The New Governance and the Tools of Public Action: An Introduction

In economic life the possibilities for rational social action, for planning, for reform--in short, for solving problems--depend not upon our choice among mythical grand alternatives but largely upon choice among particular social techniques ... techniques and not "isms" are the kernel of rational social action in the Western world. (1) Far-reaching developments in the global economy have us revisiting basic questions about government: what its role should be, what it can and cannot do, and how best to do it. (2) INTRODUCTION: THE REVOLUTION THAT NO ONE NOTICED A fundamental re-thinking is currently underway throughout the world about how to cope with public problems. (3) Stimulated by popular frustrations with the cost and effectiveness of government programs and by a new-found faith in liberal economic theories, serious questions are being raised about the capabilities, and even the motivations, of public-sector institutions. Long a staple of American political discourse, such questioning has spread to other parts of the world as well, unleashing an extraordinary torrent of reform. (4) As a consequence, governments from the United States and Canada to Malaysia and New Zealand are being challenged to reinvent, downsize, privatize, devolve, decentralize, deregulate and de-layer themselves, subject themselves to performance tests, and contract themselves out. Underlying much of this reform surge is a set of theories that portrays government agencies as tightly structured hierarchies insulated from market forces and from effective citizen pressure and therefore free to serve the personal and institutional interests of bureaucrats instead. (5) Even defenders of government among the reformers argue that we are saddled with the wrong kinds of governments at the present time, industrial-era governments "with their sluggish, centralized bureaucracies, their preoccupation with rules and regulations, and their hierarchical chains of command." (6) Largely overlooked in these accounts, however, is the extent to which the structure of modern government already embodies many of the features that these reforms seek to implement. In point of fact, a technological revolution has taken place in the operation of the public sector over the past fifty years both in the United States and, increasingly, in other parts of the world; but it is a revolution that few people recognize. The heart of this revolution has been a fundamental transformation not just in the scope and scale of government action, but in its basic forms. A massive proliferation has occurred in the tools of public action, in the instruments or means used to address public problems. Where earlier government activity was largely restricted to the direct delivery of goods or services by government bureaucrats, it now embraces a dizzying array of loans, loan guarantees, grants, contracts, social regulation, economic regulation, insurance, tax expenditures, vouchers, and much more. What makes this development particularly significant is that each of these tools has its own operating procedures, its own skill requirements, its own delivery mechanism, indeed its own "political economy." Each therefore imparts its own "twist" to the operation of the programs that embody it. Loan guarantees, for example, rely on commercial banks to extend assisted credit to qualified borrowers. In the process, commercial lending officers become the implementing agents of government lending programs. Since private bankers have their own world-view, their own decision rules, and their own priorities, left to their own devices they likely will produce programs that differ markedly from those that would result from direct government lending, not to mention outright government grants. Perhaps most importantly, like loan guarantees, many of these "newer" tools share an important common feature: they are highly indirect. They rely heavily on a wide assortment of "third parties"--commercial banks, private hospitals, social service agencies, industrial corporations, universities, day-care centers, other levels of government, financiers, construction firms, and many more--to deliver publicly financed services and pursue authorized public purposes. …