Hood The NPM in the 80s (1995).pdf

8/12/2019 Hood The NPM in the 80s (1995).pdf

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Acan in& olgafuullons and Society, ol. 20, No. U3, pp. 93-109, 1995Ekvicr Science LtdPrinted in Great Britain0361~36Bzl95 19.50+0.00

THE NEW PUBLIC MANAGEMENT IN THE 1980s:VARIATIONS ON A THEME

CHRISTOPHER HOODLondon School of Economi cs and Pol i t i cal Science

Changes in public sector accow~tingn a number of OECD countries over the 198Bs were central to therise of the New Public Mulaganent (NPM) and its asso&md doctrks of public accoumabihty andorganizitiooal best practice. lhis paper d&uases theriseofNPMuulalvmativetothetnditionofpuMicaccountabilityembodiedin pmgmssive-era public admin&ra&n ideas. It argues that, in spite of allegationsofintem?tionalintionurdtheadoptionofanewgiobalp;udigminpuMic mylaganent,d==w=considerable variation in the extent to which different OECD countries xlopted NPM over the 19t3Os. Itfurther argues that conventiortal expMm&u of the rise of NPM (w, party pohticai incumbency,etonomic~tecorduldgovanment~)seanhudtosust?inevcn6romarrl?tivclybriefinspectionofsuchaossnationaldua~ucavailable,uldthatulaplul?tionbvedoninitialendowmcntmaygiveusaditkrentpeqectiveonthosechanges.

Over the 1980s there was a move in a numberof OECD countries towards the New PublicManagement (NPM). Central to this change inmodes of public management was a shift towardsaccountingization (a term coined by Power 81Laughlin, 1992, p. 133). This development canbe claimed to be part of a broader shift inreceived doctrines of public accountability andpublic administration At the same time, account-ing changes formed an important part of theassault on the progressive-era models of publicaccountability (cf Hal&an & Wettenhall, 1990).

For progressive public administration,2 demo-cratic accountability depends on limiting corrup-tion and the waste and incompetence that areheld to go with it (cf. Karl, 1963, p. 18). Theassumption is that politicians are inherently

venal, using their public office wherever pos-sible to enrich themselves, their friends andrelations, and that reliance on private-sectorcontracting for public services inevitably leadsto high-cost lowquality products, either becauseof corrupt influence on the contract-awardingprocess or because the public contract marketwill come to be controlled by organized crime,or both. Whether these assumptions can besafely dispensed with in the wealthy OECDcountries of today is a matter for debate.

From those assumptions, the accountabilityparadigm of progressive public administration(hereafter PPA for convenience) put heavystress on two basic management doctrines. Oneof those doctrines was to keep the public sectorsharply distinct from the private sector in terms

This paper was presented in an earlier form to the Workshop on Changing Notions of Accountability in the UK PublicSector, SE, December 1991, and to the ElASM Workshop on Accounting, Accountability and the New European PublicSector, Helsinki, September 1992.1 amgrateful for comments and criticisms received on those occasions, and particularlyto Peter Miller for helpful suggestions. Broadly, accountingization means the introduction of ever-more explicit cost categorization into areas where costswere previously aggregated, pooled or undefined.* That is, the style of public administration that emerged in the progressive era of the late nineteenth and early twentiethcenturies.

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94 C. HOOD

of continuity, ethos, methods of doing business,organizational design, people, rewards andcareer structure. The aim, in Beatrice Webbswords (Barker, 1984, p. 34) was for a Jesuiticalcorps of ascetic zealots. The other doctrine wasto maintain buffers against political and mana-gerial discretion by means of an elaboratestructure of procedural rules designed toprevent favouritism and corruption and to keeparms-length relations between politicians andthe entrenched custodians of particular publicservice trusts.3

This organizational model attracts more deri-sion than analysis today (cf. Osborne & Gaebler,1992). In fact, it reflects an underlying metaphorof trustee and beneficiary (John Lockes meta-phor for government) and involves a complexmix of high-trust and low-trust relationships, withthe accompanying accounting rules reflectingdegrees of trust. Within the Jesuitical corps ofthe public service were many high-trust rela-tionships (for example, in conventions of mutualconsultation or action on the basis of word-of-mouth agreements across departments), thecosts of which were not accountingized. Theimplicit assumption is that such high-trust,non-costed behaviour lowers transaction costswithin the public sector and makes it moreefficient than it would be if each action had tobe negotiated and costed on a low-trust basis.However, PPA also embodied many low-trustrelationships, particularly in areas where theJesuitical corps faced the corrupting forces ofthe world outside, notably the award of con-tracts, recruitment and staffing, as well as thehandling of cash, where distrust prevailed andelaborate records had to be kept and audited.

In the place of the PPA model came NewPublic Management or NPM (cf. Aucoin, 1990;Hood, 1987, 1990a, b, 1991; Dunsire Hood,

1989; Hood Jackson, 1991; Pollitt, 1993;Pusey, 199 1). NPM involved a different concep-tion of public accountability, with differentpatterns of trust and distrust and hence adifferent style of accountingization. The basis ofNPM lay in reversing the two cardinal doctrinesof PPA; that is, lessening or removing differencesbetween the public and the private sector andshifting the emphasis from process account-ability towards a greater element of account-ability in terms of results. Accounting was to bea key element in this new conception ofaccountability, since it reflected high trust inthe market and private business methods (nolonger to be equated with organized crime) andlow trust in public servants and professionals(now seen as budget-maximizing bureaucratsrather than Jesuitical ascetics), whose activitiestherefore needed to be more closely costed andevaluated by accounting techniques. The ideasof NPM were couched in the language ofeconomic rationalism, and promoted by a newgeneration of econocrats and accountocratsin high public office.

The term NPM was coined because somegeneric label seemed to be needed for a general,though certainly not universal, shift in publicmanagement styles. The term was intended tocut across the particular language of individualprojects or countries (such as the French Projetde Service the British Next Steps, theCanadian Public Service 2000). The analogyis with terms like new politics, new right, andnew industrial state, which were invented for asimilar reason.4

As with the disappearance of the dinosaurs,there is no single accepted explanation of thisalleged paradigm shift. In fact, emerging expla-nations roughly parallel the major contendingtheories of the dinosaurs extinction. Some

.3An organizational structure which could clearly be classed as hierarchist in the cultural theory of Mary Douglas ( 1982)and her followers (Thompson et al.. 1990).4 The term new does not imply that NPM doctrines appeared for the first time in the 1980s (any more than the NewLearning of the fifteenth and sixteenth centuries involved the first discovery of Latin and Greek). Many NPM doctrinesrepackage ideas which have been in public administration since its earliest beginnings. Nor must NPM be confused withthe New Public Administration movement in the U.S.A. in the late 1960s and early 1970s. which achieved no realmainstream influence (see Marini, 1971).


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THE NEW PUBLIC MANAGEMENT 95

accounts stress habitat loss for the old stylearising from post-industrial technology, pro-ducing a wholly new model of public admini-stration built around electronic data handlingand networking, providing many new niches foraccountingization and lowering its direct costs(see Taylor & Williams, 1991, p. 172; Taylor,1992). Some see the demise of the old modelas the result of a sudden shock, with New Bightideas about organizational design coming as ameteorite from out of the blue (as in Quirks,1988, idea-centric account of 1980s deregula-tion). Some see PPAs fate as a self-inducedextinction, as older control frameworks andaccounting practices came to degrade the valueswhich they were designed to promote (seePainter, 1990, p. 77; Hirschman, 1982). And yetothers interpret the change as caused by a newset of predator interests, such as accountingfirms and management consultants, hunting PPAinto extinction (see Dunleavy, 1985, 1986,1991).

contains important variations, and that noaccount of the shift from the progressive publicadministration model to NPM can be satisfactoryunless it can account for international leadersand laggards.

NEW PUBLIC MANAGEMENT; THEMESAND VARIATIONS

Themes

However, before such extinction sciencecan be developed, we need to be satisfied thatsome general extinction has actually takenplace, and that the new life-form of NPM iseverywhere supplanting PPA. Such claims areindeed commonly made both by practitionersand by academic commentators. Aucoin (1990,p. 134) for instance, asserts that: What has beentaking place in almost every government indeveloped political systems and highly institu-tionalized administrative states is a new emphasison the organizational designs for public manage-ment . . This internationalization of publicmanagement parallels the internationalization ofpublic and private sector economies. Similarly,Osborne & Gaebler (1992, pp. 322-330) writeof NPM as a new global paradigm, claimingthat transition to the new paradigm is inevitablejust as the transition from machine rule toProgressive government was inevitable (p.325).

The doctrines of public sector managementencompassed by NPM have been variouslydescribed by different commentators (such asAucoin, 1990; Hood, 1991; Pollitt, 1993) andsome have identiBed diRerent phases in thedevelopment of NPM. However, there is still agood deal of overlap among the differentaccounts of what NPM entailed. For example,the idea of a shift in emphasis from policy makingto management skills, from a stress on processto a stress on output, from orderly hierarchiesto an intendedly more competitive basis forproviding public services, from fared to variablepay and from a uniform and inclusive publicservice to a variant structure with moreemphasis on contract provision, are themeswhich appear in most accounts.

Most commentators have associated NPMwith approximately seven dimensions of change,which are summarized in Table 1, together withtheir associated doctrines, and some speculativeideas about their implications for accountingiza-tion. The elements relate to the two cardinalelements of PPA already noted, in that the firstfour elements of Table 1 relate to the issue ofhow far the public sector should be distinct fromthe private sector in its organization andmethods of accountability, and the last threebroadly relate to the issue of how far managerialand professional discretion should be fenced inby explicit standards and rules. The sevenelements are as follows.

If we accept such claims, we would expect 1) A shift towards greater disuggmgution ofto see a process of international convergence public organizations into separately managedand diffusion of NPM ideas in public administra- corporatized units for each public sectortion. But this paper argues that the inter- product each identified as a separate costnationalization of the NPM model at least centre, with its own organizational identity in


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C. HOODTABLE 1. Doctrinal components of new public vt

No. Doctrine T)piCd Replaces OpentiOMl Some possiblejustification significance accountingimDliatiOnS

PS dtsf tnct tw nessUnbundling of thePs into corporatizedunits organized byproduct

More contract-based competitiveprovision, withinternal markets andterm contracts

Stress n private-sector styles ofmanagementpractice

More stress ondiscipline andliugality in resourceUSe

Rules us dtscwt ton5. More emphasis on

visible hands-on topmanagement

6. Explicit formal Accountabilitymeasurable stan- means clearly stateddards and measures aims; efficiencyo f pefonnce and needs hard look atsuccess goals

7. Greater emphasison output controls Need for greaterstress on results

Make unitsmanageable, andfocus blame; splitprovision andproduction to createanti-waste lobbyRivahy as the key tolower costs andbetter standards;contracts as the keyto explicatingperformanceSGMdd.3

Need to applyproven private-sector managementtools in the publicsector

Need to cut directcosts, raise labourdiscipline, do morewith less

Accountabilityrequires clearassignment ofresponsiblity notdifision of power

Belief in uniform Erosion of singleand inclusive PS to serviceavoid underlaps and employment; atms-overlaps in length dealings;accountability devolved budgetsUnspecifiedemploymentcontracts, open-ended provision,linking of purchase,provision,production, to cuttransaction costStresson PS ethicfixed pay and hiringrules, modelemployerorientationcentralizedpersonnel structure,jobs for lifeStable base budgetand establishmentnorms, minimumstandards, unionvetoes

Paramount stresson policy skiUs andrules, not activemanagement

Qualitative andimplicit standardsand norms

Stress on procedure Resources and payand control by based oncollibration performance

activitySource: adapted from Hood (1991, pp. 4-5).

More cost centre units

Distinction ofprimvy andsecondary publicservice labour force

Move from doubleimbalance PS pay,career service,unmonetizedrewards dueprocess employeeentitlements

LessPrimaryemploymen lessjob security, lessproducer-friendlystyle

More stress onidentifying costs andunderstanding coststructures; so costdata becomecommerciallyconfidential andcooperative behaviourbecomes costlyPrivate-sectoraccounting norms

More stress on thebottom line

More freedom tomanage bydisaetionaty power

Erosion of self-management byprofessionals

Fewer generalprocedural constraintson handling ofcontracts, cash, staff;coupled with more useof fmancial data formanagementaccountabilityPertixmanceindicators and audit

Move away fromdetailed accountingfor particular activitiestowards broader costcentre accounting;may involve blurringoftundsbrpayandfor


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TH NEW PUBLIC MANAGEMENT 97

fact if not in law, and greater delegation ofresource decisions, in a movement towardsone-line budgets, mission statements, businessplans and managerial autonomy). The corpora-tized style contrasts with the PPA style ofproviding all public services through semi-anonymized organizations within a singleaggregated unit, with detailed service-widerules, common service provision in key areas ofoperation, detailed central control of paybargaining and stafhng levels.

(2) A shift towards greater competition bothbetween public sector organizations and bet-ween public sector organizations and the privatesector. The aim for a more competitive stylecontrasts with the PPA style of ascribing semi-permanent ascribed roles to public sectororganizations; that is, captive markets which areindefinitely assigned to particular prestigeproducers.

(3) A move towards greater use within thepublic sector of management practices whichare broadly drawn from the private corporatesector, rather than PPA-style public-sector-specific methods of doing business. Examples ofthe latter include model employer aspirationsto set an example to, rather than to follow thelead of, private-sector employers in matters ofpay and conditions of employment (for example,in equal opportunity or employment of disabledpersons) and the traditional double imbalancepay structure of public administration, in whichlower-level statf tend to be relatively highly paidcompared to their private-sector counterpartsand top-level staff are relatively low-paid (cf.Sjolund, 1989).(4) A move towards greater stress on disci-pli ne and parsimony in resource use and onactive search for finding alternative, less costlyways to deliver public services, instead of layingthe emphasis on institutional continuity, themaintenance of public services which are stablein volume terms and on policy development.

( 5) A move towards more hunds-on manage-ment (that is, more active control of publicorganizations by visible top managers wieldingdiscretionary power) as against the traditionalPPA style of handsofF management in the

public sector, involving relatively anonymousbureaucrats at the top of public-sector organiza-tions, carefully fenced in by personnel manage-ment rules designed to prevent favouritism andharassment.(6) A move towards more explicit andmeasurable (or at least checkable) stanahrdsof performance for public sector organizations,in terms of the range, level and content ofservices to be provided, as against trust inprofessional standards and expertise across thepublic sector. The old PPA style involved lowtrust in politicians and managers but relativelyhigh trust in professional expertise, both in avertical sense (that is, up and down theorganizational ladder, or between principalsand agents in the new legal+conomic lan-guage of the economic rationalists) and in alateral sense (that is, across difyerent units ofthe public sector; cf. Fox, 1974, pp. 72-84,102-l 19).

(7) Attempts to control public organizationsin a more homeostatic style according to pre-set output measures (particularly in pay basedon job performance rather than rank or educa-tional attainment), rather than by the traditionalstyle of orders of the day coming on an adhoc basis from the top, or by the subtle balancingof incompatible desiderata in the collibrationstyle of control identified by Dunsire (1978,1990) as central to orthodox bureaucraticfunctioning.

These doctrines of NPM link to recurrentdebates about how public administration shouldbe conducted, which stretch back at least as faras the major disputes between legalists andConfucians in the Chinese mandarinate over2000 years ago (see Kamenka, 1989, pp.38-39). How far the public sector should beinsulated and clearly separated from the privatesector in matters of handling business and staff,and how far business should be conducted byprofessional discretion rather than by pre-setrules or standards, are issues which go to theheart of most doctrinal disputes in public admini-stration, including such major waves of classicpublic administration thought as the ideas of theGerman cameralists from the mid-sixteenth


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century (Small, 1909) the nineteenth-centuryBritish utilitarians (Hume, 1981) and the turn-of-the-century American progressives (Ostrom,1974). Such doctrines also have profoundimplications for how public sector accountingis conceived, in the sense of what records arekept, how they are used, and what is costed andmeasured.

This summary list of course oversimplifies,and there are many interesting counter-trends.Examples of such counter-trends include: theunfashionability of the traditional public enter-prise model in conventional market sectors ofthe economy, coupled with the vigorous adop-tion of that model for non-marketed publicservices in several countries; the weakening ofolder doctrines of metaphytic competition (i.e.public versus private providers; Corbett, 1965)as against doctrines of market testing byfranchising; the weakening of trust in profes-sionals while strengthening the hand of mana-gers. Certainly, there is no logical necessity fora public management system to change in all ofthese seven respects at once. Many variationsare possible.Variations

There are no systematic cross-national studiesshowing degrees of variation in public manage-ment reform in a robust and reliable way. Theliterature in the area is long in anecdote andgeneral commentary but short on systematiccomparison, and comes close to being a data-free environment. There are only isolatedfragments and relatively low-grade comparativedata from sources like OECD public manage-ment reports and cross-national consultancyreports such as the Price WaterhouseKranfieldstudy of comparative pay flexibility (Hegewisch,1991).

But even such fragmentary sources are suffi-cient to show that not all OECD countries movedto adopt NPM principles to the same extent duringthe 1980 and that there were marked diffe-rences even within similar family groups suchas the English-speaking Westminster-modelcountries (cf. Hood, 1990~). It is particularlynotable that some of the OECDs showcase

economies, Japan, Germany and Switzerland,seem to have put much less emphasis onadopting NPM-type reforms (on the sevendimensions indicated in Table 1) in the 1980sthan countries like Sweden, New Zealand or theU.K. But it would be hard to argue that thosecountries were closest to the NPM model at theoutset, particularly in respect of use of privatesector-style management practices, hands-onmanagement or output controls.

For example, the NPM tendency to decentra-lize personnel management (such as hiring andjob classifications) to operating units away fromcentral oversight agencies was not a markedtendency in Japan, where the National PersonnelAuthority was if anything strengthened ratherthan weakened over the 1980s. Administrativereform received much attention, in the form ofthe three reform commissions over that decade(modelled on the famous 1937 U.S. BrownlowCommittee on Administrative Management),but the accent seems to have been more onprivatization, deregulation and tax reform thanon the principles of NPM, with the exceptionof a small measure of corporatization in the formof more freedom for Ministries to reorganizethemselves without specific authority from theDiet. And whereas doctrines of pay for perfor-mance took a strong hold in countries such asSweden, Denmark, New Zealand and the U.K.,there was no equivalent movement in Germany(partly because pay for performance poten-tially conflicts with the Basic Law doctrine ofequality of pay across particular grades in thepublic service). Indeed, neither Germany norSwitzerland made any major changes in theirpublic administration at federal level in the1980s; rather, Vewaltungspjlege (a quiet periodof cultivation after the reforms of the 1960s whichembraced policy evaluation) was a commonwatchword in Germany over that decade.

But even within the group of countries inwhich more emphasis seemed to be placed onpublic management reforms, it is not clear thatthe direction of change was the same. Forinstance, the free commune experiment inNorway in 1987 and the French move to far-reaching territorial decentralization in 1983


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100 C. HOOD

emphasis placed on NPM in South Africa, HongKong, Australia and New Zealand (for the latter,see Pusey, 1991; Scott et al., 1990; Yeatman,1987).However, it might be possible to broaden tireview of NPM as an Anglo-American preoccupa-tion to the idea that it reflects what Castlesironically calls the awfulness of the English.By this phrase, Castles means the relativelypoor economic performance and arrested deve-lopment of welfare state policies which, heclaims, characterize the English-speaking coun-tries (Castles, 1989; Castles & Merrill, 1989, pp.181-185). It is, for example, noticeable that thehigh scorers on NPM emphasis are mostly English-speaking countries (and hence clearly candidatesfor English awfulness ti Zu Castles). The lowscorers, in contrast, are all non-English-speakingcountries.

Moreover, an English awfulness explanationmight fit with a view of NPM as representinginternational convergence on a common publicmanagement style. On Castles analysis, theEnglish-speaking countries lost their formerlydistinctive high-direct employment feature ofpublic management between the 1960s and the198Os, and NPM could be interpreted as part ofthat process of coming into line with non-English-speaking countries. Particularly withrespect to the practice of accounting tech-niques and management consultancy, diflu-sion of the new NPM ideas might have beenexpected to spread more readily across coun-tries with the same language and similar legaltraditions.

But it seems too simple to attribute NPM toEnglish awfulness alone. For example, Swedenappears as a high scorer on NPM emphasis, whichwould be particularly damaging for an interpre-tation built on a Castles-type English awfulnessfactor. Moreover, Denmark, the Netherlands andFrance are also cases which score relatively highon NPM emphasis, and two of them (Denmarkand the Netherlands) reported strong develop-

TABLE 2. NPM emphasis and political incumbencyPolitical incumbency emphasis

NPMEmphasis LeW Centre WWHi Sweden

Medium

Lo

France

Greece

NZAustriaDenmarkFinlandItafYetherlands

PortugalUSA5Germany JaPm

Snain Switzerland TurkevSources: analysis bved on OECD PUMA reports and onpolitical incumbency data for OECD countries drawn fromGorvin (1989) and Keestngs Contem~ Archfves.

ment of variable pay in recent years to the 1990Price WaterhouseICranfield project (Hegewisch,199 1, Table 3). NPM seems to be more than justanother English disease.Party politics

Some commentators explain PPAs demise inrather similar terms to the predator theorists ofthe dinosaurs extinction. The notion is that theold structure has been subverted by the deve-lopment of New Right interests who stand tobenefit in various ways from dismantling thePPA model.

At one level, the demise of traditional PPA isoften attributed to the advent of New Rightgovernment in the 1980s and particularly tothe infiuence of Ronald Reagan and MargaretThatcher, who aimed to roll back big govern-ment and state-led egalitarianism and welfarism,and to remould what was left of the public sectorin the image of private business (see Pollitt,1993). lf NPM was sparked by such figures, wewould expect its development to be mostmarked in countries which were governed byright-wing parties during the 1980s.

It is obviously debatable whether U.S.A. should be scored as centre or right for these purposes. In many does partymatter studies. it is excluded, on the grounds that it is essentially unclassifiable. Given its separation of powers, it is herecounted asacentre-leftcoalitionfor 1980,acentre-right coalition for 1981 to 1986andacentristcoalitionfor 1987 to 1990.


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Table 2 gives a rough indication of the extentto which OECD countries were governed duringthe 1980s mainly by parties on their left, theirright or their centre. For this exercise, a scoreof i- 1 was given to each OECD country for eachyear of incumbency in government by a politicalparty to the right of t h a t countrys politicalspectrum, and a score of -1 for each year ofincumbency by a party to the left of t h a tspectrum; 0.5 was given for each year ofincumbency by a centre-right coalition and-0.5 for each year of incumbency by a centre-left coalition, with 0 for a grand coalition (as inthe Austrian case). Countries which score hi(more than 1 S.D. above the mean) are taken asright in incumbency terms, and countrieswhich score lo (more than 1 S.D. below themean) are taken as left in incumbency terms.Centre scorers are the rest.

NPM scorings are based on the countryreports to OECD on Public Management (1988and 1990), with a maximum, score of 2 on eachof seven dimensions of doctrine, as describedearlier. Hi scorers are those whose overallscore is more than 1 standard deviation (S.D.)above the mean score; lo scorers are thosewhose overall score is more than 1 S.D. belowthe mean score. Medium scorers are therest.

This exercise is useful only for first approxi-mations, and it may be that a better test wouldbe a series of before and after looks at casesof changes in government. Scoring politicalincumbency involves problems which are fami-liar in the does politics matter? debate overmacroeconomic policy in political science.There is no established method for comparingdegrees of rightness and leftness ac?wsscountries, and there are clearly dilYerent q u a l i -t ies of rightness and leftness (for example,participatory versus hierarchical emphases insocialism). Presidential and federal systemsclearly cause complications (for example, theI7.S. would count as right only in Presidentialterms for the 1980s). Coalition/PR system casestend to bunch in the middle, so that the outliersrend to be non-PR systems like France and Japan,which may get disproportionate weight in the

analysis. All that such a scoring exercise does isto give us a first cut as to whether OECDcountries were governed during the 1980smainly by parties on their left, their right ortheir centre.

Crude as the data are, however, Table 2 showsup the difiiculties in the popular idea that NPMwas closely associated with incumbency byright governing parties in the 1980s. Swedenis the most obvious misfit for such an idea. It isa country which shows apparently high NPMemphasis during the 198Os, but also scores fairlyhigh for left political incumbency with eightyears out of the decade under Social Democraticgovernments. Indeed, Sweden is conventionallytaken as the leading case of the social demo-cratic alternative to liberal capitalism. And atthe other extreme, there are unambiguouslyright cases, like Japan and Turkey, which seemto score distinctly low on the NPM emphasisscale.

Of course, such results are only surprising ifwe expect the incumbency of dserent politicalparties to lead to different public policyoutcomes. Other analyses of party competitionmight lead to different expectations. An exampleis Scharpfs ( 1987) nested game model of thedynamics of party competition, in which tworival left and right parties compete for thefickle favours of floating middle-ground votersagainst a set of variant macroeconomic condi-tions produced by a game between incumbentgovernments, labour unions and central banks.Modifying that framework only slightly, wecould posit a party competition game playedbetween right and left wing parties (ri laScharpf) and a public management gameplayed between incumbent governments andpublic managers/top bureaucrats or profes-sionals (substituted for Scharpfs macroeconomicpolicy game played between governments andlabour unions). In the second game, incumbentpoliticians choose between tough and tenderapproaches to public managers, and the latterchoose between a cooperative and uncoopera-tive approach to politicians. Table 3 outlinessuch a game. Clearly, politicians would preferto be in cell l), bureaucrats and managers in


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and resistance to extra taxes. Underlying the measures of government size can conceal asonset of such fiscal stress may be the changes much as they reveal (Peters & Heisler, 1983).in income level and distribution, weakening the But if we look at four conventional measures ofTocqueville coalition for government growth government size (that is, government employ-in the electorate; that is, an electoral majority ment as a percentage of total employment,of voters at below-average incomes who stand government expenditure as a percentage ofto benefit from increasing public spending finan- GDP, social security expenditure as a percen-ced from income taxes. A move towards a more tage of GDP and tax revenue as a percentagediamond-shaped income distribution pattern of GDP), it does emerge that the two mostlays the conditions for a new tax-conscious slimline governments within OECD (Japan andwinning electoral coalition, and NPM can be Turkey) placed a low degree of emphasis onrepresented as the approach to public manage- NPM during the 1980s just as would bement which fits this new tax-consciousness in expected. But not all outsize governments inmarginal electorates; for example, by keeping the OECD placed high emphasis on NPM in theoverall public-sector pay bill down by means of 198Os, and the medium-sized governmentsperformance pay rather than by across-the-board also varied considerably in the emphasis whichpay rises in the traditional style. they laid on NPM. So if government size plays

However, if NPM is best explained as a a part in determining NPM emphasis, it isresponse to fiscal stress and government over- probably a subsidiary one rather than the singleload, we might expect NPM to be most strongly determinant.developed in those countries which score Similarly, the link between macroeconomichighest on government spending and employ- performance and the degree of emphasis onment an&or have a history of relativeIy poor NPM seems to be far from clear-cut. NPM ismacroeconomic performance on the conven- often interpreted as a reflection of 1970stional indices of GDP growth, public debt levels, economic chickens coming home to roost (i.e.inflation and unemployment rates (such as the record of past or current economic perfor-Greece or New Zealand). mance), and a return to hard-headed realism.

Indeed, NPM has frequently been interpreted But there appears to be no automatic relation-for example, by trade union critics) as little ship between the emphasis piaced by diITerent

more than a means of slimming down big OECD countries on NPM and their level ofgovernment, and saving on resources in the performance on the four conventional macro-public sector. If slimline public management is economic indicators in the post-oil shock era ofwhat counts in competition among industrial the 1970s. i.e. 1974-1979.(or post-industrial) states for economic advan- Table ii gives some indicative data on thistage, we would expect to see convergence, with point. It is true that some of the macroeconomicthe countries which are least slimline at the success stories of the 1970s are found in theoutset making the most dramatic strides in low NPM emphasis group, as might be expected.adopting NPM doctrines (because those are the Countries like Japan and pre- 1990 Germany arecountries which would have the most to worry in this group. But not all of the high performersabout in terms of comparative advantage). of the 1970s are in that group, and nor are allEqually, countries with small-sized public the economic basket cases of the 1970s (inbureaucracy might have proportionately less to term3 of overall scores on GDP growth per head,gain from putting greater stress on such CPI growth and unemployment) in the highdoctrines. NPM emphasis group. And even if we relate

Finding useful indicators for government size degrees of NPM emphasis to current economicis no easier than arriving at robust measures of performance (on the same basis) over thethe nature of party political incumbency. Indeed, 198Os, the same puzzles arise, as can also beit is commonty observed that coventional seen from Table 4. It .seems that macroeconomic



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TABLE 4. NPM emphasis and economic performance 1974-1979 and 1980-1988Economicperformancecategory

Econ eraHiMedium Hi

Medium andMixed

NPM emphasis 19BOs

Hi Medium lo

1974-1979 19Bo-1988 1974-1979 19Bo-1988 1974-1979 19Elo-1988JaPmSweden Sweden France AUStlki BBD BBD

(4) AUSti Norway Japan1) FinlandNorway

N2 (4) Canada Ireland GreeceAUS Aus (4)

(4) SpainUK (4) Turkey

(1) (3)(4)

Medium Lo U.K.Canada

Lo

aYPort.

N2 (1)

dYPort.(4)Ireland(4)Switz.

reece(4)Spain(4)Turkey(4)

(4) (4)Source: analysis based on OEW Historical Stat ist icsKey to economic performance indicators:Hi = all available indicators in hi category;Lo = all avallable indicators ln lo category;Medium hi = 25 or more of available indicators ln hi category and no indicators in lo ategory;Medium lo = 25 or more of available indicators in lo category and no indicators ln hi ategory;Medium and mixed = (a) all available indicators in medium category; (b) available indicators dlsuibuted across all threecategories (hi medium and lo).Notes:( 1) No indicator avallable for unemployment rates for this case for this period.(2) No indicator available for GDP growth per head for this case for this period.(3) No indicator available for CPl growth for this case for this period.(4) No indicator available for government debt relative to GDP for this case for this period.

performance alone is not sufficient to explainthe rise of NPM.

As with Table 2, the placings are indicativeand broad-brush. NPM scorings are as des-cribed on p. 101. Economic performancescorings are based on OECD Historical Statistics1974-1979 and 1980-1988. Four conventionalseries were used: average unemploymentrates as a percentage of total labour force;average rates of growth in real GDP percapita; average growth rate in consumer price

index; and average public debt levels as apercentage of GDP. For each of these indices,the countries were divided into hi, mediumand lo scorers by the method used as beforei.e. more than 1 S.D. away from the mean

counted as hi or lo, and the remaindermedium), except that for the CPI index twooutkrs (Turkey.and Iceland) were takenout, inthat both had scores more than twice the meanand the effect of including them was to putalmost all countries in the medium category.


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I niti al endowmentPopular wisdom notwithstanding, there seem

to be important cases which do not readily fitstandard explanations for why NPM developedin the 1980s. Another possible explanation isthe baseline, or initial endowment from whichdifferent administrative systems start.

Specificially it could be argued that for anadministrative system to move signticiantlytowards NPM, it must be set up at the outset insuch a way as to provide both motive andopportunity (conventional elements of detec-tive fiction) for incumbent politicians to wantto shift the administrative system sharply in thatdirection.

We could argue that motive in this case mightbe expected to consist mainly in the promiseor hope of resource saving from the adoptionof NPM measures, and could therefore beexpected to be proportionately higher in acontext of outsize government and/or acutefiscal stress associated with poor macroeconomicperformance than in the context of slimlinegovernment and/or strong macroeconomic per-formance. Opportunity might be expected todepend on the existence of some Archimedeanpoint from which would-be reforming politi-cians can influence the public sector as a whole.For instance, in a country like Switzerland,where even the number of Ministries (seven) inthe federal government is set out in the constitu-tion and has not changed for 150 years, theopportunity for politicians or top officials toreshape public administration is relatively slight,because there is effectively no difference bet-ween constitutional reform and administrativereform. But in countries like the UK, wherethere is no constitutional check to admini-strative reform and politicians at the centre canchange the entire system, opportunity is muchgreater. It would therefore seem that a crucialvariable for opportunity is the extent to whichthere is an integrated public service controllablefrom a single Point and without significantjurisdictional breaks (for example, withoutindependent public bodies beyond the reach ofcontrol by a single set of elected politicians, likethe German Bundesbank).

TABLE . Public management baseline styles and propensityto shift NPM-wards: a tentative hypothesis

Stressonintegration Stress on collectivism in service provisionof publicStTViC~ Lo HiHi

Lo

(1) (2)Japanese way Swedish way

Motive for switch: lo Motive for switch: hiOpportunity: hi Opportunity: hi

(3) (4)American way German way

Motive for switch: lo Motive for switch: hi00Dommitv: lo Oowrtunitv: lo

Table 5 puts these two aspects of initialendowment together to identify four polartypes: what is labelled the Japanese way,where public service integration in this sense ishigh but collectivism (in the sense of the relativesize of the public sector in spending and employ-ment) is comparatively low; the Swedish way,where both public service integration andcollectivism are high; the American way,where both integration and collectivism are low;and the German way, where collectivism ishigh but integration is low. These labels areused as convenient shorthand terms, and itis not suggested that each of these countriesexactly corresponds to the stereotype in allparticulars.

On this basis, some countries would be muchmore likely to move NPM-wards than others, atleast in the first round of public managementreforms. For the polar type labelled the Americanway, there would on these assumptions beneither motive nor opportunity to make a majorshift NPM-wards. No one would be in a positionto order the changes, and in any case the gainswould be expected to be less than in an outsizegovernment system. For the Japanese way,there would be opportunity but again littlemotive because the system is starting fromthe small government box. And for theGerman way, there would be motive, but noopportunity.

Only in the polar type labelled the Swedish


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106 C. HOOD

way would there be bo t h motive and oppor-tunity: motive, because outsize governmentmakes resource saving of key importance inconditions of growing fiscal stress, and oppor-tunity, because there are central points ofleverage over the entire public service. Hence itmight be argued that countries in the Swedishway box (like the U.K., France, the Scandinaviancountries and possibly the Netherlands) wouldbe the type most prone to make rapid stridestowards the development of NPM in the1980s.

A variable diffusion model of this kind canhelp to explain what more generalized explana-tions of NPM on their own cannot: namely, whya number of key OECD countries undergovernments of different political stripes shiftedto NPM in the 1980s while others movedrelatively little in that direction. All of the OECDcountries which seem to have placed the higheststress on replacing PPA with NPM during the1980s started from the Swedish way box inTable 5 at the baseline, and some of thecountries which put medium-to-high stress onNPM, such as France and Denmark, also startedas Swedish way cases in this sense. Of course,such an explanation is not independent ofhabitat-change accounts stressing the effect offiscal stress and tax-consciousness, but it doesexplain why a similar habitat change mightproduce different effects in different institutionalsystems.

CONCLUSIONCompared to the voluminous literature on

deregulation and privatization, accounts of therise of NPM are less developed and sparser. Westill lack clear measuring rods for comparingpublic management style, and the discussionhere is relatively speculative. Distinguishingsurface change from deep change will always be

difficult in public organizations. However, fourtentative conclusions can be drawn from thishighly exploratory exercise.

First, puce Aucoin, Osborne and Gaebler andother global change interpretations, it is notclear that the old PPA model of accountabilityhas collapsed everywhere, or to the same extent.Even though we do not know how to measurecross-national differences finely, there do appearto be leaders and laggards in the process, and itis interesting that some of the notable laggardsare leading countries in the international eco-nomy, posing something of a challenge for theview that public management intemationaliza-tion parallels economic internationalization. Ifa policy dinosaur is going into extinction here,the process is still far from complete. Hence thepossible relevance of a variable difTusion modelbased on initial institutional endowment, asdiscussed in the last section. And if the differentinstitutional endowments lead to permanentdifferences (rather than simply governingthe speed of PPA extinction), we may needto be cautious about assuming that changesin public sector accounting are likely to beglobal.Second, the conventional explanations ofchange in the public sector do not on their ownseem fully to explain observed variations in thedegree to which NPM reforms were taken up byOECD states in the 1980s. For instance, ideassuch as the view that NPM is all about right-wingers in office, slimming down outsize govem-ment or responding to macroeconomic failure(in the past or present) all come up againstawkward cases which do not seem to fitexpectations when we look across the OECDcountries. But that does not of course rule outsuch items as part of a broader multi-factorexplanation of the shift to NPM.

Third, there appears to be no simple relation-ship between macroeconomic performancelevels and the degree of emphasis laid on NPM.

6 Indeed, Germany itself is an ambiguous case, since its large government character derives more from high publicspending than high public employment. If size of public employment is the key tn NPM motivation, there wnuld thereforebe no mare motivation than under the American way.


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A working hypothesis might be that the show-case economies were not under strong pres-sures to shake up their public managementsystems and that the more basket-case eco-nomies lacked the capacity to do so, so thatthose making the biggest strides with NPM arelikely to be those in the medium-to-poormacroeconomic performance bands.

Fourth, there seems to be no simple relation-ship between the political stripe of governments(in so far as that can be gauged) and the degreeof emphasis laid on NPM. Are we to assume thatDowns (1957) classic ideas about policy con-vergence in party competition better explainapparent concensus on NPM than Hibbs ( 1977)ideas about policy divergence? Or could it bethat apparently similar measures have beenadopted in different political circumstances fordiametrically different reasons and with quitedifferent effects? After all, such things oftenhappen in administrative reform. Perhaps theclassic historical case is merit hiring for civilservants, which, according to Hans Mueller(1984) was adopted by eighteenth-century

Prussia to bring the middle class into the publicbureaucracy and by nineteenth-century Britainto keep them out.

On similar lines, it might be argued that NPMhas been adopted in some contexts to ward offthe New Right agenda for privatization andbureaucide and in other countries as the firststep towards realizing that agenda. Much of NPMis built on the idea (or ideology) of homeostaticcontrol; that is, the clarification of goals andmissions in advance, and then building theaccountability systems in relation to thosepreset goals (cf. Dunsire, 1990). But if NPM hasitself been adopted for diametrically oppositereasons in ditferent contexts, it may, ironically,be another example of the common situation inpolitics in which it is far easier to settle onparticular measures than on general or basicobjectives. That too may suggest that we shouldbe cautious about assuming that public-sectoraccounting is likely to enter a new age of globaluniformity, at least in the sense of the widerpublic management context within which itoperates.

BIBLIOGRAPHYAucoin, P., Administrative Reform in Public Management: Paradigms, Principles, Paradoxes and Pendulums,

Gouemunce(l99O)pp. 115-137.Castles, F. G., Big Government in Weak States: The Paradox of State Size in the English-speaking Nations

of Advanced Capitalism, Jou r na l o f Commonwea l t h and Compa r a t i v e Politics ( 1989) pp. 267-293.Castles, F. G. & Mer r i l l , V., Towards a General Model of Public Policy Outcomes, Jou r na l o f T heo r et i c a l

Po l f t f cs ( 1989) pp. 177-2 12.Corbett, D., Po l i t i c s and t be A i r l i nes (London: Allen and Unwin, 1965).Douglas, J., Review Article: The Changing Tide - Some Recent Studies of Thatcherism. B r f t i s b ou r na l

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Adm fn i s t r a t f on ( 1986) p p. 1334.Dunleavy, P. J.. Democr cy, Bum au c racy an d Pub l i c Cho i ce (London: Harvester, 1991).Dunsire, A, Con0vI in a Bureaucracy (Oxford: Martin Robertson, 1978).Dunsire, A., Holistic Governance, Pub l i c Po l i c y and Adm i n f stm t f o n ( 1990) pp. 3-18.Dunsire, A . Hood, C. C., Cu t bac k Managemen t i n Pu b l i c Bu r eauc r a c i e s (Cambridge: Cambridge

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THE NEW PUBLlC MANAGEMENT 109Thompson, M., Ellis, R Wilds y, A., Cultural Tbtwy (Boulder: Westview, 1990).von Beyme, IL, Do Parties Matter? The Impact of Parties on the Key Decisions in the Political System,

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