Barely managing: on what’s missing from left political economy

by Sahil Dutta and Paul Gilbert

There’s a difference between policies and power. If a left-wing party wants to turn its manifesto promises into political practice it needs to construct the capacity to do so. The gap between a minister’s policy aspiration and the lived reality of a worker or service user is vast, and composed of a chain of different institutions, expertise and personnel. This gap corrupts the democratic ideal that elected politicians make policies, while civil servants merely carry them out.

Connecting these disparate parts of the British state are not the Machiavellian scheming of Yes Minster bureaucrats. Instead, it’s the managerial reforms that sought to rationalise the state bureaucracy that must be challenged. It’s here, in what Christopher Hood called the tools of New Public Management (NPM), that neoliberalism is deeply encoded.

These techniques, used to design, cost and evaluate state action are so embedded in state administration, that it’s perhaps no surprise that the Labour Party’s own briefing on ‘Alternative Models of Ownership’ says so little about alternative, democratic forms of management. While it (rightly) highlights the importance of ‘democratising’ ownership, it depicts management as a simple corollary of ownership. Here, the very real ills which beset privatised services and infrastructure are simply laid at the door of privatisation.

But reversing decades of privatisation will not produce the return of a mythic “public service ethos”. Reforming ownership is not enough, for a Left political economy to succeed, managerialism must matter too. 

Reform of the state’s managerial tools would mount not only a direct challenge to the status quo, but also to the inheritance of New Labour. The last Labour government did not substantially transform inequities of power in the private economy. Its most significant legacy was instead a restless innovation in public governance that saw quangos, consultants and managerial specialists become ever more central to the design and delivery of the public sector. 

In doing so New Labour ramped up a trend for centralising state control that began with Edward Heath and grew under Margaret Thatcher. The success of the New Right assault on the collective sectors during the 1980s, that is now often associated with fiscal retrenchment, depended, in fact, on government constructing the capacity to force through its changes at an administrative level.

Thatcher’s government especially worked on substituting the autonomy of professions whose authority and expertise could resist their programme of change - teachers, doctors, civil servants, social workers, local government - for control at a distance by a thickened clot of managers. As Michael Heseltine, then secretary of state for the environment, put it a year after Thatcher took power: “The management ethos must run right through our national life - private and public companies, civil service, nationalised industries, local government, the National Health Service”. 

But Thatcher didn’t simply oversee the development of an increasingly centrally managed state. The specific techniques that made this ‘neoliberal’ revolution possible matter. And key to this struggle was the development of NPM: a regime of governance where private sector values of efficiency and cost-saving are forced into public sector organisations. Its advocates hoped that by driving ‘private sector values’ into the public sector, NPM would ramp up efficiency. Critics warned that valorising efficiency was nothing more than a pseudo-intellectual justification for cutting costs, and would inevitably mean slashing the crucial services that many relied on. In the end, NPM delivered the worst of both: More cuts and higher costs. 

Years of successive reforms saw public sector costs spiral. State spending on quangos quadrupled from 1980-2010 to over £40 billion in real terms. This was part of a trend that saw the administrative costs of UK civil departments rise by 50% over Thatcher’s time in office and substantially again under Blair. By 2010, the administrative cost of running the British state neared £30 billion a year (excluding military spending), proof that whatever the supporters promised and critics feared, NPM did the very opposite of ‘slashing the state’. 

But straightforwardly criticising NPM for failing to deliver on its promise of ‘a government that works better and costs less’, risks overlooking a more significant legacy: the transformation of the exercise of political economic power in the public sector.

In academies and free schools, foundation trust hospitals, outsourced services, quango-run utilities, or the flourishing of targets and audit culture, NPM has transformed government. Put simply, the managerial state now lacks the capacity to democratically run public services, even the ones it owns. 

To be clear, we’re not suggesting that vital public services and infrastructure should be privately owned. The manifesto proposals to bring private rail companies back into public ownership, and replace our ‘dysfunctional’ water system with a network of regionally-owned water companies are well made. These utilities ‘taken out of democratic control’ through privatisation have cost members of the public – and the state – more, while rewarding private owners handsomely. 

In these cases, ownership itself (and the compulsion to appease rapacious shareholders) is a key problem to which Labour needs to provide a solution. Similarly, there is no doubt that any hope of a rebalanced political economy needs greater infrastructure investment. But re-nationalisation of – or increased public investment in – infrastructure is only the beginning, and privileging ownership reforms as a way out of neoliberalism is not enough to challenge entrenched NPM techniques.

How should the corrosive effects of NPM be tackled then? In identifying private market relations as the core of a regressive political economy, critics of NPM see a solution in either rejecting the private sector “ethos” or injecting “democratic principles” into the organisation of the public sector. But viewing headteachers, chief executives and vice-chancellors as if they dreamed of one-day realising large executive compensation packages linked to the ‘share value’ of their virtual corporations is itself misleading.

Leaving aside the constant increase in private concessions and subcontractors across the public sector, this is not the case. There are no shareholders, no dividends, no impatient financiers demanding short-term gains to their ‘shareholder value’. Managers in public services do not manage ‘as if’ their institutions were private, shareholder-owned entities merely because some agents of the state want to privatise them.

It is not the supposed ‘market principles’ that make tools of NPM damaging for a Left political economy, it is the tools themselves. Critics too easily collapse these into the triumph of so-called free-market fundamentalism associated with Hayek and Friedman. Yet the focus on targets, cost-benefit analysis, outsourcing and audit culture stems from a very different intellectual lineage to that of neoliberal theory. It is the RAND institute and the likes of Robert McNamara and Alain Enthoven who have been central to the development of contemporary public sector managerial knowledge, not the Mont Pelerin Society.

In contemporary Britain, the reproduction of NPM has become an end in itself in the public sector. Consider the list of training courses recently made available to senior academics and professional services staff at a large, research-intensive university in the Midlands: ‘Essential guide to managing at the university’; ‘Management communication’; ‘Management for efficiency and effectiveness’; ‘Managing performance’; ‘Managing projects in the organisation’; and the malignantly tautological ‘Understanding the management role to improve management performance.’ 

The entrenchment of a well-remunerated cadre empowered to manage – to evaluate, compensate and castigate performance according to a set of quantified criteria – becomes a self-referential and recursive process. As the organisational reforms fail to bring about the promised efficiency gains, managers (supported by highly-paid consultants) introduce further change, utilising an expanded set of increasingly tendentious quantifications in order to asymptotically capture organisational processes and roles. And then, more often than not, they move on, to ‘manage change’ elsewhere.

As Will Davies has noted, in contrast to the Left's concerted push for new approaches to economics, there has been a frustrating silence to date around the possibility of new Left approaches to management. The best of the current academic works are rightly critical, berating managers for excluding slaveholding, colonial expansion and other forms of ‘necrocapitalism’ from conventional histories of management. There are also numerous Foucauldian warnings about the dangers of ‘governing by numbers’, but this is not enough.

Similarly, the ambition of Left management must become something richer than prioritising stakeholder voice or labour representation on corporate boards. The challenge is to develop alternative techniques that allow for democratic accountability of public service professionals in such a way that prevents empowering distant technocrats as the ultimate arbiters of correct practice. This is no call to simply turn NPM red. Current managerial techniques have a neoliberal trajectory inscribed in their history.

Instead workers could take the lead challenging existing frameworks of accountability in their sectors. What is to stop nurses themselves partnering with Unison to create a fairer system of appraisal of their expertise for example? 

A return to the pre-NPM autonomy of civil servants and the professions is neither viable nor particularly desirable, given the class politics from which professional autonomy once drew its legitimacy. Moreover, in a left political economy organised around democratic ownership, there will still be management failure.

No perfect ‘process’ can ever be developed to deliver perfect outcomes. Yet change remains necessary and neither a continuation of NPM nor an ‘anti-neoliberal ethos’ will suffice.

Photo: thetaxhaven


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