D e v e l o pme n t : E q u a l i t i e s a n d s u s t a i n a b i l i t y address situations where a government could legitimately intervene for reasons other than ‘efficiency’ (Bozeman, 2002: 146). Bozeman suggests that economic efficiency continues to dominate public decision-making because the alternatives ‘lack analytic precision’ and ‘offer few practical guidelines’ (2002: 157). Yet he rejects the domination of efficiency criteria in policy deliberations ‘simply by force of available analytical tools’. Haglund points out that other publicly important criteria might be justice, inclusion and sustainability (2010: 23). Samuelson later acknowledged that the scope of ‘publicness’ was potentially very wide. A ‘public good’ is one that ‘enters two or more persons’ utility’. This leaves ‘a knife-edge pole of the private good case, and with all the rest of the world in the public-good domain by virtue of involving some “consumption externality”’ (1969: 107–108). Most goods have a dimension of ‘publicness’ or ‘joint consumption’ (Bator, 1958: 371). The ubiquity of publicness, or ‘semipublicness’ means that many goods potentially warrant interventions to regulate or modify markets. Conventional economics assumes that markets are constituted by one-off transactions, however public goods concern longer timeframes and multi-generational stocks. Examples include historical carbon emissions, radioactive waste, biological genetic resources or disease organisms, ‘reputational stocks’ like monetary systems, and ‘institutional stocks’ in the form of market and democratic systems (Nordhaus, 2005: 1–5). From market failure to state and public value failure Public goods theory was an artefact of the ‘golden age’ welfare capitalism (Marglin and Schor, 1990), which assigned a strong positive role to the state in deciding what public goods to provide and financing them through the public purse. The Keynesian consensus supported strong state planning and intervention across the ideological spectrum. In the mid-1970s, the economic and political consensus shifted away from market failure and state action, returning to neoclassical economics and concerns that state failure should be remedied by market action. Since the 1980s, the ‘policy space’ has been dominated by market ideals and privatisation policies, including contracting-out and the creation of quasimarket instruments for allocating public goods (such as health or education ‘vouchers’ or tradable pollution credits). The public sector has been internally transformed by the formation of government-private sector ‘hybrids’ and the penetration of business culture and management techniques through public sector reform. The culture shift has been towards market efficiency ideals and state-failure theory. ‘Public choice’ and ‘social choice’ theories analyse the interactions between economics and politics. They approach collective action from a micro-economic perspective, applying classical economic assumptions about selfinterested individual behaviour using mathematical methods of analysis. Public choice theory assumes that government is non-benevolent and that public policies do not embody public interest but are ‘gamed’ according to the private interests of politicians, bureaucrats and ‘rent-seeking’ lobbies. This approach supports the theory of ‘government failure’ and argues that the state should be limited and politicians constrained (Skidelsky, 2009: 108–109). Public choice theory considers neither questions about what constitutes the public interest, nor the problem of provision. It addresses aspects of political bargaining from an efficiency perspective. Yet provision is the pressing problem. New types of public goods are emerging and the scope is widening, but governmental and taxpayer support for public goods remains problematic (Desai, 2003: 73). Bator remarks that markets are not necessarily an ‘ultimate’ value in themselves. ‘Constitutional’ choices define the scope for market operation and government intervention (Marmolo, 1999). In the case of ‘true’ public goods, individuals do not only wish to ‘free-ride’, they retain an interest in actually being able to consume a certain quantity of the good, whether their ‘revealed preference’ reflects the ‘right price’ for it or not. Political and social values are possibly better served by ‘non-efficient’ market institutions (Bator, 1958: 378–379). As one distinguished economist observed, ‘a society can be Pareto optimal and still be perfectly disgusting’ (Sen, 1970: 22). Contra public choice theory, government organisations could be said to be distinct from market organisations because they work in the public interest, create value and enable the efficient exchange of political rights (Bozeman, 2002: 146–147). Research on ‘public interest motivation’ amongst government workers identifies motivations such as ‘commitment to the public interest’, ‘self-sacrifice’, ‘compassion’ and ‘attraction to the public and politics’ (Bozeman, 2002: 148). ‘Public values’ may be seen as constitutive of particular organisations or political cultures. For example, Denmark’s ‘public values’ are said to include due process, accountability and welfare provision (Jorgensøn, 1997: cited in Bozeman, 2002: 49). Bozeman identifies ‘public failure’, where neither markets nor the government sector succeed in providing the goods and services required to achieve ‘core public values’. He identifies seven reasons for public failure: 1) insufficient mechanisms to aggregate public values; 2) imperfect monopolies; 3) benefit hoarding; 4) scarcity of providers; 5) short time horizon; 6) reliance on ‘substitutability’, endangering resources and ‘the greatest public failure’; and 7) threats to basic subsistence and human dignity. Kanbur (2001) observes that ‘certain markets evoke popular discomfort, distrust and even outrage’. Society would not accept completely ‘efficient’ markets in certain goods like arms, drugs, toxic waste, child labour or body parts. ‘Obnoxious markets’ are characterised by extremity, agency and inequality. The more extreme the outcomes of a transaction, the greater the distance between the market actor and the persons bearing the consequences, and the greater the inequality of market relations, the more Commonwealth Governance Handbook 2013/14 98
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