Why Public Administration

In recent years, there has been much criticism of organizations in general and governmental organizations in particular. Economists (and others) argue that human behavior in organizations, like all other human behavior, is driven by self-interest, and hence appropriate mechanisms are required to link that self-interest, expressed in the profit motive, to broader social goals and needs. The only effective mechanisms for achieving this linkage, their argument continues, arc economic markets, Adam Smiths "invisible hand." For this reason, it is said, the activities of society aimed at satisfying its economic needs, as well as its needs for public order and for various kinds of public goods and services, should be satisfied, to the maximum degree possible, through privately owned business firms operating in competitive markets. Privatization is the target to be aimed at. I find this argument badly flawed. First, its major motivational premise is simply false. Human beings make most of their decisions, not in terms of individual self-interest, but in terms of the perceived interests of the groups, families, organizations, ethnic groups, and national states with which they identify and to whom they are loyal. The "invisible hand" is attached much more strongly to organizational identification than to a more narrowly defined self-interest. As a consequence, the belief that the profit motive is the only reliable motive for welding organizational actions to social needs is wrong. What is essential to make the weld is that organizations must use only those resources that they can induce society (through the market or through democratic processes) to appropriate to them in exchange for their services. Second, if identification, and not economic self-interest in the narrower sense, is the driving motive in organizational behavior, then the argument that privatization will always (or even usually) increase productivity and efficiency is equally wrong. Such empirical evidence as we have on the relative efficiency of private and public organizations shows no consistent superiority of one over the other. It does show consistent and predictable inefficiencies of organizations when they arc not subjected to the discipline of the na in their external dealings (for example, in conditions of monopoly, or when subsidies are available and manipulable). And evidence also shows that the goals of organizations will be strongly influenced by the sources of their revenues and by the ways in winch their productivity is measured. Of course, it is not enough that a society work efficiently and productively, We also expect a society to distribute goods and services fairly, however vigorously we may debate and disagree about the criteria of fairness. …