The revered pioneer of political economics, Adam Smith (1804: 178), defines the difference between the public and private sector as follows;
‘Erecting and maintaining those public institutions and those public works, which though they may be in the highest degree advantageous to a great society, are of such a nature, that the profits could never repay their expenses to any individual or small number of individuals and which it cannot be expected, therefore, that any individual or small number of individuals would ever erect or maintain.’
That is to say that the private sector will not supply services to society unless there is a profit to be made in doing so, therefore it becomes the governments responsibility to step in and ensure that services such as civil defence and the administration of justice are in place to provide stable conditions for the private sector to prosper and thus bring greater quality of living standards to society in general.
With that in mind, successive Governments across the world have faced the dilemma over which services to provide and in what way is it best to fund, manage and deliver these services? It is a hotly contested issue and factors such as political ideology, the economic outlook, changes in social attitude, technological advances, legal constraints and environmental considerations all have to be taken in to account before political leaders can decide on the direction of public policy.
If we take the period from the end of the Second World War until the beginning of the 1980’s as a starting point for an analysis of Public Sector organisation, we can look back and see that the traditional system of organisation known as Public Administration was characterised by a belief that there was a separation between the political and administrative functions of government. In other words, it was seen to be the job of political leaders to formally control government policy and the job of the civil service to put these policies into practice on its behalf.
It was therefore assumed that civil servants were apolitical and beyond reproach from the public, as their only duty was to serve the public interest by implementing a top down hierarchical model of bureaucracy that strictly adhered to standardised rules and procedures set out by their political masters.
As a consequence, this rendered the decision making process painfully slow due to complicated administrative procedures and overzealous regulation, while a wasteful economic culture permeated throughout the public sector.
In an effort to improve the economic efficiency of the public sector, the principles of scientific management (Taylor, 1911) were applied that analysed workflow and broke it down to it’s constituent parts but despite removing redundant steps, critics rejected the ‘one-best-way’ of delivering public services and viewed the Public Sector as a ‘lumbering dinosaur’ that delivered poor quality service.
It wasn’t until Margaret Thatcher’s Conservative Party came to power with a neo liberal political agenda that significant strides were made to address the bloated scale of the state and the perceived uneconomic, inefficient and ineffective nature of the public sector.
In doing so, the government introduced swingeing Public Sector cuts and pushed through sweeping Public Sector reforms such as the privatisation of nationalised industries in an effort to reduce the size and financial burden of the state.
During this time of Political upheaval, the economic landscape also changed significantly with government adopting a monetarist economic policy to promote a free market economy. As a result, the economy experienced a boom, which led to a feeling amongst many that the public sector had become outmoded and in need of a comprehensive overhaul to keep pace with the buoyant private sector.
In a bid to modernise the public sector, a new system for organising public services emerged known as New Public Management,...
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