New Public Management

An Introduction

Jan-Erik Lane

• Publisher: Routledge
• Year: 2002
• ISBN:
  9781134574100
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

New public management is a topical phrase to describe how management techniques from the private sector are now being applied to public services. This book provides a completely up-to-date overview of the main theoretical models of public sector management, and examines the key changes that have occurred as more and more public services are contracted out to private organisations, as the public sector itself grapples with 'internal markets'. Drawing on economics, organisational theory and poliltics, Jan-Erik Lane presents new public management from an analytical perspective. This book uses game theory and empirical studies in order to assess the pros and cons of new public management.

Part I
Where we stand

The theory of public sector management covers in principle all the three branches of government: resource allocation, income distribution and public regulation, although it has been most developed in relation to the first and the last type of government activity. The application of management principles in social security has just begun and its effects are contested—the workfare state.

In Chapter 1, I argue that any theory of public sector management must take a stand in relation to a set of difficult theoretical problems that have emerged from the confrontation between three basic approaches in this century. These basic frameworks for the analysis of governance in the public sector include: (1) public administration, (2) management and (3) public policy and implementation. New public management (NPM) cannot bypass the lessons learned in the debate between adherents of these three very different approaches to the public sector and the role of government.

Chapter 2 shows that the size of the public sector in the countries of the world remains so large today that it warrants the continued search for and development of a theory of public sector management. Despite a decade of privatisations, governments remain active in the provision of public services, in the transfer of social security benefits as well as in public regulation (Rosen, 1988; Musgrave and Musgrave, 1989; Castles, 1998).

1 Basic approaches in the
twentieth century

Introduction

A number of scholars contributed to the emergence of a science of the public sector in the early decades of the twentieth century. One may perhaps say that the key figure was Max Weber, formulating the theory of the bureau as the chief institutional mechanism in the public sector, but he was certainly not the only major theoretician. One may wish to mention a name like Fayol and especially the early Americans, for instance Wilson, Taylor and Gulick (Fry, 1989; Raadschelders, 1998).

Yet, Weber achieved a dominant position in the classical school—called ‘public administration’, partly because of the strong evolution of administrative law as the bulk of public law followed his ideas about public governance. However, between 1940 and 1960 there occurred a kind of Kuhnian paradigm shift, the management approach and the policy approach replacing the classical approach.

What we can do here is only to identify the basic ideas of the classical approach. A number of interpretations have been made of the classical authors, which we cannot survey here. What has to be done here is to underline what is common in the models of the classical approach while not paying attention to the differences among them, however important these may be. Consequently, we will not make a critique of the classical authors or point out the contradictions between them or even state the nuances among them.

The classical framework, called ‘public administration’, at least at times made claims to the effect that it constituted a new discipline within the social sciences or political science. It focused upon the construction of legal mechanisms for the operation of large-scale public programmes, which would work effectively when its rules were followed. If the rules were transparent and the public sector employees followed these rules, then efficiency would be achieved. Thus, public programmes could be administered, almost like a machine could be instructed to obey commands and operate accordingly. The classical framework delivered two major institutional mechanisms in terms of which public administration could be carried out: the bureau and the public enterprise, which we will look at in Chapters 3 and 4.

What we wish to do is to state their basic commitments in terms of a few models of the public sector that they adhered to or held valid. The same method of exposition is followed in relation to the scholars who broke new ground in the 1940s, 1950s and 1960s, suggesting that public administration be replaced by management or by public policy.

It should be pointed out that many of the ideas of public administration are far from outdated. Some of them have been implemented by the states who practise the Rule of Law to the extent that one tends not even to remember that public administration advocated them with great fervour. Other ideas were completely rejected by the new frameworks forthcoming after the Second World War, but they have reappeared again in new public management. Yet, there is truth to the characterisation by Christopher Hood that public administration has lost an empire and has not found yet a new role (Hood, 1990). Which were the key models in public administration?

Key models in public administration

A number of important contributions to public administration were made from the publication of Woodrow Wilson’s key article in 1884 up until the appearance of a few major syntheses in the 1930s. The classical approach dominated the modelling of the public sector up until the publication of The Functions of the Executive by Chester Barnard in 1938, which initiates the movement away from the classical approach using conceptions from organisational theory. In the 1960s it received another major challenge, this time from the policy approach, which culminates with two books by Aaron Wildavsky, namely Implementation from 1973 (with J.Pressman) and Speaking Truth to Power: The Art and Craft of Policy Analysis from 1979.

Perhaps the role of Weber in bringing forth the classic framework has been overemphasised, as he neither initiated the framework nor stated a comprehensive formulation of its principles. One finds important contributions to the classical framework from authors such as Willoughby, Goodnow, Parker Follet, White, Unwick and Morstein Marx (Fry, 1989). Yet, Weber’s model of bureaucracy was stated in such a forcefully simple manner that it became easily accessible not only for research but also for practitioners. Weber outlined a pure model of bureaucracy as the optimal manner of organising the public sector. It consisted of a short list of features which seemed to form a compact whole (Weber, 1978:217–223).

The advantage of pinpointing the core models of the classical framework is that it forces us to concentrate upon a few basic ideas, and assess their validity today. These key models constituted not only the core of the emerging discipline of public administration, but they also played a major practical role when designing the legal framework for the public sector early in this century along lines suggested by adherents of the public law instrument (Loughlin, 1992). The disadvantage is that one neglects the complexity of the classical approach, which was far more rich and comprehensive than what is stated below (Hill, 1992).

Positions or tasks

The classical framework models the public sector as essentially different from the private sector. There is a set of differences between the two sectors, which must be institutionalised. The public sector is basically a set of positions or roles which operate in an optimal manner when these are distinguished from the persons that hold or occupy these positions. Thus, one aspect of the core model of the classical framework is:

(CM1) Positions are to be distinguished from persons.

The public sector is a structure of positions, which operate effectively when they are kept separate from the private motives of the persons who occupy these positions, Thus, the classical framework deals with how this separation is to be institutionalised as well as with how these positions are to be structured.

The classical framework delivers a set of principles or rules that follow up upon (CM1), which all have the purpose of safeguarding this separation between position and person. These principles can be seen as the implications of adhering to (CM1). Here, we find the rules about recruitment:

(R1) All positions must be recruited by means of transparent criteria of performance, connected with the position in question.

(R2) Persons must be promoted in accordance with transparent criteria of achievement, connected with the position in question.

(R3) Persons must be removed from their positions when their performance does not satisfy the requirements of the position.

(R1)–(R3) can only be realised by means of an institutional framework, safeguarded in the final resort by the employment of the judicial machinery. There principles deal with both how positions are to be filled and how persons are to be separated from their positions. Thus, they give substance to the basic model (CM1), i.e. that positions and persons must be completely distinguished.

Yet, what is even more important to (CM1) is the clear separation between the resources of the position and the income and wealth of the individual who occupies the position in question. Thus, we have certain rules to control resources, remuneration and patronage:

(I1) Each office holder is to be remunerated according to a contract, which pays the individual a fix monthly sum of money.

(I2) The resources connected with the position belong to that office and cannot be appropriated by the office holder for his/her own purposes.

(I3) In order to prevent the occurrence of various forms of corruption, the money paid to the office holder must be enough to allow a decent standard of living including a pension.

The rules (I1)–(I3) call for the institutionalisation of budgetary systems which allow for this transparent call for separating the resources of the public sector from the income and wealth of the persons working in that sector. Again, one can view (I1)–(I3) as giving meaning to (CM1), now from the financial point of view.

If indeed (R1)–(R3) as well as (I1)–(I3) enhance (CM1) or institutionalise the separation between positions and individuals, then the remaining rules clarify how the positions are to be organised, given the assumption that positions should dominate over individuals.

In the classical framework the emphasis is upon centralisation and the division of labour. It was understood that positions needed to be organised in a hierarchical manner, based upon minute division of labour. Thus, we have the following rules:

(H1) Positions are to be organised according to super-subordination, where the spans of control become ever larger the higher up in the hierarchy one ascends.

(H2) Positions may be organised according to the line-staff principle, where a high division of labour is to be achieved in the line sections.

The rules about recruitment, income and hierarchy substantiate the model about the separation between position and person, which distinction has given rise to much debate concerning both its feasibility and desirability.

Rules

Now, the emphasis upon a clear demarcation between task and person led the classical approach to place rules at the core of the public sector. Thus, public law in general and administrative law in particular is regarded as a powerful governance mechanism in all kinds of public sector activities. Rules play such a prominent role in public administration that we may wish to identify the following model as another core belief:

(CM2) Public sector governance is or should be rule orientated.

One finds among the classics many variations on these two basic themes, (CM1) and (CM2), all of which we cannot cover in this book, as we are looking for the common core in their writings. This common core is more important than the individual variations of the core, if one wants to take a stand in relation to the classical framework. By ‘importance’ we refer not only to academic impulse but also to practical weight. In fact, all countries orientated towards the rule of law implemented these principles more or less in their legal systems.

In addition, one may interpret (H1) and (H2) as a clear preference for a top-down approach to the organisation of the public sector. Thus, we have here a third basic model in the classical approach, namely:

(CM3) Top-down structures are conducive to efficiency in the public sector.

In order to take a stand for or against (CM3), one needs to define and measure efficiency in public sector activities. Actually, the concept of efficiency is one of the fundamental concerns for all theories about the public sector. At the same time one may acknowledge that it has proved easier to arrive at a common understanding of its meaning than the concept of equity, which is also crucial for public sector governance.

Facts and values

Means-end efficiency was no doubt what the classics searched for. Thus, although the question about ends is a perfectly relevant one to raise in relation to the public sector activities, the answer provided by the classical framework focused upon the distinction between facts and values, between technology and democracy, or between instrumental ends and final ends. There were a few fundamental distinctions that had to be made, according to the classical framework. Thus, we have:

(CM4) Ends≠means, facts≠values, technology≠democracy.

To the classics, these distinctions were parallel, or identical. They constituted a core body of epistemological commitments that were essential to the approach. Basically, it was argued that public administration could handle one but not the other. Thus, means, facts and technology were endogeneous to the approach whereas ends, values and democracy were exogeneous. If one underlines efficiency, then one is bound to ask questions about ultimate ends: What is the purpose of administrative efficiency? Which ends does it serve? Can a science of public administration deliver the ends of the public sector activities?

The separations offered in (CM4) would, it was believed, solve a number of questions in public administration—pure or applied—by means of a series of dichotomies which all coincided, at least so it was argued. (CM4) soon became an issue of much debate between the classics and their critics. If ends, values and democracy can be distinguished from means, facts and technology in the manner stated by public administration, then what motivated civil servants to try their best in office? Similarly, if one starts from (CM1), or the sharp distinction between tasks and individuals, then one would want to know what motiv...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Illustrations
• Preface
• Introduction: The Challenge of 2000
• Part I: Where We Stand
• Part II: From Where We Come
• Part III: Where We Are Heading
• Conclusion: The Relevance and Limit of Contractualism In Public Governance
• References