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Questioning the New Public Management Privatization or Public Enterprise Reform? International Case Studies with Implications for Public Management by Ali Farazmand; The Future of Governing by B. Guy Peters Review by: Amita Singh Public Administration Review, Vol. 63, No. 1 (Jan. - Feb., 2003), pp. 116-119 Published by: Wiley on behalf of the American Society for Public Administration Stable URL: http://www.jstor.org/stable/977527 . Accessed: 15/06/2014 11:01 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Wiley and American Society for Public Administration are collaborating with JSTOR to digitize, preserve and extend access to Public Administration Review. http://www.jstor.org This content downloaded from 195.78.109.96 on Sun, 15 Jun 2014 11:01:09 AM All use subject to JSTOR Terms and Conditions

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Questioning the New Public ManagementPrivatization or Public Enterprise Reform? International Case Studies with Implications forPublic Management by Ali Farazmand; The Future of Governing by B. Guy PetersReview by: Amita SinghPublic Administration Review, Vol. 63, No. 1 (Jan. - Feb., 2003), pp. 116-119Published by: Wiley on behalf of the American Society for Public AdministrationStable URL: http://www.jstor.org/stable/977527 .

Accessed: 15/06/2014 11:01

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

Wiley and American Society for Public Administration are collaborating with JSTOR to digitize, preserve andextend access to Public Administration Review.

http://www.jstor.org

This content downloaded from 195.78.109.96 on Sun, 15 Jun 2014 11:01:09 AMAll use subject to JSTOR Terms and Conditions

Page 2: Questioning the New Public Management

Questioning the New Public Management

Amita Singh, Jawaharlal Nehru University Ali Farazmand, ed., Privatization or Public Enterprise Reform? Interna-

tional Case Studies with Implicationsfor Public Management (London: Green- wood Press, 2001). 265pp., $74.95, hard. ISBN: 0313306311.

B. Guy Peters, The Future of Governing, 2nd ed., revised (Lawrence, KS: University Press of Kansas, 2001). 260pp. $16.95, paper. ISBN: 0700611304.

Farazmand and Peters explore the area of public sector reforms and pro- vide a cautionary note to the radical reformer. The debate on privatization has become more polarized lately. While some see a scintillating future through market Darwinism ensuring "survival of the fittest," others see privatization as a horrendous game plan of the ruthless invader. Public choice theorists and the new institu- tional economists offer packages of hybrid solutions that may further dis- illusion policy researchers. These two books attempt to discern ideology from logic in this intractable debate.

The insecurities and interdependen- cies of the globalizing world and the reversals of Keynesian economic pro- grams have led nations to leapfrog the sovereign-state model for a supermar- ket-state model. The obituaries of the Westphalian state are now being writ- ten by mushrooming networks of pub- lic-private partnerships. State author- ity has been eroded by the new restructuring and rearticulation drives in both the developed and the devel- oping countries, but it must be con- ceded that this exercise has not been able to ensure democratic accountabil- ity, collective good, and sustainable economic development.

Disparaging references to public administration have only made the journey more difficult, participants more obscure, and objectives hazier. Almost four decades ago, Landau made this prophetic statement about public administration: "this lusty young giant of a decade ago, may now 'evaporate' as a field" (1962, 2). How- ever, Landau may be proven wrong (as Farazmand and Peters reveal): the pub- lic sector has managed to generate sup- port even in these times when it is the choicest whipping boy for any policy debacle. Twenty-first century gover- nance models are challenged by glo- bal economic competition and focus on improving service-delivery systems through New Public Management (NPM). Public management ap- proaches are marred by innumerable mutinies and bottom-up insurgencies since the new efficiency seekers have undervalued the intangibles in public policy such as identity, pluralism, and multiculturalism. While Farazmand addresses the consequences of privatization, Guy Peters analyzes the epistemic foundations of this process.

Money, media, and managers have campaigned with a missionary zeal for the market, and the myth of the su- premacy of the private sector over pub-

lic sector has become firmly saddled. The competition, speed, efficiency, and tangible performance indicators manifested in the market may con- vince the reformers of privatizing the public sector. This deification of mar- kets has made it some sort of a magic pill for all evils of the state-and a cause for many new incurable evils, as well.

The ship of state under these emerg- ing networks of public, private, and people's associations (which spread from the global to the local world) has become something of a "flotilla" which is being carried away with the tide while it is being hollowed out from the inside. The pathologies of bureau- cracy have provided fertile soil for the marketizers. The argument that the state should shed its extra baggage is now firmly entrenched.

These two books provide a warn- ing signal to those complacently settled on the pillion of privatization. Farazmand's warning comes through some well-conducted case studies from developed and developing coun- tries and Guy Peters enriches this study by analyzing the reforms threadbare. They may also be used as "History Lessons for the Reinventors" (Rosen- bloom 1989). The two books strongly

Amita Singh is an associate professor at the Centre for the Study of Law and Governance, Jawaharlal Nehru University, New Delhi. She is the author of four books, the latest ones being The Politics of Environment Administration (Galgotia, 2000) and Public Adminis- tration-Roots and Wings (Galgotia, 2002). She is presently working on corporate governance, privatization, and environmental sustainability. Email: [email protected].

1 6 Public Administration Review * January/February 2003, Vol. 63, No. 1

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acknowledge both the ideological push inherent in the reform agenda and its linkages to the international donor and multilateral funding agencies. While the approach in the former is institu- tional, the latter is more of a strategic and tactical postmodernist analysis. Both writers attempt to resuscitate the sinking state. Farazmand aspires for new institutions, but Peters suggests the desirability of continuous reform, as he writes that, "changing an insti- tutional structure as large as a public bureaucracy is a difficult chore; even changing one organization within it has been enough to defeat some expe- rienced and skilled practitioners" (197). The essence of the debate makes it amply clear that public administra- tion still serves as a kind of the pace- maker for governance.

Privatization or Public Enterprise Reform?

This book, edited by Ali Faraz- mand, is a very spirited presentation of 12 cross-country case studies by eminent scholars in the field. It is di- vided into three parts and 12 original chapters. The first part of the book is on "Government Contracting Services, Privatization and Public Enterprise Reform." It contains three inspiring pieces of research. The first, by the editor himself, analyzes the expand- ing ideological influence of the forces of the political Right in getting con- verts even from erstwhile socialist countries, like China and the post revo- lutionary Iranian Islamic Republic. Farazmand analyzes how public choice theorists rationalize a full- fledged privatization under the flawed notion that welfare percolates through wealth. His arguments strip off this supply-side economic theory, which has failed to produce the trickle down effect and has caused insurmountable externality problems like unemploy- ment, destitution, and poverty. The ten- tacular ingress of corporations into developing economies has created a

circuit of dependence upon external funding which divests the state of its operating power. This divestiture is interestingly undertaken in three ways: practical, tactical, and strategic (which one may find similar to Peters' descrip- tion of the four models of governance). The section on alternatives to privatization is an indispensable study for bureaucrats and policy experts. It strengthens the belief, undisputed even by Osborne and Gaebler, that only ser- vices can be contracted out, not gov- ernance (1992, 45). The next chapter is a study from Australia in which Callender and Johnston analyze the frontiers of the new macro and micro levels partnerships and exposes the use of economic rationalist policies by the government to help business become the major shareholder in the market. However, the authors are uncertain about the future of these partnerships and are, therefore, inconclusive about their contribution to civil society.

The debate becomes more fo- cussed in the chapter by Bennett. It discusses the contentious issue of performance contracting as an NPM technique for improving governance. He argues that although it brings flex- ibility, it is erroneous to think that without building institutions of pub- lic accountability this would bring any substantial difference. Bennett's study encounters the dilemma inher- ent in the politics of privatization- that the government may legitimize the sale of efficient public enterprises also. Logically, if the enterprise makes profit, the sensible government should retain it rather then sell it; yet lack of appropriate institutions pre- vents this from happening.

Part II of the book is a thought-pro- voking collection of five case studies from more developed nations. The ab- sence of a study from aggressively re- forming countries like Canada or New Zealand is conspicuous. The analysis in the chapters by Vivien A. Schmidt and Margaret F. Reid stand apart in being more practical than ideological

in reforming the governance of France and Germany, respectively. The re- markable feature of the former is the focus on corporate governance and the role of noyaux durs (the hard core of investors) in controlling it. The idea of a resilient state as a shield against the excesses of privatization is pre- sented in Reid's chapter on Germany. However, there exists a general con- sensus in Germany that certain assets should not be privatized.

Henry's chapter on the United States does not mince words in pre- senting privatization interestingly as "an aging Hollywood starlet" or as "a fading concept" (95). He has effec- tively pinned down the most intrigu- ing issue in the United States of the revolving door between the govern- ment and the private sector. Many sub- sequent scandals from Enron to Xerox prove the validity of this analysis.

Terry presents a thought-provoking chapter on the issue of utility privatizations in the United Kingdom. Drawing from the experience of privatization drives during Thatcher's and Major's regimes, he convincingly highlights the success of the former in the judiciously conducted feasibility studies which precede privatization.

Collyer, McMaster, and Wettenhall offer a strong defense of public en- terprises in Australia. They highlight the dubious role of commissions, which control public enterprises. The paper has also convincingly brought out the interminable use of the trade union movement by the government for weakening the public enterprise reforms.

The last part of the book contains three illuminating essays from devel- oping countries. The first of these by Farazmand is a spirited examination of the less explored Islamic State of Iran. Strong nationalist leadership, glo- bal oil politics, and cultural rigor were historically responsible for the lack of privatization in Iran. Facts from Ira- nian history reveal that privatization here has always remained an enigma

Book Reviews 1 17

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but it has been tamed by institutions such as the Mostazafin Foundation (for the dispossessed and the oppressed poor). Farazmand strikes an important note when he writes, "global capital- ism needed a public enterprise system that could absorb the social cost of corporate capitalism and promote and guarantee the process of rapid surplus accumulation of capital around the world" (181).

The situation is rather different in India, as is evident from the paper con- tributed by Maheshwari. In contrast to Iran, privatization in India came in an ad hoc manner before supportive in- stitutions could be raised for the marginalized. Ironically, this analysis clearly sidelines the ideological link- ages of the privatization policy to the coalition government in India and the conspicuous absence of any study of the democratic deficit in the process of contracting out. The fuzzy border that exists between accountability and autonomy has helped the government to sell even the profit making public enterprises such as Indian Petro- Chemicals Limited to Reliance, Videsh Sanchar Nigam Limited to Tatas, and Maruti to Suzuki.

The final chapters make important points on reconstructing institutions during the privatization processes. The task is challenging (as Haque notes), since the term privatization is multi- dimensional and, therefore, is open to several interpretations. Kurtz, Cun- ningham, and Adwan provide an in- sightful survey of privatization as the optimal economic development strat- egy for every situation. The two chap- ters admit that much of the privatiza- tion chaos is due to these varied interpretations of the term, a situation that is complicated further by the pres- ence of donor agencies and govern- mental regulations for the markets.

The Future of Governing Peters presents the logic of continu-

ous reform as a deterrent to the funda-

mentalism sweeping through nations in the form of the NPM. A thoroughly researched work, this book should come as a relief to those disillusioned by the ruthlessness and the ideologi- cal jingoism of privatization, which is masquerading through the world with a "one size fits all" prescription. In- terestingly, this second edition of the book completes research initiated in the first edition, which had appeared rather incomplete, because it treated only industrially advanced countries.

Peters' four models of governance are: market, participatory, flexible, and deregulatory (which despite their deep differences have been flapping their wings together). He delves into the different epistemic foundations of each model and shows how they tend to converge into the commonality of the market. Every argument is well re- searched and is directed to answer the basic, but perplexing, question of why do governments continue to reform even in the face of minimal success, especially in light of the need to in- vest significant amounts of political capital in the process? The author tries to simplify the answer by calling it "a triumph of hope over experience" (vii). He argues that a fundamental rethink- ing of the process of governance is required. His perspective on reforms is firmly rooted in established organi- zational and management traditions and conforms to conventional ethics of public service.

The last part of the book, "Can We Go Home Again? Where Do We Go Then?" tries to answer the disillusion- ment prevailing among the ardent ad- vocates for public administration. That NPM reforms are not novel is his ma- jor conclusion. He suggests that un- less there is a value framework as an alternative ethos for public service, the reforms cannot be successful. Some of the questions that are effectively an- swered by Peters include: Why are Anglo-Saxon countries the center of the reform universe? How do these reforms fare when they are planted in

alien environments? He also examines the praxis of market reforms to expose how governments fatten while people shrink as cogs in the globalization machine.

Conclusion These exhaustive studies by Faraz-

mand and Peters, while they help us understand the reforms, are able to do only limited justice to the cross-cul- tural settings. Reforms in a develop- ing world depend upon the amount of foreign direct investment (FDI). FDI depends on the credibility ratings of the World Bank. All governance efforts therefore rotate around the framework of multinational donor agencies. The World Bank has demonstrated little understanding of the enormous spread of community systems and their "epis- temic bindings" with their surround- ings. These unmarketable, self-gov- erning social systems survive because of their epistemic bonding to the local resource consumption patterns. Their sustainability is assured by being both the market as well as the government (in Western usage) at the same time. Privatization gnaws away this epis- temic bonding by altering the resource use pattern. The books, despite hav- ing case studies and findings from de- veloping countries, could have better highlighted this dangerous uprooting of sustainable developmental paths.

Both books agree that the dismal performance of the public sector has set the stage for market reforms and that privatization is an idea drawn out of ideological moorings and not so much out of historical experience. The big global corporations act as their flywheel. Farazmand and Peters unmask the theoretical deceptiveness of the market approach and suggest a modest return to the traditional wis- dom of public administration. These books make indispensable reading for those involved in public policy, cor- porate governance, and privatization research.

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References

Chevallier, J.A. 1996. Public Administra- tion in Statist France. Public Adminis- tration Review 56(1): 67-74.

Landau, Martin. 1962. The Concept of Decision-Making in the Field of Pub- lic Administration. In Concepts and Issues in Administrative Behavior, ed- ited by Sidney Mailick and Eward H. Van Ness, 2. Englewood Cliffs, NJ: Prentice Hall.

Osborne, David, and Ted Gaebler. 1992. Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. Reading, MA: Addison-Wesley.

Rosenbloom, David H. 2001. History Les- sons for the Reinventors. Public Admin- istration Review 61(2): 161-65.

Book Reviews 1 19

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