P u b l i c g o o d s : F r om ma r k e t e f f i c i e n c y t o d emo c r a t i c e f f e c t i v e n e s s discomfort or ‘obnoxiousness’. Obnoxious markets demand judicious regulation, plus measures to address the underlying issues directly – cushioning extremity using safety nets, strengthening agency through information and ameliorating inequality through redistribution. Haglund (2010) examines the case for market efficiency versus state inefficiency in relation to the privatisation of two key monopolistic sectors: water and energy. She finds the promise of market efficiency to be both theoretically and empirically doubtful, arguing that well-designed public institutions may be no less efficient and are likely to be more effective (2010: 29). Economic efficiency and costeffectiveness are the principles driving privatisation. Within a global ‘competition society’, cost-cutting is the key tool for achieving efficiency. However, cost-cutting can seriously threaten service quality and cause key aspects of the service to collapse. The drive for efficiency can lead to too much competition, resulting in overcapacity, inequity and forms of exclusion that are difficult to legitimise politically or socially. Providers will compete to capture lucrative high-end markets while exiting less profitable sectors – rural transport, health care services and health insurance markets provide examples where politically and socially undesirable outcomes have been observed. Alternative conceptions – from the ‘German historical school’ to a new theory of public goods A historical analysis (Pickhardt, 2005; 2006) enables the recognition of alternative economic approaches to public goods and public action. An alternative economic tradition is associated with development economics and policy, theories of uneven development, evolutionary economics and the economics of innovation. The so-called ‘German historical school’ of economics and public administration rejected the classical emphasis on individuals and theoretical market efficiency as an approach that privileges precision over relevance: it ‘would rather be accurately wrong than approximately correct’ (‘The Other Canon’, no date). The ‘other canon’ is more interested in social change, national development and social reform than in theoretical equilibria, and relates the economy to questions of ethics, psychology, customs and law. Pickhardt (2005) highlights the importance of ‘Gemeinsinn’, the ‘sense of community’ or ‘public spirit’, to this approach, noting that it underpins the social-market economy that is still important in continental Europe today. The German historical school regarded public benefit and cooperation as essential preconditions and supplements to the private economy. Individual self-interest was counterbalanced by the needs of the nation as a whole, ‘and in the case of Knies also a sense for justice, propriety or fairness’ (Pickhardt, 2005: 278). A historical and comparative view of economic thought highlights the absence of an a priori consensus about how public goods should be approached. Building on discussions about global public goods, new public goods theory suggests an approach comprising three main dimensions: i) democratic procedures; ii) protection and provision of public goods; and iii) concern for rights and equality. Moving away from efficiency-oriented market formalism enables us to turn towards constitutional questions, drawing upon recent innovations in global public goods theory to help think about public policy, regulation and co-operation. A new theory of public goods brings together and balances three main faces of ‘publicness’: i) Democratic publicness of decision-making, involving accountability and active participation ii) Fairness and equity, reflected in system-wide availability and accessibility without discrimination. This fits well with Kanbur’s calls to ameliorate extremity and inequality (2001), addressing questions of essential need and rights-based approaches to public goods and services iii) Publicness of benefits, guaranteeing safety, acceptability and quality of services. This includes educative, preventive and promotive aspects, together with the criteria of sustainability New public goods theory draws upon the theoretical work of Kaul and others on global public goods (Kaul, 2001; Kaul et al, 2003; Kaul, 2013). Figure 1 provides a diagrammatic illustration of new public goods, comprising three faces of ‘publicness’. These criteria must be ‘triangulated’, meaning that a balanced approach must include participatory democracy, equity in enjoyment of services and system-wide quality, cost, sustainability and safety considerations. Democratic participation is necessary but insufficient. The principle of societal equity and scientific and technical consensus on the public interest and harm prevention (safety and quality) are also needed. Knowledge, information and educative efforts are crucial to help the public reach decisions where values and interests conflict, and to maximise the value of public investments. Figure 1: What is ‘public’? New public goods approach Commonwealth Governance Handbook 2013/14 99 A new public goods approach to the ‘publicness’ of public goods PC Publicness in consultation Available and accessible / equitable goods and services Adapted from Kaul, 2001: 14–15 PB Publicness of benefits Acceptable quality, safe, preventive and promotive PD Publicness in decision making Democratic and informed
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