “balanced social growth” strategy pause.

As it so happens, Riggs’ linkage of bureaucratic power with corruption in “prismatic” societies is not borne out by the experience of the Asian Tigers and the Little Dragons. The reason for the gap between the “prismatic” theory and the Asian reality is not difficult to fathom—the theory’s failure to account for the role of leadership in public sector reform and development.

As regards the public choice theory’s equation of political with economic behaviour, reason and empirical evidence debunk this hypothesis. That economics is important in the life of human beings is a given. In so far as the discipline (economics) makes the human being’s physical/biological/material needs its dominant concern, it cannot but be relevant in rational calculations. However, wo/man does not leave by bread alone. Besides the material pursuits, s/he hankers after social/group affiliation, psychological satisfaction, spiritual equanimity, and self-actualization. A theory that narrows the need of a “rational”, “self-seeking” individual down to material accumulation is therefore wide of the mark.

Compared with economics, politics covers a wide area. The issues central to the understanding of political life are definitely broader than those of economics, and the tools for measuring/analyzing the realization of economic objectives may not be suitable to the understanding of cherished cultural, religious, or political values. Whereas economics concerns itself primarily with material pursuits, politics is about balancing the human-being’s mindless pursuit of self-interest with society’s quest for order, peace, and harmony. It is also not unlikely that in society there exist a class of people who are motivated neither by wealth, fame or power, but by other-worldly, basically non-quantifiable, values. Where is the relevance of ‘economics’ in analyzing the ‘rationality’ of such individuals?

The assumption that wo/man is a pure economic being may in fact be at odds with the notion of decency prevailing at a certain time or place. In some cultures, the emphasis placed on wealth accumulation differs substantially from the importance attached to non-economic values such as compassion, altruism, rectitude, humility, filial piety, group solidarity, and contrition.

In the reckoning of public choice theory, democracy is an elaborate scam. This is rather interesting, more so, when considered alongside the neoliberal apologists’ insistence on the “exportation” of democratic institutions and doctrines (including the doctrine of free enterprise) to new states. By arguing simultaneously that individual freedom is good for economic success, but that it is not good enough to constitute the basis of organized government, public choice theory exposes the neoliberal partisans’ cynicism and hypocrisy on democracy.

In any case, while no government is perfect, even the most imperfect government is better than none. After all, organized government does not have to look beyond itself to correct its own imperfections. By contrast, market failure almost invariably needs the Visible Hand of the state to be set right. For example, the perverse behaviour of the market (including monopolistic behavior as well as the irregular accounting procedures in Enron, Worldcom, etc.) requires state intervention to protect the interest of individuals at risk. The airline industry pleaded with the US government to extend assistance needed in warding off bankruptcies in the wake of hazards to travel and the accompanying restrictions. Similarly, government bail-out became an option at the onset of the global economic meltdown of the last quarter of 2008.

As to be expected, critics of privatization abound. They include Farazmand (2000), Korten (1999), Schulte (1997), Korbin (1996), and Oyugi (2007). Farazmand’s observations on the ideology of “privatization” are particularly relevant. Along with other critics, he (Farazmand, 2000:356) sees the world:

“… as turning back to the medieval system in which the barons ruled and the serfs had no way out of the bondage of economic and social dependency and exploitation, and … the whole concept of the ancient ‘mercenary system’ of economy and social organization is returning with ‘wage slavery’, economic dependency and loss of political freedom and human dignity”.

Rather than offer humankind a life-line to uninterrupted growth and eternal happiness, privatization has produced extremely disturbing outcomes. Among these are (Farazmand, 2002:361-364):

(a) Expansion of the private realm at public expense (as private enterprises annex a growing proportion of the total space, public agencies and agents are cramped into a tiny regulatory, at times, freedom-abridging, enclave);
(b) As a result of retrenchments and layoffs, creation of ‘industrial reserve armies’ (that is, a reserve of cheap labour);
(c) Acceleration of the ‘race to the bottom’, and towards human degradation;
(d) Creeping individualism/narcissism;
(e) ‘Agencification’ and ‘subsidiarity’: In the globalization context, subsidiarity means ‘agency’ of an upper level hierarchical authority, or of a centralized economic and political organization;
(f) Cooption of local elites into the globalization movement: Having been sold on the notion of privatization, local political, economic and intellectual elites are effectively assimilated into the ranks of foreign interests’/powers’ local “trading-post agents”. In this capacity, the agents constantly harp on the “benefits” of privatization and globalization while doing little or nothing to defend their own peoples’ vital interests;
(g) Loss of public assets: In an era of privatization, citizens and societies are stripped of their most valuable assets; governments are liable to be manipulated and stampeded (by global corporate elites) into taking decisions that effectively perpetuate dependence on, and bondage to, external interests; and
(h) Stunted growth which promotes and deepens the begging (or mendicant) culture.

Corporatisation: an integral-innovative reform strategy

The fourth approach to state reform might have soft-pedaled on wholesale privatization of the public domain, but it has not distanced itself completely from the neoliberal ideology underpinning minimalism. Termed corporatization, the strategy takes an integral-innovative, and therefore, ambitious, view of public sector reform. It rests on the following key assumptions:

• The state still has a significant, but highly circumscribed, role to play in development;
• The role (of the state) includes providing vital services and enhancing living standards, but excludes commercial and quasi-commercial operations;
• In discharging its mandate, the state will derive immense benefits from the application of business logic and methods (including, the focus on entrepreneurship and innovation, acknowledgment of the citizen-customer’s choices and preferences, institution of customer-care policies, forging of public-private partnership for the management and financing of infrastructure development projects, contracting-out/“out-sourcing”, and where necessary, outright privatization);
• In place of the traditional public administration’s law-and-order fixation, the New Public Management (NPM) offers the state limitless opportunities to improve on its performance;
• The core elements of NPM are delegation, empowerment of managers (to innovate, shift resources, hire and fire), performance and productivity measurement, implementation of performance-based staff selection and development policies, installation of output- and outcome-oriented budgeting and financial management systems, and accountability (Osborne and Gaebler, 1992; Pollitt and Bouckaert, 2004; Easton, 1995).

In effect, corporatization and NPM try to respond to the key concerns in public choice theory by, among other things:

# identifying the “customers” of state agencies, and giving them the opportunity to choose among a range of output delivery modalities;
# delegating authority to service delivery agents;
# empowering managers to take critical decisions and to serve the “citizen-customer”;
# applying ‘market tests’ to decisions on the supply of public goods (with a view to “hiving off” commercial operations to autonomous public enterprises, or yielding the ground to private economic actors;
# providing for incentives and the adoption of commercial techniques in government enterprises; and
# encouraging risk-taking and entrepreneurial impulses in public management.

Critical questions for NPM

Advocates of corporatization and NPM are yet to respond to a number of questions. The first is whether the ‘citizen’ is a customer in the traditional sense of the term. Pegnato does not think so. He believes that the word “customer” devalues the whole concept of citizenship, more so, as the latter is invested with sovereign rights that far exceed those of a utility-fixated customer (Pegnato, 1997).

If measurement is critical to the success of NPM, how do we measure the “productivity” of traffic ticketing officials, police constables, and magistrates?

In measuring the performance of public institutions, there is a danger in mistaking ‘process’ for ‘outcomes’, in substituting managerially determined criteria for the customer’s actual preference, and in reading too much into the final productivity statistics. The experience of South Africa’s defunct Transvaal Provincial Administration is highly illustrative. In an attempt at meeting the Administration’s “ticketing quota”, each traffic officer targeted motorists who exceeded the speed limit, but showed no interest in preventing road accidents, promoting road safety, or checking the weight of vehicles as a means of slowing road depreciation (Visser).

Other pertinent questions are: how can the entrepreneurial thrusts of NPM be reconciled with the fundamental concerns for public accountability? When law and order and security functions are “contracted-out” to private providers, whose responsibility is it to clean up the mess that the profit-obsessed actors might leave behind?

In conclusion, studies into the application of NPM have highlighted the risks in empowering managers at the expense of the work force (Aucoin and Heintzman, 2000; Lee, 2000). When managers have unquestionable power to hire and fire, they are tempted to exercise it to reward loyalists and punish independent-minded employees (Balogun, 2010; and Argyriades, 2003).


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