Rise and Demise of the New Public Management

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Essay: The Rise and Demise of the New Public Management. By Wolfgang Drechsler (University of Tartu and Tallinn University of Technology, Estonia), 2005

URL = http://www.paecon.net/PAEReview/issue33/Drechsler33.htm

Critique of the neoliberal approaches to the state.


"Within the public sphere, the most important reform movement of the last quarter of a century has been the New Public Management (NPM). It is of particular interest in the post-autistic economics (pae) context because NPM largely rests on the same ideology and epistemology as standard textbook economics (STE) is based (for my take on this, see Drechsler 2000), and it has had, and still has, similar results. Already more on the defensive within public administration (PA) than STE is within economics, NPM also shows that such major paradigm shifts in theory and policy may actually happen. In addition, it occasionally appears that pae-oriented scholars have overlooked the fact that some features in public management reform, state organization, and the economic interpretation of state functions that they advocate – from “Good Governance” to “efficiency” as a goal in itself – actually belong into the “other camp” and by and large have a disastrous effect on “industrial” and “developing” countries alike, although the consequences for the latter are much more severe.

NPM is the transfer of business and market principles and management techniques from the private into the public sector, symbiotic with and based on a neo-liberal understanding of state and economy. The goal, therefore, is a slim, reduced, minimal state in which any public activity is decreased and, if at all, exercised according to business principles of efficiency. NPM is based on the understanding that all human behavior is always motivated by self-interest and, specifically, profit maximization. Epistemologically, it shares with STE the quantification myth, i.e. that everything relevant can be quantified; qualitative judgments are not necessary. It is popularly denoted by concepts such as project management, flat hierarchies, customer orientation, abolition of career civil service, depolitization, total quality management, and contracting-out.

NPM comes from Anglo-America, and it was strongly pushed by most of the International Finance Institutions (IFI’s) such as the World Bank and the IMF. It originates from the 1980s with their dominance of neo-liberal governments (especially Thatcher and Reagan) and the perceived crisis of the Welfare state, but it came to full fruition in the early 1990s. NPM is part of the neo-classical economic imperialism within the social sciences, i.e. the tendency to approach all questions with neo-classical economic methods." (http://www.paecon.net/PAEReview/issue33/Drechsler33.htm)