Public Management and Administration - Owen E.hughes

Neoclassicism
Since the mid-1970s there has been a movement away from the larger, implicitly
collectivist role of government which had been present for most of the century.
Although the extent of change does vary between countries, there
certainly was a ‘turning of the tide’ (Friedman and Friedman, 1980). Within the
ranks of governments, among policy advisers, and in key parts of the bureaucracy,
there is now a dominance of neoclassical economics and what is sometimes
called economic rationalism. There are four aspects to this theory:
● The assumption of individual rationality Individuals can be assumed to
prefer more of something rather than less and will act rationally in pursuit
of goals, at least in the aggregate. Individuals are assumed to be the best
judges of their own (economic) interests. They should be given as much
freedom as possible to develop their own strategies for achieving them.
They are capable of deciding how much of any particular good or service
they want, and how much they are prepared to pay for it.
● The elaboration of models from this assumption From the first assumption,
quite elaborate empirical models can be constructed, especially by
using techniques developed in rational choice and/or game theory. The
application to politics is also called public choice theory.
● A maximum role for market forces Economic rationalism includes the
view, derived from models, that private markets are both efficient and selfregulating.
Services or goods able to be provided by markets, should be.
● A minimum role for government Government interference with the selfregulating
mechanism of the market will be inherently inefficient. It should,
therefore, be minimized. This is the obvious corollary to providing for
a maximum role for market forces.
Such views captured the economics profession from the mid-1970s and, soon
afterwards, governments and the bureaucracy as well. The election of the
Thatcher government in Britain in 1979 and the Reagan government in the
United States in 1980 saw attempts to introduce many ‘small government’ policies.
This was followed by other countries.
Government makes a comeback?
The Role of Government 87
It could be argued that the election of the Clinton administration in the United
States in 1992 signalled a return to governmentalism after twelve years of antigovernmentalism,
or that Major or Blair in Britain were less extremist and confrontationist
than was Thatcher. However, the general attitude to reducing
government and curbing the power of the bureaucracy seems more entrenched
than political changes would suggest. It is also notable that Leftist parties in