Getting the Ideas Right: Public Management, Corruption and Development

Martin Minogue, Research Director, Centre on Regulation and Competition,

University of Manchester

Introduction

Why must Your Majesty use the word profit? All I am concerned with are th e good

and the right. If Your Majesty says, ‘How can I profit my state?’ your officials will

say: ‘How can I profit my family?’ and officers and common people will say: ‘How

can I profit myself?’. Once superiors and inferiors are competing for profit, the state

will be in danger.(Mencius, cited in Meek 2002).

These words, written more than 2000 years ago, come from the Chinese thinker

responsible for the full development of Confucian ethics, and constitute a reminder

that there is very little that is new in contemporary discussion of the nature of the

state, and its proper relation both to those who work for it, and those who are

governed by it. The last part of the quotation could stand as a warning for us now, as

we struggle to find the most appropriate and beneficial relationship between state and

society .

The themes this workshop addresses- public management, corruption, poverty

reduction -are dauntingly large, and complex in their relation to each other. All are

characterised by contested understandings, which this paper examines in the

straightforward belief that it is impossible to ‘get practice right’ ( the new aid donor

mantra) unless you first ‘get the ideas right’.

New Public Management(NPM): assumptions and contradictions

There is now a substantial literature on the origins of NPM and its underlying

principles. Most of this literature sees these principles as involving a novel conception

of the state-society, public-private relationship, and is generally in agreement that the

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roots of what must be regarded as a new philosophy of governance are to be found in

neoliberal thought, more especially the strands deriving from ‘public choice theory’..

Conceptually, NPM is a response to perceived failures of the ‘command and control’

state with its Keynsian philosophy of stabilisation and redistribution, and strong

internal values of public interest and public accountability; and rests on contestable

assumptions about public and private domains.

Assumption: the public interest state has led to extensive government failure and

inefficiency, and should be replaced by superior private market mechanisms

It is the appeal to the collectivist philosophy and its realisation through social

engineering that neoliberals find most objectionable. For them, the public interest

state is an expensive façade to disguise the reality of a conspiracy by public

officials(both elected and appointed) to advance their own self- interest. This

conception depends on the supposition that social behaviour(in all its manifestations)

is primarily governed by individual self- interest .Nonetheless, it is that same

characteristic of individualist self-interest which makes the alternative market-based

form of governance superior, for the market resolution of self- interested transactions

produces perfect efficiency. There is a sleight of hand here which is often glossed

over by those who promote the replacement of state action by market-based action.

These alternative views of the state are rarely commensurable, and so become

ideological choices; this leaves looking rather bedraggled the promotion of NPM

as a neutral, objective, rationalist discourse of managerial change.

Assumption: a more efficient public sector rests on the separation of policy from

execution The NPM reform model requires a move away from traditional

hierarchies towards a smaller central core which rests on a flatter, more decentralised

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structure. This makes for a clearer separation of policy and management , allows more

entrepreneurial and performance-based service delivery, and avoids the debilitating

effects of routinised bureaucracy.Oddly, traditional systems also separate policy from

execution, politics from administration. Both approaches stand condemned for failing

to recognise the impossibility of making such a separation in real public

bureaucracies. Public managers unavoidably operate in a political context; politicians

inevitably intervene in operational matters. The lines of accountability running

between the two, and the quality of po licy itself, will be seriously compromised if

genuine separation of policy from execution takes place.

Assumption: an entrepreneurial culture based on managerial incentives will produce

better governmental performance than a public service culture based on public

interest principles NPM insists that public managers should be given the freedom to

manage, and the incentives to perform better, enjoyed by private sector counterparts.

Overall, the application of these principles would transform traditional bureaucrats

into entrepreneurial managers. The contradictions inherent in this position flow from

the elision of the public and private domains, which are animated by different

objectives, respond to differing values, and do not constitute commensurable

environments. The view of managers as self- interested individuals with no conception

of collective interest or public ethics is deeply flawed.

Assumption: accountability rooted in a direct relationship between ‘manager’ and

‘customer’ is preferable to legal and political forms of accountability This is the

inexorable logic of the entrepreneurial approach. Managers must be made directly

responsible for the efficient delivery of services, and the citizen is therefore seen

rather as a consumer or customer who will hold the manager to account through

complaints, or by being enabled to choose between alternative suppliers. This

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approach ignores the highly political context of most major public services such as

health, education, transport and utilities. Moreover, the privatisation of many of these

responsibilities leaves an accountability gap which can only be filled by new

regulatory systems. It is no accident that in the reform agenda of developed

economies NPM is rapidly being superseded by innovations in regulatory governance

and the idea of the ‘regulatory state’.(Moran, 2001)

The practice of NPM

‘The international management movement has not needed results to fuel its onward

march’ (Pollitt and Bouckaert, 2000:132)

Given the emphasis of NPM on such elements as efficiency gains, performance

management, and value for money, and an explicit commitment to a concern with

results, there is a yawning gap in the NPM literature where evaluation ought to be.

Clearly reforms have been extensively promoted, and proponents claim they have

produced improvements in systems, processes, operations, even administrative

cultures. But Pollitt and Bouckaert show that, while reform activities may be

considerable, there is an absence of persuasive evidence with which to measure

results on any of these dimensions. Discourse has most changed; but there is little to

link reforms of structures and processes to outcomes, whether in terms of better

policymaking or better delivery of public services.( Pollitt and Bouckaert, 2000:97-

133).

We might assume that a clearer picture might emerge in those countries where NPM

has been longest established, New Zealand and the UK. But recent analysis of New

Zealand provides mixed messages. Schick, a committed participant, claims that there

is universal agreement that New Zealand is managed much better than before(Shick,

1996).But Boston(2000) in a careful attempt at a comprehensive evaluation

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concludes: ‘ regardless of where one turns, and regardless of which performance

indicators are employed, there is conflicting evidence on the merits of New Zealand’s

reformed public sector…whether one is concerned with specific aspects of the model

or the model as a whole.’ (Boston,2000:42).

For the UK, it is clear that a major structural transformation has taken place, but the

results are thoroughly contested. The literature on privatisation and contracting

mechanisms makes it clear that there is no hard evidence of efficiency gains (Parker,

1998: Walsh and others 1996); the literature on civil service restructuring points to

serious erosion of morale and accountability(Lawton, 1998); while the applications to

local government are judged to have increased ‘democratic deficit’ and emasculated

local autonomy( Walsh and others, 1997,Stewart and Stoker, 1995). As for

executive(or ‘Next Steps’) agencies, a major restructuring reform, there has been

little public evaluation the effects on managerial performance , and some avoidance of

the legislative oversight which might have extracted evaluative evidence. (Gains,

2001, Judge and others 1997). Highly visible rows between Minister and Chief

Executive in two cases( the Prisons Agency and the Child Support Agency) have

revealed confused lines of public responsibility and accountability. More

surprisingly, perennial concerns have not disappeared; for example ‘ the loss of

informational and organisational resources was deeply threatening to departments’,

(Gains,2001:10), while the convention of accountability through ministerial

responsibility, once thought in terminal decline, has been rejuvenated by the

determination of central policymakers not to lose control.

The problems of attempting to transfer to developing countries the western-derived

NPM blueprint for a new kind of state have been neglected and under-researche d. An

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obvious problem is that national administrative and political cultures vary widely, and

that some process of cultural adaptation is essential. Where NPM reforms are part of a

good governance package , and the subject of aid conditionality, there may be a

tendency for donors and recipient countries to collude in a set of façade reforms

which make little real impact, but respond to the vested interest of each party in

pursuing visible cooperation (Harrison, 2001).Finally, the question needs to be asked :

why are these reforms being pressed so strongly on other countries when they are

contested and controversial in developed states, have not been properly evaluated, and

may be seriously flawed ? If they cannot be proved to be working in countries rich in

managerial resources and skills, what makes them likely to work in countries often

seriously deficient in such skills and resources? (Minogue,2001). This leads

appropriately to the discussion of corruption.

What is corruption, and who decides this?

‘There is no question that corruption is, before anything, a type of crime’(Lederman

and others, 2001:4)

‘ The art of guanxi cannot be reduced to a modern western notion of corruption

because the personalistic qualities of obligation, indebtedness and reciprocity are just

as important as transactions in material benefit (Yang, 1994:108)

These contrasting quotations alert us to yet another area of contested understanding,

though there is little acknowledgement of this in the flood of publications by and

through aid donors in the last five years. To some degree this is because this literature

has been dominated by economists of a neoliberal bent, who define corruption in

terms of opportunistic, self- interested individuals who seize the opportunities to

extract ‘rents’ provided by the bureaucratic dominance of the ‘third world’

state.(Ackerman 1999, World Bank 1998, Gray and Kaufmann 1998 ).

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An anthropological perspective demonstrates the limits of this approach. Sissener

(2001:5) counters the narrowness of the economic view of corruption and its reliance

on a public office definition, preferring a contextual analysis which treats ‘corrupt’

behaviour as a ‘social act …[whose] meaning must be understood with reference to

the social relationships between people in historically specific settings’. Corrupt

transactions might be illegal but also legitimate. Using examples from India, Nepal

and China, Sissener argues that ‘a narrow definition of corruption makes it difficult to

explain how behaviour that transcends Weberian borders of what is deemed

acceptable for holders of public office is seen as legitimate and even laudable to those

involved.’( Sissener, 2001:11). Ledevena (1998), analysing the operation of blat in

Russia; and Yang(1994) on the pervasiveness of guanxi in China (both involving the

use of personalistic networks to obtain goods, services, or jobs in short supply, and

rarely mentioned in the official literatures) are cited to support the contention that the

line between these persistent and socially rooted behaviours and bureaucratic

corruption is so blurred that anti-corruption reforms are unlikely to work ‘unless

practices are seen as unacceptable to the practitioners' (Sissener, 2001:18).

The political dimension of corruption is also neglected by economists.Williams(1999)

and Khan(1998) remind us of what every political scientist recognises , that partisan

organisation is at the heart of modern political institutions, and that this requires

‘spoils’ to construct alliances and reward supporters. This process may be a necessary

stage in the creation of those modern political institutions and the political stability

that is above all a precondition for effective economic reform and progress; ‘taking

politics out of our understanding of corruption would be a mistake’(Williams,

1999:509).

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NPM, corruption, accountability, and development:talking points

What are the linkages here, and what lessons for practice might we derive?

1 The NPM notion of accountability fits uneasily to developing country

governance. First, it is internally contradictory, requiring simultaneously

enhanced central direction and decentralised managerial and institutional

autonomy. Secondly, its reliance on a competitive model of public service

delivery assumes the existence of market and civil society institutions which in

many developing countries are more notable for their absence.

2 The contested meanings of corruption should warn us against the tyranny of prior

conceptions. Neoliberals assume that their precepts will bring economic

efficiency and a corresponding reduction of corruption. Yet there is evidence that

NPM reforms have been associated with increased corruption, both the

privatisation of public monopolies and the creation of new agencies of

democratisation having increased, not reduced, the opportunities for ‘new

corruption’.(Harriss-White and White,1996).

3 What is needed in developing countries is not a reduction but an enhancement of

the role and effectiveness of the central state; not a fragmentation of government

systems through separated agencies and new public -private hybrids, but the

construction of strong central institutions; not an attack on public service officials

which leaves them demoralised , but a recognition that they are the most important

stakeholder in the proce ss of managing institutional innovation .As Hirschmann

(1999:302)observes :’What is the point of the state being accountable if little is

being achieved, of the state being transparent if there is nothing to show?’

4 Accountability finally is underwritten less by formal institutions than by common

values and trust; so that the social and personalistic networks that characterise

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 governance institutions in developing countries offer a form of account worth

building on.

5 Donors must show more flexibility in their analysis and strategies(as indeed they

do on the ground:Harrison,2001). They should recognise the severe limits of the

NPM model; the need for a more holistic and informed view of the political and

social contexts within which developing states must operate; and an understanding

that both corruption and bureaucratic pathologies are two sides of the coin of

underdevelopment; they are symptoms, not causes, and the patients will not be

cured by shouting insults at them.

References

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Management Reform” International Public Management Journal 3, 23-46

Gains, F.2001. “Modernisation and Accountability:the Experience of the UK’s ‘Next

Steps’ Agencies” . Paper presented to the Public Administration Committee Annual
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Gray, C.W. and Kaufmann, D. 1998 “Corruption and Development” Finance and
Development, March 1998 7-10

Harrison, G. 2001.”Post-Conditionality Politics and Administrative Reform:

Reflections on the Cases of Uganda and Tanzania”, Development and Change 32,
657-679

Hirschmann,D.1999. “Development Management versus Third World Bureaucracies:

A Brief History of Conflicting Interests” Development and Change 30:287-305

Harriss-White B., and White, G. 1996. “Corruption, Liberalisation and Democracy”

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