The new public management: Challenging the boundaries of the management vs.

administration debate Public Administration Review Washington May/Jun 1998 Authors: Linda Kaboolian Volume: 58 Issue: 3 Start Page: 189 ISSN: 00333352 Copyright American Society Full Text: This symposium is intended to promote a constructive and meaningful dialogue between scholars in the public policy and socalled "traditional public administration"communities. Scholars representing both academic provinces were asked to contribute articles that address the broad topic of "leadership, democracy and the new Public Management." While the authors approached their tasks in a variety of different ways, PAR readers will find the essays engaging and thought provoking. Articles included in the symposium were reviewed by a distinguished panel of scholars including Herbert Kaufman, 1996 Waldo Award winner, David H. Rosenbloom, former PAR editor-in-chie, and Gary L. Wamsley editor-in-chief and Gary IL. Wamsley, editor-in--chief, Administration & Society. We welcome your comments on the symposium. Larry D. Terry, symposium editor Reform movements in the public sector, codified as the "New Public Management" by scholars, provide an opportunity for the adherents of public administration and of public management to engage each other. This symposium presents the reactions of well-known scholars with different perspectives on the theoretical and empirical opportunities and challenges presented by the New Public Management. All of the authors have published important and lengthy works elsewhere that more fully elucidate their positions on issues that divide the school of public management from that of public administration.1 The unique quality of the symposium is that these scholars address one another in a conversation disciplined by focus on a specific topic. The "New Public Management": New Wine in Old Bottles The "New Public Management" labels a series of innovations occurring domestically and abroad (Organization for Economic Cooperation and Development, 1995a, 1995b). The contemporaneous appearance of similar public sector reforms in countries as varied in their

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economic and political systems as the United States, Korea, the United Kingdom, Portugal, France, Brazil, Australia, Sweden, New Zealand, and Canada is a natural topic for scholarly investigation and discussion. Whether the innovations represent a "paradigm shift" in Thomas Kuhn's (1962) sense is an empirical question largely unanswered.2 That the characteristic elements of the innovations seem founded on a set of shared principles appears more evident (Nagel, 1997). Common to reform movements in all these countries is the use of the economic market as a model for political and administrative relationships (Nagel, 1997, 349). The institutional reforms of the New Public Management are heavily influenced by the assumptions of the public choice approach, principal-agent theory, and transaction cost economics. Political roles such as voter, bureaucrat, elected representative, and interest groups, as well as the relationships among them, are modeled using market analogies (Self, 1993, 3). Similarly, policy-making, implementation, and service-delivery systems can be analyzed as a series of transactions with the characteristics of negotiated contracts, complete with concerns about information asymmetries, capture, rent-seeking, moral hazards, and the attendant problems of monitoring to ensure compliance (Lane, 1993, 33). While the reform movements vary in depth, scope, and success by country, they are remarkably similar in the goals they pursue and the technologies they utilize. Each movement is driven to maximize productive and allocative efficiencies that are hampered by "bureaupathology" that is, public agencies unresponsive to the demands of citizens, led by bureaucrats with the power and incentives to expand their administrative empires and "policy spaces" (Nagel, 1997, 350).3 While control of administrative bureaucracies by political leadership is a traditional concern in representative governments and the target of many waves of innovations, the institutional reforms associated with the New Public Management are unprecedented in the formal separation between policy making and service delivery (Light, 1997). These arrangements take different forms, for example, in the United Kingdom and New Zealand; however, their purposes are the same (Thompson, 1997, 10). Similarly, across the reform movements it is possible to observe the use of administrative technologies such as customer service, performance-based contracting, competition, market incentives, and deregulation. Knit together into a coherent whole, these technologies reinforce each other. An orientation to customer service focuses managers and agencies on what users of the services define as important (Barzelay and Kaboolian, 1990; Osborne and Gaebler, 1992). Well-designed measures for the performance of agencies and managers provide direction on a daily basis and increase accountability to political overseers for performance (Eggers, 1997). Market-like arrangements such as competition within units of government and across government boundaries to the non-profit and for-profit sectors, performance bonuses, and penalties loosen the inefficient monopoly franchise of public agencies and public employees (Jensen, 1995; Donlevy, 1994).

The implementation of the New Public Management comes at the same time that the role of managers in the private sector is changing. In order to achieve the performance measures for which they are accountable, it is argued, managers need to be liberated from routines and regulation by the various administrative systems, e.g., procurement and personnel (Peters, 1987; Thompson, 1997). This advice has been embraced by the public sector. The Gore report on reinventing government describes the U.S. federal government as "filled with good people trapped in bad systems: budget systems, personnel systems, procurement systems, financial management systems, information systems" (National Performance Review, 1993, 2). "Deregulation" that is, relaxing the rules, decentra(izing authority, and increasing the discretion of managers, is the recommended course of action. In the public sector, both domestic and abroad, deregulation has taken the form of civil service reforms, notably in New Z! ealand, and delegation of authority to agency-based managers (Horner, 1994; Kettl, 1997). Politics or Administration? The authors of the papers presented in this symposium consider the consequences of the New Public Management for public managers. This is by no means a parochial interest but an opportunity to revisit long-standing issues about the relationship of public managers to the public interest, political processes, and mechanisms of accountability. All five authors ask if the market orientation of the New Public Management reforms will limit public managers to an instrumental role in the delivery of politically defined policies or will allow public managers to engage in or design the political processes that shape policies. This question remains relevant despite the fact that the New Public Management has an explicitly normative model of public managers. While the New Public Management encourages public managers to be entrepreneurial and to use incentives to guide and to enhance the performance of people and systems, public managers have been excluded from the political arena (Peters, 1996). Under the assumption that preferences are fixed and best expressed through market mechanisms, public managers are given more discretion in deciding "how" public agencies will achieve their performance goals than in defining "what" the public prefers.4 However instrumental this approach may appear, the model of the market-oriented public manager is problematic for democratic governance, Larry Terry argues in this symposium, because it implies that public managers are motivated by self-interest and act opportunistically, a stark contrast to the ideal of the "ethical agents who administer the public's business with the common good in mind." The image of the entrepreneurial public manager will affect managers' legitimacy, which, Terry argues, rests on the public's confidence that they will be faithful to the public interest and can be held accountable for their actions. More importantly, this image may further undermine trust in government, already at an all-time low in the United States (Nye, Zelikow, and King, 1997). Until we know more about how to ensure accountability, Terry rejects the model of public managers presented by the New Public Management. Cook and Kelly join Terry in centering their concerns about the New Public Management on its consequences for democratic states. Public administration by its nature, Cook argues, is a

political institution, formed by the character of the polity, in service to the health and improvement of the regime. Normative models of public management notwithstanding, institutions designed to solve problems and provide goods and services have formative effects on society and are thereby constitutive. The job of public managers is to be vigilant about the effects of various institutional arrangements on the relationships and processes that are necessary for the health of the democracy and to accept that political engagement is inevitable. But this engagement should be circumscribed by the constitutional requirements of the polity. Kelly agrees that the origins of institutional forms are the political, social, and economic systems of the regime. Moreover, she defines the goal of these forms as the development and sustenance of an "inclusive democratic polity" that provides all its adult...citizens with full rights, duties and responsibilities and a sense of belonging as an equal partner entitled to the benefits and burdens society offers. Kelly argues that the rational-choice underpinnings of the New Public Management are problematic to the continued legitimacy of democratic institutions in heterogeneous societies attempting to maintain an inclusive polity. In the light of evidence that minority groups may not have assimilated or may have rejected seemingly universal norms about individualism and profit maximization, public agencies may be evaluated as unresponsive, unjust, and illegitimate. Kelly's proposed remedy is any set of institutional arrangements that provide descriptive, symbolic, and therefore substantive representation. She is agnostic on the value of service provision by public rather than private entities, valuing instead the extent to which the decision makers and service providers mirror the composition of the citizenry. "Customer service" reforms implemented by the New Public Management provide a case in point for the concerns about the constitutive nature of public management. Cook, referencing the formative effects of the New Deal programs, questions the unintended consequences of treating citizens as customers. "Customer," a commercial role, assumes an individualist orientation and fixed preferences in contrast with the "public" assumptions of political life. Politics, Cook argues, is as much about changing people's preferences and developing collective purposes as it is about getting preferences satisfied. Reinforcement of the "customer" role may affect the way citizens see themselves and their obligations, rights in the political regime, and relationships to others. Kelly admits the value to public managers of the "customer service" strategy in addressing the heterogeneous tastes of diverse citizenry. But, Kelly notes, it is one thing to satisfy individual customers, another to be accountable for broader goals. If political processes do not provide full satisfaction to citizens, public managers under the New Public Management reforms can provide a range of choices from which customers can choose (e.g., vouchers in addition to public schools) or the right to opt out of the service delivery system. Dissatisfied customers can "exit" (e.g., live in gated communities), but the extent to which citizens accept choices made by agents, such as elected officials and public managers, when these choices do not represent their preferences, and remain engaged in civic life is key to the maintenance of a democratic state.

Not all visions of the constitutive public manager in the New Public Management reforms are dire. Behn supports public managers playing a constitutive role but is less concerned about the outcomes of these activities, arguing that public managers not only can improve the performance of public institutions, but also make government more democratic. Behn presents an activist image in stark contrast to Terry's call for the "conservator" public manager. In Behn's view, public managers have an obligation to remediate the "failures of governance" that stem from the structure of decision-making processes, human frailties of leaders, politics, illinformed citizens, and inattentive elected officials. Behn sees no reason to predict fewer failures under the New Public Management; therefore, governance will require public managers to engage in constitutive activities. Finally, Lynn too agrees that public managers will be constitutive. Despite attempts of the New Public Management reforms to keep them apart from politics, the nature of performance contracting requires negotiation of outcome goals, output measures, and resources. These are ultimately allocative decisions that will be politically determined. To the extent that the contracts are used, public managers will be engaged in politics and will shape the character of the state. Uniting these authors is their concern that public managers be accountable. Discussions of accountability too often focus on the characteristics of mechanisms and processes rather than on substance. In contrast, the authors revisit the issues of for what public managers are accountable and to whom. The New Public Management reforms use market forces to hold the public sector accountable and the satisfaction of preferences as the measures of accountability. In order for this system to proceed, certain conditions, such as the existence of competition, must exist and information about choices must be available. Kelly worries about the robustness of both of these conditions in the public sector. Behn joins Kelly in viewing the citizenry as bounded in their rationality, lacking the information, skill, or attention necessary to understand the full range of choices and technologies to solve social problems. Behn calls this "civic failure" and argues that public managers need to he! lp "educate" the citizenry about their options. If public managers do this well, by which Behn means they are explicit about their goals and strategies, their leadership will increase political accountability. Questions, Not Answers The value of this symposium is that the discussion among various schools of thought within the fields of public administration and management about the New Public Management will result in a comprehensive research agenda. Lynn is enthusiastic about the possibilities presented by the New Public Management for empirical research and theory building, though he warns us that this set of administrative reforms will fade from the scene, as many others before it have. Nevertheless, insofar as the New Public Management represents the infusion of market principles into the political world, much work is needed that moves the body of empirical knowledge from descriptive case studies to more comparative and systematic analysis.

The authors in this symposium bring their own disciplinary perspectives to the task of analyzing the New Public Management. Lynn argues that to understand operations and effects of new institutional arrangements, empirical work should be guided by both the "logic of markets and the logic of governance." He presents a useful summary of the economic theories of organizations and behavior to apply to this endeavor. Cook and Kelly make contributions from the "logic of governance." In the call to use the "logic of governance," Lynn, Cook, Kelly, and Terry are challenging researchers to link the political context with institutional arrangements. These authors agree that the role of public managers and systems of public administration are endogenous to specific political systems. Cook asks that we "bring the regime back in" and understand how management reforms reflect or contrast with the image of the state and public administration represented in the foundational documents of nations. These documents define important aspects of the polity but clearly leave latitude for a variety of institutional arrangements. Lynn reminds us that the motivations for the market-oriented reforms of the New Public Management are political as well as economic. It is important for us to understand why particular reforms such as those represented in the New Public Management arise at particular points in the economic and political life of the state. Bridging economic and political theory, Terry suggests that we add the logic of productive arrangements. Managerial techniques, Terry reminds us, are influenced by prevailing ideologies about productive arrangements. The "neo-managerialist" ideology of the New Public Management reforms exists in the private sector as well as the public. These techniques reflect important interests and values, for example, the rise of information processing. However, techniques are social constructs, and it is important to inquire as to whose interests are best served by the adoption of one set over others. When applied to public administration, the logic of production makes the link to questions of governance by highlighting the privileging of market mechanisms and efficiency over competing values. Implicit in the attempt to link politics and administration is the need to expand work beyond longitudinal studies of the United States to more comparative work. Lynn's ambitious agenda can only be conducted in this way. The New Zealand case is perhaps the best documented nonU.S. example; however, comparative work demands the development and evaluation of multiple cases (Evans, Grimes, Wilkinson, and Teece, 1996). Finally, the discussion in this symposium raises the important question of the appropriate unit of analysis. This is an enduring problem in public management research (Kaboolian, 1996). Not surprisingly, the traditional divisions, described as the "figure" of the public manager or the "ground" of politics and institutional arrangements, are represented here (Lynn, 1996). Behn would have us focus on the public manager as a leader. Within this framework, strategy would be important insofar as it was an exercise of leadership. Cook, on the other hand, would focus on the regime and political context primarily, but would join Kelly in examining organizational arrangements in some circumstances. Lynn joins Behn in considering the role of public managers but begins with a set of more critical questions about the centrality of the

public manager to the performance of public organizations in the New Public Management reforms. Lynn then moves on to economic, institutional, and organi! zational arrangements such as rules, incentives, and hierarchies. Conclusion: Something For and From Everyone The New Public Management provides scholars of public administration and public management two extraordinary opportunities. The first is to see the unfolding of an international reform movement defined by clearly enunciated principles. A phenomenon of this magnitude is a natural object of empirical inquiry to scholars. The second opportunity is to engage in theoretically grounded empirical work and theory building that crosses the boundaries of the disciplines that have studied the public sector. To the extent that the debates between public administration and public management are constructs of the reform movements of the Progressive Era and the rise of policy analysis in the 1960s, and are framed narrowly by disciplinary considerations, comprehensive understanding of the New Public Management as well as of future and past reform movements and theory building will be limited. The promise of New Public Management and the discussion begun in this symposium is to move beyond ! these limitations. Linda Kaboolian is associate professor of public policy at the John E Kennedy School of Government, Harvard University. Notes 1. Behn (1991), Cook (1996), Kelly and Duerst-Lahti (1995), Lynn (1996), and Terry (1995). 2. Nevertheless, see Mathiasen (1996) for a vigorous argument that the New Public Management does represent a paradigm shift. 3. For a discussion of these concerns, see Downs (1967), Niskanen (1971), Peters (1987), and Tullock (1965). 4. Compare this view with Reich (1990). References Barzelay, Michael, and Linda Kaboolian (1990). "Structural Metaphors and Public Management Education." Journal of Policy Analysis and Management 9(4): 599-610. Behn, Robert D. (1991). Leadership Counts. Cambridge, MA: Harvard University Press. Cook, Brian (1996). Bureaucracy and Self-Government: Reconsidering the Role of Public

Administration in American Politics Baltimore, MD: Johns Hopkins University Press. Donlevy, John W. Jr. (1994). Intergovernmental Contracting for Public Service. Los Angeles: Reason Foundation. Downs, Anthony (1967). Inside Bureaucracy. Boston, MA: Little Brown. Eggers, William D. (1997). Performance Based Contracting. Los Angeles: Rea son Public Policy Institute. Evans, Lewis, Arthur Grimes, Bruce Wilkinson, and David Teece (1996). 'Economic Reform in New Zealand 1984-95: The Pursuit of Efficiency." Journal of Economic Literature XXXIV (December): 1856-1902. Horner, Constance (1994). "Deregulating the Federal Service: Is the Time Right?" In John J. Dilulio Jr., ed., Deregulating the Public Service: Can Government Be Improved?Washington, DC: The Brookings Institution. Jensen, Ron (1995). Managed Competition: A Tool for Achieving Excece in Government. Alliance for Reinventing Government. Available from http://www.alliance.napwash.org/alliance/index.html. Kaboolian, Linda (1996). "Disciplinary Foundation: Sociology." In Donald F. Kettl and H. Brinton Milward, The State of Public Management. Baltimore, MD: The Johns Hopkins University Press. Kelly, Rita Mae and Georgia Duerst-Lahti, eds. (1995). Gender Power, Leadership and Governance. Ann Arbor, MI: University of Michigan Press. Kettl, Donald F. (1997). "The Global Revolution in Public! Management: Driving Themes, Missing Links." Journal of Policy Analysis and Management 16 (3): 446-462. Kuhn, Thomas (1962). The Structure of Scientific Revolutions. Chicago, IL: University of Chicago Press. Lane, Jan-Erik (1993). The Public Sector. London: Sage. Light, Paul C. (1997). The Tides of Reform: Making Government Work 1945-1995. New Haven, CT: Yale University Press. Lynn, Laurence E. Jr. (1996). Public Management as Art, Science and Profession. Chatham, NJ: Chatham House Mathiasen, David G. (1996). "The New Public Management and Its Critics." International Public Management Journal http://www.willamette.org/ipmn/research/journal2.html. "Radically Reinventing Government: Editor's Intro 1(3). Nagel, Available Jack H. from (1997).

duction." Journal of Policy Analytis and Management 16 (3): 349-356. National Performance Review (1993). From Red Tape to Results: Creating a Government that

Works Better and Costs Less. Washington, DC: U.S. Govemment Printing Office. Niskanen, William A. (1971). Bureaucracy and Representative Government. Chicago, IL: Rand McNally. Nye, Joseph S. Jr., Philip D. Zelikow, and David C. King, eds. (1997). hy People Don't Trust Government. Cambridge, MA: Harvard University Press. Organization for Economic Cooperation and Development (1995a). Governance in Transition: Public Management Reforms in OECD Countries. Paris: Organization for Economic Cooperation and Development. Organization for Economic Cooperation and Development (1995b). Public Management Development: Update 1994. Paris: Organization for Economic Cooperation and Development. Osborne, David and Ted Gaebler (1992). Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. Reading, MA: Addison-Wesley. Peters, B. Guy (1987). "Politicians and Bureaucrats." In Jan-Erik Lane, Bureaucracy and Public Choice. Beverly Hills: Sage. (1996). "Models of Governance for the 1990s." In Donald F. Kettl and H. Brinton Milward, The State of Public Management. Baltimore, MD: The Johns Hopkins University Press. Reich, Robert (1990). Public Management in a Democratic Society. Englewood Cliffs, NJ: Prentice Hall. Self, Peter (1993). Government by the Market? The Politics of Public Choice. London: Westview Press. Terry, Larry D. (1995). Leadership of Public Bureaucracies: The Administrator as Conservator. Thousand Oaks, CA: Sage. Thompson, James (1997). "Quasi-Markets and Strategic Change in Public Organizations.' Presented at the Fourth National Public Management Research Conference, Athens, GA. Tullock, Gordon (1965). The Politics of Bureaucracy. Washington, DC: Public Affairs Press.