IN PUBLIC MANAGEMENT
We forget at our peril that markets make a good servant, a bad master
and a worse religion.
—AMORY LOVINS, CEO, Rocky Mountain Institute
The ideas of economic individualism affect not only the design and analysis of public policy but also its management and implementation. Indeed, it seems fair to say that the great preponderance of public management reforms and innovations of the past two decades have primarily been ones based on market or quasi-market theories and concepts. These market-based public management approaches take different names in different contexts. In the United States, both the literature and the practice of public management have for more than twenty-five years been strongly influenced by market-oriented public management. Sometimes it is in the name of privatization or contracting out and sometimes it is more general notions of “managing government like a business.” Market-oriented public management owes a considerable debt to the Reagan Revolution, not so much for developing new approaches as providing a forum and a demand for them.
This chapter considers two closely related topics concerning the application of markets and values of economic individualism: privatization and New Public Management (NPM). As Starr (1988) observes, privatization is a “fuzzy concept.” Among the many available definitions, a particularly useful one has been provided by the U.S. General Accounting Office (now the U.S. Government Accountability Office). According to this definition (1998, 3), privatization is “any process that is aimed at shifting functions and responsibilities, in whole or in part, from the government to the private sector through such activities as contracting out or asset sales.” The definition seems useful because it is encompassing. A broad definition serves best simply because it covers the many activities that are generally referred to as “privatization.”
If privatization is a fuzzy concept, NPM is a fluid one. Most agree that, whatever else NPM might be, it is a set of approaches to public management