ABSTRACT
Introduction Experimentation with contracting out (privatization) of local government services grew over the 1980s and 1990s, but we have begun to see reversals in that trend. Compulsory competitive tendering has been abolished in the UK and Australia; New Zealand elected a new prime minister focused on rebuilding internal government service delivery capacity; and US local government managers began to bring previously contracted services back in house in a process of reverse privatization. This reassertion of the public role is not the direct government monopoly of the past. Instead we see local governments using markets, but playing a market structuring role in building competition, managing monopoly and reducing transactions costs of contracting. But market management is not the only role of government. Managers also see the importance of engaging citizens in the public service delivery process. This chapter describes both theoretically and empirically how this new approach to governmental reform balances the efficiency benefits of market-type engagement with the technical benefits of planning and the civic benefits of public engagement. There has been a shift in understanding of the role of the state in public service delivery over the last few decades. The old public administration emphasized direct government delivery, hierarchical control, and a separation of politics and management to ensure due process for citizens and limit outside influence among public employees. This system was criticized as too slow and inflexible by proponents of the New Public Management who argued markettype management approaches could be effectively applied to the public sector (Hood 1991; Osborne and Gaebler 1992). New Public Management emphasized speed and flexibility and touted the advantages of markets for both greater private sector engagement and consumer voice for citizens (Savas 1987). Market solutions suffer from high transactions costs and this has led to a new emphasis on network governance based on relational contracting and trust (Goldsmith and Eggers 2004; Brown et al. 2007). However, the close relationships between contractors and government in network governance undermine democratic accountability. The lack of control and accountability in contracting networks has led others to emphasize citizens are more than consumers and government more
than a contract manager (DeLeon and Denhardt 2000; Denhardt and Denhardt 2003; Sclar 2000; Starr 1987). One of the intellectual foundations for market approaches to public goods is public choice theory (Tiebout 1956). However, the public choice reliance on aggregated individual preferences in a market-type system can lead to public value failures because it allows no space for a deliberative social process of public participation (Bozeman 2002). Problems with preference misalignment cause the aggregation of individual preferences to diverge from the collective social preference (Lowery 1998). However, democratic approaches to aggregate individual preferences through voting may not be socially optimal or stable either according to social choice theory (Sager 2002a). What is missing in both these approaches is a space for deliberation to identify collective needs and common solutions. Recent work in communicative planning and deliberative democracy shows that through deliberation individuals shift preferences toward more collective goals and thus arrive at a more socially optimal choice (Sager 2002b; Lowery 2000; Frug 1999). When combined with markets and voting, deliberation may be both democratic and efficient. In this chapter, I argue there is a rebalancing of government reform that capitalizes on the efficiency of markets, the technical expertise of planning, and the social choice of democracy without the problems of accountability and decision cycling that occur under any of these strands alone. This chapter explores the theoretical basis for the emergence of such a balanced position, and provides evidence this is occurring in local government practice. Public managers have moved beyond the dichotomy of markets or planning, and instead embrace a mixed position which complements the advantages of markets with the benefits of public engagement. This balance between deliberation and markets recognizes citizens are more than consumers, and government is more than a market manager. Government creates the space for collective deliberation to occur and through this process a sense of the social is built. See Figure 3.1.
