Academic journal article Public Administration Review

Danger, Chimeras Ahead: Comment on Terry

Academic journal article Public Administration Review

Danger, Chimeras Ahead: Comment on Terry

Article excerpt

A recent article by Larry Terry raises the alarm about a new management ideology, which he calls "neomanagerialism." He says that this new ideology, a compound of several recent management theories inspiring the reform movement known as the New Public Management, is "a serious threat to democracy" (1998, 198). In fact, though, the ideology described by Terry does not exist. Terry misinterprets the theories he describes, which are extensions of traditional concerns in public administration. Public administration scholars should not fear these theories, but welcome them as giving us new insights into the way organizations do and can work.

Terry views neo-managerialism as being based in part on the old managerialism, one of whose tenets is that "managers must be granted reasonable `room to manoeuver.... '" This certainly sounds like an idea associated with New Public Management, and as evidence Terry mentions the 1993 Gore report, which refers to U.S. federal managers as "good people trapped in bad systems." The bad systems, explains Terry, are viewed as "overburdened by a plethora of cumbersome and unnecessary rules, regulations, and other constraints" (1998, 195).

But what makes neo-managerialism new, according to Terry, is that the old managerialism is combined with organizational economics (agency theory and transaction-cost economics) and with public-choice theory. And what do the latter theories say? According to Terry, they say that "Public managers require extensive policing ... for they cannot--and should not--be trusted" (1998, 196). These theories supposedly "assume that public managers are inclined to cheat, lie, and engage in other opportunistic behaviors" (1998, 198).

Neo-managerialism as presented by Terry, then, is a strikingly bizarre ideology, for its two main pillars, the managerialist pillar and the economics pillar, stand in direct contradiction to each other. The former says managers must be freed from constraints, the latter says that they require extensive policing and cannot be trusted.

Two alternatives immediately come to mind: that the theorists of the New Public Management are completely befuddled, or that Terry has misunderstood something. I will argue below that the second alternative is correct. Terry himself, however, tries a third alternative, with unfortunate results. Terry's approach is to treat the positive statements of organizational economics, about how managers might behave, as normative statements, about how they should behave. Thus, according to Terry, neo-managerialism not only asserts that managers should be freed of constraints, as the old managerialism did, but that they should be self-interested and opportunistic (1998, 197). One could hardly help finding such a prospect frightening: self-interested managers running wild, glorying in their opportunism.

This is, however, a complete misunderstanding of what organizational economics is about. Agency theorists(1) do not, as Terry seems to think, celebrate self-interested behavior by managers; rather, they refer to such behavior as agency "problems." To the extent that these theorists have a normative goal, it is to prescribe solutions to such problems. By trying to combine organizational economics and managerialism into a single normative philosophy, Terry has created a chimera, in both senses of the word ("an imaginary monster compounded of incongruous parts" and "an illusion or fabrication of the mind"). This monster would, indeed, be frightening--if it existed. Let us agree that a normative theory advocating complete freedom for opportunists is not one we wish to adopt, give thanks briefly that no one is advocating such a theory, and move on.

It remains to be discussed how organizational economics and managerialism can usefully be combined, for Terry is correct in noting that both have played a role in the development of the New Public Management, notably in New Zealand (Boston, 1991a; Thompson, 1997). …

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