Rowing versus Steering - NAIJAON

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Monday, July 8, 2019

Rowing versus Steering

High modernist models of policy making were, Wrst and foremost, models of central
control. On those models, policy makers were supposed to decide what should be
done to promote the public good, and then to make it happen.
This ambition became increasingly implausible as problems to which policy was
addressed became (or came to be recognized as) increasingly complex. Despite brave
talk of ways of ‘‘organizing social complexity’’ (Deutsch 1963; La Porte 1975), a sense
soon set in that government was ‘‘overloaded’’ and society was politically ungovern-
able (King 1975; Crozier, Huntington, and Watanuki 1975). Despite the aspiration of
constantly improving social conditions, producing generally good outcomes for
people without fail, a sense emerged that society is now characterized by increasingly
pervasive risks, both individually and collectively (Beck 1992).
Even when policy makers thought they had a Wrm grip on the levers of power at the
center, however, they long feared that they had much less of a grip on those
responsible for implementing their policies on the ground. ‘‘Street-level bureau-
crats’’—police, caseworkers in social service agencies, and such like—inevitably
apply oYcial policies in ways and places at some distance from close scrutiny by
superiors (Lipsky 1980). Substantial de facto discretion inevitably follows, however
tightly rule bound their actions are formally supposed to be. But it is not just
bureaucrats literally on the streets who enjoy such discretion. Organization theorists
have developed the general concept of ‘‘control loss’’ to describe the way in which the
top boss’s power to control subordinates slips away the further down the chain of
command the subordinate is (Blau 1963; Deutsch 1963). It can never be taken for
granted that policies will be implemented on the ground as intended: usually they
will not (Pressman and Wildavsky 1973; Bardach 1977, 1980).
One early response to appreciation of problems of control loss within a system of
public management was to abandon ‘‘command-and-control’’ mechanisms for evok-
ing compliance with public policies, in favor of a system of ‘‘incentives’’ (Kneese and
Schultze 1975; Schultze 1977). The thought was that, if you structure the incentives
correctly, people will thereby have a reason for doing what you want them to do,
without further intrusive intervention from public oYcials in the day-to-day man-
agement of their aVairs. This thinking persisted into the 1980s and 1990s: it lay, for
instance, behind the mania for ‘‘internal markets’’ in so many of the state-funded
health care systems of Europe (Le Grand 1991; Saltman and von Otter 1992). The
trick, of course, lies in setting the incentives just right. Allowing the Nuclear
Regulatory Commission to Wne unsafe nuclear power plants only $5,000 a day for
unsafe practices, when it would cost the power company $300,000 a day to purchase
substitute power oV the grid, is hardly a deterrent (US Comptroller General 1979).
Appreciation of the incapacity of the center to exercise eVective control over what
happens on the ground through command and control within a hierarchy has also
led to increasing ‘‘contracting out’’ of public services, public–private partnerships, and arm’s-length government (Smith and Lipsky 1993; Commission on Public–
Private Partnerships 2001). The image typically evoked here is one of ‘‘steering, not
rowing’’ (Kaufmann, Majone, and Ostrom 1985; Bovens 1990).
Twin thoughts motivate this development. The Wrst is that, by divesting themselves
of responsibility for front-line service delivery, the policy units of government will be
in a better position to focus on strategic policy choice (Osborne and Gaebler 1993;
Gore 1993). The second thought is that by stipulating ‘‘performance standards’’ in the
terms of contract, and monitoring compliance with them, public servants will be
better able to ensure that public services are properly delivered than they would have
been had those services been provided within the public sector itself.
This is hardly the Wrst time such a thing has happened. In the early history of the
modern state, under arrangements that have come to be called ‘‘tax farming,’’ rulers
used to subcontract tax collections to local nobles, with historically very mixed
success. Fix the incentives as the prince tried, the nobles always seemed to be able
to Wgure out some way of diddling the crown (Levi 1988). Those committed to
steering, by monitoring others’ rowing, would like to think they have learned how
better to specify and monitor contract compliance. But so too has every prince’s new
The history of ‘‘steering and rowing’’ crystallizes the contradictory character of the
modern ‘‘governance’’ state, and illuminates also the complex relations between
‘‘governance’’ and the conception of policy studies as a persuasive vocation. On the
one hand, powerful, well-documented forces are pushing policy systems in the
direction of deliberation, consultation, and accommodation. ‘‘High modernism’’ is
accompanied by high complexity, which requires high doses of voluntary coordin-
ation. And high modernism has also helped create smart people who cannot simply
be ordered around: rising levels of formal education, notably sharp rises in partici-
pation in higher education, have created large social groups with the inclination, and
the intellectual resources, to demand a say in policy making. These are some of the
social developments that lie behind the spread of loosely networked advocacy
coalitions of the kind noted above.
Modern steering may therefore be conceived as demanding a more democratic
mode of statecraft—one where the practice of the persuasive vocation of policy
studies is peculiarly important. But as we have also just seen, ‘‘steering’’ can have a
less democratic face. It echoes the ambitions of princes, and a world of centralized
scrutiny and monitoring preWgured in Bentham’s (1787) Panopticon. The earliest
images of the steering state, in Plato’s Republic, are indeed avowedly authoritarian;
and the greatest ‘‘helmsman’’ of the modern era was also one of its most brutal
autocrats, Mao Zedong.
As the language of ‘‘steering’’ therefore shows, the legacy of ‘‘networked govern-
ance’’ is mixed, indeed contradictory, inscribed with both autocracy and democracy.
This helps explain much of the Wxation of the new public management on monitor-
ing and control.
For all the borrowing that new public management, with its privatization and
outsourcing, has done from economics, the one bit of economics it seems steadfastly  to ignore is the one bit that ought presumably to have most relevance to the state as
an organized enterprise: the economic theory of the Wrm (Simon 2000).
Two key works emphasize the point. One is Ronald Coase’s (1937) early analysis of
why to internalize production within the same Wrm, rather than just buying the
components required from other producers on the open market—the ‘‘produce/buy
decision.’’ The answer is obvious as soon as the question is asked. You want to
internalize production within the Wrm if, but only if, you have more conWdence in
your capacity to monitor and control the quality of the inputs into the production
process than the quality of the outputs (the components you would alternatively have
to buy on the open market). You produce in-house only when you are relatively
unconWdent of your capacity to monitor the quality of the goods that external
producers supply to you.
One implication of this analysis for contracting out of public services to private
organizations is plain: for the same reason that a private organization is formed to
provide the service, the public should be hesitant to contract to them. For the same
reason the private organization does not buy in the outputs it promises to supply,
preferring to produce them in-house, so too should the public organization: con-
tracts are inevitably incomplete, performance standards underspeciWed, and
the room for maximizing private proWts at the cost of the public purposes is too
great. Indeed this problem of what may summarily be called ‘‘opportunism’’ lies at
the heart of the way the new institutional economics addresses the Wrm (Williamson
1985, 29–32, 281–5). There then follows another obvious implication: if we do contract
out public services, it is better to contract them out to non-proWt suppliers who are
known to share the goals that the public had in establishing the program than it is to
contract them out to for-proWt suppliers whose interests clearly diverge from the
public purposes (Smith and Lipsky 1993; Rose-Ackerman 1996; Goodin 2003).
The second contribution to the theory of the Wrm that ought to bear on current
practices of outsourcing and privatizing public services is Herbert Simon’s (1951)
analysis of the ‘‘employment relationship.’’ The key to that, too, is the notion of
‘‘incomplete contracting.’’ The reason we hire someone as an employee of our Wrm
is that we cannot specify, in detail in advance, exactly what performances will be
required. If we could, we would subcontract the services: but not knowing exactly
what we want, we cannot write the relevant performance contract. Instead we write an
employment contract, of the general form that says: ‘‘The employee will do whatever
the employer says.’’ Rudely, it is a slavery contract (suitably circumscribed by labour
law); politely, it is a ‘‘relational contract,’’ an agreement to stand in a relationship the
precise terms of which will be speciWed later (Williamson 1985). Indeed as North
points out, there are even elements of the relational in the master–slave relationship
(1990,32). But the basic point, once again, is that we cannot specify in advance what is
wanted: and insofar as we cannot, that makes a powerful case for producing in-house
rather than contracting out. And that is as true for public organizations as private, and
once again equally for public organizations contracting with private organizations. For
the same reasons that the private contractors employ people at all, for those very same
reasons the state ought not to subcontract to those private suppliers.

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