Public Management and Administration - Owen E.hughes

84 Public Management and Administration
argues that individuals should be left to make economic decisions for themselves,
while the Left believes that only collective action and ownership or
intervention by the state can solve the social problems and inequalities thought
to be inherent in capitalism. It is generally the case that leftist regimes have
favoured greater government involvement in production while rightist regimes
have favoured less.
Political debate usually takes place some distance from each end of the continuum;
however, at different times in Western societies over the past two centuries,
the pendulum of state involvement has oscillated between different
points on it. During that time period there have been several main phases of
government involvement in society.
The laissez-faire society
For present purposes, the late eighteenth century is a reasonable starting point
for discussing the role of government in mixed economies. This was the final
stage of mercantilism, a time in which governments were intimately involved
in the minutiae of the economy. Regulations were especially directed at developing
the wealth and power of the nation by restricting external trade, but they
also entailed internal regulations addressed to national purposes. The general
aim was to use government to further the economic ends of the nation, but by
a set of ad hoc decisions rather than a clear, consistent programme. The mercantilist’s
role for government was large and intrusive; in other words, the
political part of society was to dominate the economic.
As a reaction against this kind of society, Adam Smith wrote The Wealth of
Nations in 1776, in which he argued, in addition to advocating free trade
among nations, for a greatly reduced role for government. According to Smith
(1976, pp. 208–9), the ‘duties of the sovereign’ – in other words, the role of
government – were as follows:
First, the duty of protecting the society from the violence and invasion of other independent
societies; secondly, the duty of protecting, as far as possible, every member of
the society from the injustice or oppression of every other member of it, or the duty of
establishing an exact administration of justice; and thirdly, the duty of erecting and maintaining
certain public works and certain public institutions, which it can never be for the
interest of any individual, or small number of individuals, to erect and maintain; because
the profit could never repay the expense to any individual or small number of individuals,
though it may frequently do much more than repay it to a great society.
There are several key ideas here about the role of the public sector, including
the beginnings of the theory of public goods.
Smith certainly envisaged a smaller role for government than that in place at
the time. The first duty – that of defence – has always been a government role,
even the main reason why governments exist at all. The second duty – to provide
a system of laws – has two main aspects. It is an extension of the defence