New Public Management-CN

Origin 
Theoretical Base
Impact/approach/criticism
Conclusion

Npm =Summation of set of Notions 

"NPM is a term which describes a broad set of notions which collectively contain recommendation in a more professional manner"

Thus its not a single monolith philosophy rather its a collection of many themes and subthemes which collectively seek to impart a improved performance and efficiency to government administrative machinery"

         

Borins has given a listing of key faetures of NPM perspective which are common to all the interelated themes which collectively makes up the NPM philosphy

• Maintaining an open mind towards private sector as an effective provider of Public service
• Appreciating the virtue of competition 
• providung high quality service with citizen value
• Increasin the autonomy of public managers
• rewarding organisation and individuals in basis of performance target(Neo Taylorism)

ORIGIN

NPM as an idea pose its origin to rampant widespread dissatisfaction about traditional model of PA which had big and powerful government presence.

The flaws of traditional public administartion was exposed specially in 1970s late with problems like 

severe resource constraint

fiscal deficit 

High borrowing 

BoP crisis

The genral dissatisfaction was about the inefficiency with which the bureaucratic administartion operated and the major reason for that was above mentioned economic failure.

Infact in early 1980s an early perspective to NPM emerged in the form of Thatcherism and Reagonsims because Margrat Thatcher in 1979 and Ronald Reagon in 1980s started and recommended Public management as reformed public administartion.

Thatcher and Reagon argued that in pulic management perspective of government functioning is the one having privatisation as a dominant theme.

 It was advisable because with strong link between sound public management and strong economic performance.

• Oversized Bureaucratic style of government administartion is less effective 
• Thus initially the theme of public management was simply a theme of privatisation
•  and it was a response to the oversized and over bureaucratized model

therefore the argument was through privatisation economic performance of public organisation can be enchanced and public interest can also be fulfilled 

Later on the models and themes which made up the NPM philosphy of 1990s were much more broad rather than just the idea of privatisation

Infact the term NPM was coined and Popularised by OECD bloc which is block of 34 High income countries which accepts principles of free market economics.

• 1990s

• Reengineering

• Reinventing

• OECD

• PCT

• CT

OECD doctoringe of NPM were crystallised from early to mid 1990s and the two important contributors of these doctorine were Christopherhood and Walter Kickett.

Infact its believed that it was christopher hood who used the term NPM for first time.

Although Arithemetic ideas and arguments of NPM were already being talked about in one or other form ever since 1980s

Theoretical foundation/Base

Although the NPM perspective crystallised only during 1960s but foundation for same was laid in 1980s in form of many theories and explanation which exposed the limitation of traditional modes of public administration .

The  various theories like

•  Critical theory
• PCT
• Transaction cost theory of Oliver Williamson
• Neo-Taylorism

All contributed to form the theoretical base for NPM

In the light of these theories the concept of NPM developed and popularised by various approaches mainly three approaches

APPROACHES OF NPM

Three Approaches or three models

a)Reinventing Model 1992
b)Reenginnering Model 1993
c)OECD Model 1995

Reinventing Model 1992

David Osborne and Ted Gabler wrote a path breaking in 1992 named "Reinventing Government-How the entrepreneurial spirit is transforming the public sector"

This Book suggested a 10 point programme for reinventing govt on the public sector administrative functioning as entrepreneurial government:



1)Competition Oriented-Promote competition between diverse providers of  goods and services,this also meant that government would enagage in steering rather than rolling.

2)Community owned government-empower citizens and communities by reducing bureaucratic over control over them. This would involve taking certain services and regulation out of control of Bureaucracy.

3)Performance oriented government-ie governmental agencies and department should focus on output and not the input  ie it should become result oriented .

4)Mission driven ie govt should deal mission which should guide their performance rather the  rules guiding them.

5)Customer Driven- ie an approach which redefine citizens as customer. In other words it offers choices to the users of Public administration.(Institutional Pluralism)

6)Preventive focus-ie govt functioning should be anticipatory and should be aimed at prevention rather than cure.

7)Enterprise Government-it will put energy into earning money rather than spending money and would attempt at genrating resources.

8)decentralised functioning ie the authority control of bureaucratic functioning is dispersed and governmet should adopt participatory philosphy.

9)The government should prefer market mechanism rather than bureaucratic mechanism .

10)Catalystic government ie the government which just not provide public service rather than catalysing the provisions of public services by promoting other sectors like private and voluntary in action in order to solve community problems.


The reinventing model went on to become hugely paradigm of modern public administration.

Almost immediately after the propagation of this model the american government initiated reform movement in 1993 called National performance review at the initiative of then vice president ALGORE.

Accordingly sweeping administrative reforms as suggested by reinventing model were carried out in United States and soon other nations also followed it. Infact International funding agencies like World Bank and Multilateral programmer like UNDP started recommending the reinventing government ideas , every developing country receiving financial aid and substance.

Osborn and Gabler on their part were coninced that their model and NPM philosophy was a best remedy for the probelem faced by Public administration .

In their book they noted 

"We are lucky to be in public management at a time when truth has been disvovered " Suggesting thereby that NPM was a truth and everything else was a wrong way of conducting Public administration"

RE-ENGINEERING MODEL

Hammer and Champy wrote another popular book of seminal importance in 1993

"Reengineering the cooperation"-A manifesto for business revolution

This book sought to give revolutionary ideas about streamlining and reforming any organisation whether private or public Business process reengineering )BPR.

The reenginering is defined in this book as fundamental rethinking and radical redesigning of process


in an organisation, so as to acheive higher performance in terms of quality , speed , services and cost.

BPR-Rethinking and Redesigning-of process to performance -Quality , speed , services cost.

The features or the propositions of the reenginnering model are as under

1.Process are designed to suit the organisation and not the vice versa.

2.Different stages of process should be performed in their natural order so as to have ease and speed for the client and also cost saving for organisation.

3.simple tasks should be combined into multi functional jobs so that repetition of work is avoided and size of bureaucracy can also be trimmed.

4. Work should be performed where its done in best way ie...many process can be outsourced, if they are performed better outside.

(Infact this is a commonlaity between reinventing and reenginnering model)

5.It should be used optimally for redesigning the work system

6.Flexibility in process ie..even if a process is once established as efficient and cost effective , their should be open mindedness about reviewing it and following a flexible dynamisn rather than rigid staticness about the process.

The re-engineering suggestions found great acceptance across the board from private as well as public organisation.

In public organisation they were often adapted under a related mechanism called O&M (Organisation and Methods) and work study.

OECD MODEL

Various OECD docorines of NOM were in circulation right from 1980s but the crystallisation of NPM concept happened around the wrold around mid 1990s , especially in the form of efforts by two thinkers specially Cristopherhood and Walter Kickert.

Within OECD countries , UK , Newzeland , canada, Norway and Iceland were the prominent and most active in terms of creating NPM Model .

ChristopherHood used the term NPM in 1991 to describe the performance model in PUblic organisation which would emphasize E3.

He argued for professional management in public org using private sector style of management.

The OECD definition of NPM was crystallised by Kickert as under -

"NPM is a new paardigm of public management with certain characteristics trends involving internal and external countries of new public administration"

Its basically today's public administration.

The 8 characteristic trend of NPM are 

1.Strengthening the steering function (encouraging competition)

2.Devolving authority the steering function

3.Ensuring Performance and accountability 

4.Improving Human Resource Management

5.Optimising the potential of Info Tech

6.Developing competition and choice

7,Improving the quality of government regulation

8.Providing a responsible public service.

Apart from these three model there have been some terms and models whoch essentially retraits same broad themes.

LAN ROSENBLOOMS MARKET BASED PUBAD MODEL-

which is absolutely similar to reinventing government

PAULIN -GOVT BY SEMI AUTONOMOUS AGENCIES-

which similar to both reinventing and reengineering model

IMPACT

• The NPM Perspective became very popular by mid 1990s and was touted as best solution for public administration.

• Infact ChristopherHood used an ecpression "Best public management for all seasons"

• In 1999 GENDRON & COOPER called NPM as "One best Way"

• The success of NPM led to focus on various administrative reforms and improvement which would be termed as direct impact or outcome of NPM perspective.

1. Delivery of high quality service with citizen value 

In this context , its argued that two major development or outcomes from NPM have been 

• citizens are reconceptualised as active customers rather than passive recipient of government services
• performance targets started being set for and on behalf of citizens or customers.These performance targets have come to be specified in form of rights of interacting citizens.

When he interacts with the government agancies . These rights went on to be crystallized as citizen charter ie a charter of rights which a citizen can accept in form of performance speed and efficiency.

These performance targets in form of citizen charter due to be noted conspicuously in every govt office so that everybody is aware of it.

Citizen Charter-Statement of commitment of providing services to the citizen within a specified time quality of service example- the time taken in getting a passport or a ration card or election card etc

2.The NPM movement also led to increasing operational efficiency of public managers and also provided flexibility to them.-

so that they can take entrepreneurial decisions rather than waiting for hierarchical approval for every business which causes delay and lead to missed opportunity for the government for the government and harassment for public.

In this context , very popular observation was made by Christopher Hood "let managers manage" meaning thereby that even public administrators  ought to be treated as managers  and should be given the operational autonomy and flexibility.

This concept led to the idea of creation of "Hands on Managers" iee the managers who actually operates at the cutting edge level and can take non stop decsion so as to minimise harassment or inconvenience to public.

3.The New Focus in "Management Support Service " was created

a) Public personnel management (PPM) as human support whereby managerial capacities would be enhanced through better personnel policies pertaining to training , motivation, leadership , communication etc.

b)Technological support-in form of optimised used of iCt so as to enhanced speed , convenience , transparency ,accessibility etc

4.Receptiveness to competition-

As a result of NPM , the government world over became more a more receptive in privatisation and competition .

Thus overall, the NPM perspective created a focus on privatization dominated institutional pluralism and private style of government operations in the form of leaner but more efficient government.

CRITICISM OF NPM PERSPECTIVE-

NPM philosophy found broad based acceptance across across government and across experts.

However it also come in for sharp criticism on account of following-

• Its unacceptable and debatable theoretical base
• unacceptable and debatable content
• un-dear functioning mechanism

1.

• At the very basis of NPM these are certain theories like theory of state failure , critical theory /Public choice theory etc and These theories are not free or not without flaws. As a result what they recommended namely private dominated institution pluralism is also not free from debate.
• In other words the negatives of these theories  is also not free from debate.
• In other words the negatives of these theories also applies to NPM as well.
• NPM-playing class

2.

• The content of NPM perspective which revolves around competition , choice , market orientation  and entrepreneurial government has been criticized as narrow and unidirectional.
• These approach interprets government -citozen relationship in the conomic sense alone and therefore ethical and social issues are ignored to a large extent.
• critics have argued that NPM recommends unethical adoption of private managemnet policies into global services and therefore ends up disguising private interest as public interest.

• NPM has also been criticized for promoting corporate elitism and consultancy.

3.

• It has been argued that functional mechanism of NPM has been left unspelt and unclarified specially in light of cultural hetrogeneity.

• In other words , when NPM doctorines or reinventing solutions are being used in various countries , some countries neither have the clarity nor the institutional base to implement the NPM models, yet these models are recommended and even imposed on these countries.

SOME MAIN CRITICS OF NPM

ROBERT HUGHES-

He gave a comprehensive crticism of NPM in 2003 along four lines-

1.The Economic logic is flawed ie..the state society relationship doesn't work on just economic logic , NPM ignores the complexity of socio-economic reality and therefore ends up operating for only classes having capacity to pay.

2.The pubad similarity is challenged. He argued that private organisation have single static goal ie..profit maximisation whereas government have dynamic , multiple and humane goals , therefore NPM logic doesn't work fully.

3.Reduced accountability -

the moment government adopts steering function or 3rd party governance public accountability will come in question because there is no guarantee that private player will assume public accountability.

As a result there is always a danger that profits are passed onto the players but accountability remains with government.

4.Unclear Specification-

• The three important terms used by NPM namely efficiency, public interest and customer orientation are unclearly spelt and can be interpreted differently...

• ex-efficiency whether its economic efficiency or socio economic efficiency.

• Public interest is the interest of paying public or genral public

• Customer orientation or service quality is quality of single service or service as a broad philosophy.

• In other words he argued that NPM is under winning the government role which can never be marginalised.

P.DONLEAVY (2006)

• He proclaimed that NPM is dead. He argued that its dead because post NPM paradigm have been developed around the theme of digital era governance.

• He argued that digitisation or OCT or joint up government , government can exercise effective controls and even in digital era the government cannpt be marginalised as done by NPM.

GIDDENS 

He gave the model called "3rd way thinking ie a model different from simply privatisation or a traditional model which works on hierarchy.

New Public Management Chart

Public Choice Theory Summary

Public Choice Theory-Class Notes

Meaning-

Dennis Mueller 's defintion-

• "Public choice approach is the economic study of non market decision making or its the application of economics to the political and administrative concept and seeks to explain the politico administrative process through which collective decisions are made."

• To further elucidate , the PCT examines the process of collective decision making whose politico administrative decisions are technology fuel for and on behalf of many.

• The underlined issue is to examine that collective decision making by politico administrative setup is ostensibly in public interest or not.

• And if not what can be the alternative.

• In other words , PCT examine are pubad decsions really be in public interest and if not what can be alternative.

• The alternative which ultimately emerges out of public choice approach analysis is to actually give public the choice iee to create institutional pluralism for that number of public.

Propositions:-

1.Human behavior is dominated by self interest

2.Collective Decision Making-;Govt is collection of individuals -self interest comes to picture

3.Theory of state failure like market failure



1.Human Behavior-self interest

• Human behavior is dominated by self interest and every human being is an utility maximiser
• in fact this is the concept of standard economics which is applied to politico administrative process.
• Under PCT its argued that the individual who seeks utility maximization shall remain so under all settings including the settings when he is taking a collective decision ostensibly for or on behalf of others.
• Thus, when a politician or an administrator is taking part in coming process for making public choices , he is as much an utility maxi-miser as any average individual.

2.Collective decision making-

• The government is the collection of individuals. as a result , decisions and actions of the government are likely to be determined by the same self interest which motivates people to take decisions in their individual capacities.

• In this context , James Buchannan one of the foremost proponents of PCT has noted-

• "The simple view that government's collective decision making processes solved social problems selflessly in common interest is just romanticism in politics -economic theory"

• Thus what may appear to be decision in public interest may have some hidden interest. This is because according to PCT arguments.

• COM is guided by either the self interest of powerful interest groups who can tilt the corrective decision making in their favor.

3. The theory of state failure

• The theory of state failure or govt. failure -one of the key argument given by PCT is that if markets can fail so can the govt.

• The approach challenges the idea that govt can correct anomalies caused by the market through collective decision making in public interest

• The approach also makes a distinction between the real government  and some idealised government.

• The argument is that the real government's collective decision makers may not have interest in efficiency rather than they may have interest in self service.

ex-Macd Website -1 crore expenditure per month)

• Thus the PCA makes a distinction between real public interest vs pseudo or fake public interest. Further there is a strong possibilty that decsions gets influenced by selfish or vested interests and may be characterised by any one or more of the following ...

a)vote maximisation

b)self aggrandising

c)wealth maximization

• Thus all in all PCT argues that when ostensibly public interest is persued in reality,
• there is pursuit of self interest.

• As a result , while examining the question who make public choices , how and whose interest;

• PCT recommended allowing real choices to public directly. So that every member of public is a utility maximiser that self can make personal best choice, which collectively would tantamount to public interest.

Component:

1.Rent seeking Theory -Anne kruger, Gordon Tullock, James Buchanan

2.Capture Theory-George Stigher

3.Theory of self seeking behaviour-Antony Downs

Rent Seeking Theory

• It Argues ceratin section of public or certain specific interest group have intense preferences for particular policies and government decisions and therefore they seek to earn benefits through manipulation and exploittaion of politico-economic environment.

• To elborate these powerful individual or interest groups -try to tilt or sway collective decison making in their favor by trying to have administrative and political decision makers on their side .

• The attempt is to make them take public decsions or to exercise public choice in such a way that would adavance the interest of these powerful people. 

• Such behavior on part of these individual or powerful interrst group is called Rent seeking behvior.

• In economics , Rent seeking is different from profit seeking.

• Profit seeking involves economic transaction leading to production of new wealth , rent seeking creates no additional economic wealth and it is just a politico economic manipulation or exploitation wherein the powerful private players seek self interest by seeking special concession and monopoly privileges from collective decision making process.

• The idea is to invest resources in terms of time, efforts and money in the influential person of collective decision making process so as to see special concession and monopoly privilege for ex-creating discretion among market price by awarding exclusive rights in telecom spectrum , gas spectrum, mining rights etc.

• This rent seeking was first time coined by ANNE KRUGER in 1974

•  although the central theme of capturing special monopoly priveleges by influencing collective decision making process was first idnetified by Gordon Tullock (1967) in his paper "Welfare of tarrifs, monopoly and thefts".

• Later on James Buchanan did path breaking work in rent seeking as he elaborated impact of rent seeking on govt. failure by explaining how ->because of rent seeking public interest is defeated.
•  infact he got noble prize in economics in 1986 for explaining how political self interest and non economic focus adversely affect govt. policy."

Capture Theory

• Another  explanation of possibility of collective decsion making going wrong under private influence.

• Capture Theory was given by George Stigler who also won noble prize in economics in 1982 for explaining how government regulation and regulating agency are prone to be captured by powerful interest groups.

• Capture theory is also called economic theory of regulation.

• The core proposition of this theory is powerful interest group can influence enactment of laws and regulationn in self serving manner

• 

• To elaborate there is often a pressure on government agency as these powerful interest groups tries to influence them heavily so that the particular law or regulation can be framed in particular manner suiting them.

• For example -excise law, exim policy , special economic zone etc are often caprured or influecned by these powerful people.

• Its further argues that  Capture theroy becomes practicable because of coroporate political nexus and vote maximisation behaviour of political class.

• As a result of which there are decsions which are in the favour of powerful groups and activities like constituency pleasing industrial patronage and poitical parties and sent seeking activities are natural outcomes.

Theory of Self Seeking behavior

Anthony downs has given another perspective or Act.

• Acc. to him Bureacracy acts in unrestrained self interest and is only loyal to itself.

• Acc/him it happens because of absence of market discipline.

• To elaborate the bureaucrats or public administration are not subject to market discipline becuase they don't have any personal stakes in performance and non performance of public organisation.

• As a result neither success of public organisation makes them happy nor the failure hurts them.

• As a result , there is 

a)no control over cost and spending

b)service delivery is poor mostly

c)self serving behaviour of bureaucrats may go unchallenged

d)therefore public interest often gets compromised.

• As a result bureaucrats and other public servants tend to bloom self serving , self aggrandizing and loyal only to self rather than being loyal to public organisation or public.

Elements of Public Choice Approach

1)Methodological individualism

2)Rationality of man
3)Politics as Exchange


a)Methodological individualism-

• it argues that while studying collective entities or process, an individual should be unit of Analysis.

• chief arguement of PCT is that its an individuals motivation that governs or decides even collective decision. 

• Even when we are studying government decision making or politiko administrative process, we must realise that study of government collective decsion making =study of individual motivation.

b)Rationality of Man-

• This element of PCT argues that man is utility maximiser for self so man can rank alternatives in order of priority and can pick best alternative which maximise utility for himself.

c)Politics as Exchange-

• This concept was given by James Buchanan and is a natural outcome of above two elements.

• The idea here is that politics or politico administrative decsion making is visualised by public choice approach /PCT as a self serving , quid pro quo as people on both the sides are governed by self interest.

• There is always a possibility of mutually benefecial exchange taking place, this is called politics of exchange.

• Thus because of above three elements public choice tend ti be devoid of public interest.

Solution Side of PCT

It recommends that if govt collective decsion making process fails to give the public the choices or public interests then let public take care of their interests .

In other words lets genuinely give or pursue public interest by 

a)creating institutinal pluralism

b)Dislodging government monopolies and hegemony so as to reduce the possibility and influence of rent seeking and capture activity.

As long as suggestion regarding creating mechanisms whereby public can choose for itself for better ensuring public interest are concerned, the two most prominent thinkers are 

• William Niskansen 
• Vincent Ostrom 

William Niskansen

Niskansen in his book "Bureucracy and represntative govt" argues

Bureacracy did not provide optimum public service because it hardly has any incentive for minimising cost and maximising service delivery like there private counterparts (similar to what anthony said)

Bureaucracy seeks power patronage and budgetary allocation for self service and self aggrandising motive.

As a result there is wasteful and unncessary funding and public resource .

This is also termed as budget maximisation of bureaucracy.

As a result Niskansen suggests-

1.Increases the competition by creating multiple institution so that the goods and services can also be supplied by other player thus market discipline would come and competition would be created and people will get choice to get best services at least possible cost.

2.Increase the incentives for bureacracy to be efficient. He suggested that a performe perish culture should be inculcated in bureacracy rather than simple time bound carries structure.

Vincent Ostrom-

• He is regarded as foremost exponent of public chouce theroy. He wrote an article "Public choice :A differnt approach to study of public administartion".

• He was crtical of dominant government organisation theory ie..according to him government organisation or public administration should not be unitary , dominant or having huge money powers powers , instead he argued there should be a switch from dominant administratio to democratic administartion.

• Dominant unitary rule ie...govt is single service provider->Democratic -multiple service provider-choices to people.

• This will happen only when instead of single dominating org in , government, there will be multiple competing orgnisation so that choice is available to public .

• Ostrom argued that creating multiple decision centre rather than one dominant centre of decsion making will respond better to diverse prefernces of citizen and will also cope better with different environmental organisation while suggesting democratic administration rather than blooming bureaucratic administration.

•  He noted "Bureaucracy is necessary but not sufficient for creating a productive and responsive public service economially and therefore a variety of arrangement should be used to provide an efficient public goods and services"

CRITICISM OF PCT

A)Elitist Bias

Although PCT presented a beneficial solution for guarding against danger of state failure , it itself is not free of problems

1.Elitist Bias-PCT recommends enhanced role of market as compared to state and therefore there is possibility that govt may yield too much space to pvt dominant institutional pluralism.

        Private players have their own preferences or limitation

             a)they don;t operate where immediate profit is not present. As a result certain region or territory of economic activity may be neglected which was otherwise crucial by public service view.

Ill effects like imbalance , region development, consumerism, poor priortisation od economic deveopment are distinct possibility.

              b)Moreover, private institution player always put user fee for every services they offer and as a result they end up catering to elite clients who has the capacity to pay based on user pay relationship.

2.Where is the choice?-

 Although the way theme behind PVT is that it creates choice or institutional pluralism but in reality sometimes its apparent.

              a)Choices are more apparent than real on many crucial goals -electricity, water supply , rail road.

There may not be any choice as government retains these services to itself.

Moreover even if choices are provided or multiple institutions are created , they doesn not guarantee choices.

Its because multi service providers may not get exclusive areas to operate in.

              b)Many private players don't like to invest in certain sectors even of government wants thus choices may not genuinely exist.

3.Imposition without context sensitivity-or providing poor quality of service.

4.Coordination ie various plural institution will need to be sytematically coordinated so that their action and decision are harmonious and under broader public interest.

In this context goldsmith and eggers have further noted as under 

"Involving private partners to produce public goods and services puts more rather than less responsibility on public administration officials".

  B)Challenge of Ensuring Public Interest

IT has been argued by various critics of privatization and market forces that creating too much space for market forces can hamper genuine public interest for following reasons/possibilities-

a)Elitist Bias in their provision of Goods and services

b)User pay relationship which doesn't create inclusive public service rather keep the public exclusive for affluent class.

c)Private players have their own priorities and motivation and therefore they may not operate in crucial sectors or territories and segments because it may not appear profitable to them.

Thus, all in all privatisation is no guarantee for public interest for improvement in quality of service delivery on mass scale.

In this context 

FRANZ MAND noted-

"Increasing dominance by corporate sector creates possibility of dominant control of globalizing corporate elites and as a result govt. role is overruled by these corporate elites"

 A similar concern has also been raised by NPS perspective given by DENHARDT AND DENHARDT where they hae argued that government cannot be a margin player and even if institution pluralism is being created the focus must remain on public services"

IN other words, people's trust on government cannot be allowed to be eroded on argument that government is marginal player and that's why NPS perspective argues that there should be serving rather than steering.

Thus the challenge is to create a balance wherein 

a)private capacities are made use of

b)government role is not marginalised

c)public interest is still guaranteed