PERFORMANCE INDICATORS AND MANAGEMENT PERFORMANCE IN NATIONALIZED INDUSTRIES

Tracing the links between managerial performance and performance indicators reveals the limited quality of information provided by those indicators. There are two reasons. First, aggregate indices in their composition and assumption provide only a starting point for analysis and evaluation. Second, the political context inhibits publication of informative indicators of the kind which a competent organization might use for internal purposes. Part of the problem resides in misapplication of a private sector analogy. We conclude that both understanding of the nature of managerial performance in nationalized industries and conditions for working towards a more appropriate evaluation have been largely lacking in the public forum.     

AUDITING THE EFFICIENCY OF NATIONALIZED INDUSTRIES: ENTER THE MONOPOLIES A MERGERS COMMISSION

For over thirty years, there have been no arrangements for the systematic audit of the efficiency and effectiveness of British nationalized industries. In November 1981, the Government announced their intention to introduce such audits on a regular, programmed basis and assigned the responsibility to the Monopolies and Mergers Commission. Using two of the Commission's reports, this essay contests the opinion that efficiency audits, as distinct from effectiveness audits, require pre-determined performance criteria. But whilst recognizing both the advance in Whitehall thinking represented by the new arrangements and the quality of the audits so far completed by the Commission, the essay questions the decision to assign this function to the Commission, rather than the Comptroller and Auditor General, and expresses doubts about the extent to which the new arrangements will contribute to proper parliamentary control and accountability in the case of public enterprises.     

NATIONALIZED INDUSTRIES AS ORGANIZED INTERESTS

The nationalized industries are usually regarded as bodies to be 'controlled' in some way by governments; but they have now developed sufficient autonomy to be able to exert influence on their own behalf within the political system. The emergence of the Nationalized Industries Chairman's Group is one aspect of their activity; the separate industries are also more outspoken in their own concerns. These developments deserve some consideration on both political and economic grounds. In the end the justification lies in their need to compete politically with other industrial interest groups. In the contemporary polity no one else will act for them, and so their leaders have a right, and perhaps a duty, to sustain their industries by 'pressure-group' tactics. Clearly the industries can be seen as 'state corporatist' bodies in the usual conceptualizations, but the development of political autonomy could contribute to a more open structure of the public sector.     

THE DYNAMICS OF POLICY CHANGE: WBBYING AND WATER PRIVATIZATION

The privatization of the water industry was one of the most controversial and turbulent privatizations of the 1980s. The government undertook the project somewhat reluctantly, then the first plans had to be withdrawn, but eventually, the privatization of the industry was successfully completed in 1989. In this article, we first set out to provide a thorough account of the process of privatizing water, based on primary sources and exhaustive interviews. In doing so, we identity some major problems of established theories of British policy making: the process of water privatization clearly does not conform to any single model of policy making. Instead, individual 'episodes' of the policy process conform to different models. Arguing that existing theories of British policy making may have focused too narrowly on routine decision-making processes, we propose that a theory of the transformation of policy communities is required to understand the dynamics of radical policy change in Britain.     

ISSUE NETWORKS AND THE RESTRUCTURING OF THE BRITISH AND WEST GERMAN COAL INDUSTRIES IN THE 1980s

This article uses policy network theory to examine comparatively the politics of the British and West German coal industries in the 1980s. It considers the reasons why policy in Britain was directed at restructuring and in West Germany at preserving the industry's existing structure. It focuses on the dynamics of network stability and change, and the growing importance of the international dimension in domestic policy making, a factor overlooked by network theory. The article contrasts the Thatcher and Kohl governments which, though both avowedly committed to free-markets, pursued very different policies in the coal industry. The article concludes with a brief assessment of network theory.     

WILL THE PRIVATIZATION OF PUBLIC ENTERPRISES SOLVE THE PROBLEM OF CONTROL?

The Government's privatization programme has acquired such momentum that hardly any public enterprise is exempt from action or proposals. Evaluation of the programme must recognize the diversity of privatization policies, and the tensions inherent within their objectives. Ideological motivation has been supported by the inability of policymakers to design a viable framework of economic and financial control over public enterprises. This has led to a view that it is impossible to manage business efficiently within the public sector, the constraints of which can only be escaped by ‘setting the enterprise free’. However, decisions now will close future options, only be escaped and may be prohibitive to reverse. A list of unanswered questions remain about future relationships between hybrids and governments, the costs and benefits of the regulatory systems which will replace public ownership, and the balance between public policy and private interests. Can the market succeed where the state has been judged to have failed?     

COMPETITION OR MONOPOLY? COMPARING PRIVATIZATION OF LOCAL PUBLIC SERVICES IN THE US AND SPAIN

Differences in national traditions of public intervention, institutional arrangements and public service markets make local public services an area of great diversity. In this paper we undertake a comparative study of how local governments arrange for delivery of water and waste services in the US and Spain. We find levels of privatization are higher in Spain than in the US. We review organizational reform in the two contexts and compare service delivery data using national surveys from each country. We find lower and less stable privatization in the US stems in part from adherence to public choice emphasis on the benefits of market competition over public monopoly. By contrast, Spanish municipalities reflect an industrial organization approach, and create hybrid public/private firms which benefit from both market engagement and economies of scale available under monopoly production. We conclude that managing monopoly may be more important than competition in local service delivery.     

VIOLENCE AND THE COSTS OF HONESTY: RETHINKING BUREAUCRATS' CHOICES TO TAKE BRIBES

Explanations of bureaucrats' decisions to take bribes include accounts of incentives as well as expectations. However, there are further considerations in violent contexts, where refusal of bribes may have dire consequences. Yet, insight into this topic is limited. This article investigates how violence upholds bribery, through interviews with South African officials who enforce regulations in communities where gangs operate. The investigation shows that when citizens offer bribes to enable rule violations, this is a process of both temptation and threats: officials who refuse bribes face intimidation by both citizens and colluding colleagues. This illustrates how violence may function as a mechanism to enforce corrupt contracts between bureaucrats and criminal citizens. Through reducing costs in such settings, bribe‐taking is partly a strategy of social protection. This has implications for policy and suggests that, besides incentives and expectations, administrative reforms may benefit from ‘fixing the security’ of bureaucrats in violent contexts.     

RIVAL EXPLANATIONS OF PUBLIC OWNERSHIP, ITS FAILURE AND PRIVATIZATION

This article contrasts three types of explanation of three events – the initial nationalization of many British industries, mainly in the 1940s, the failure of most nationalized industries to be economically successful by the 1970s and the privatization of most of them in the 1980s and 1990s. Its first section summarizes briefly an ordinary historical account of each event as developed elsewhere at greater length (in Foster 1992). The second section considers Chicagoan and Virginian explanations of the same events; and whether they are consistent with the other historical explanations. It concludes that Chicagoan theories do not explain any of these episodes plausibly, except possible rail nationalization, but in that case it worked in any sense only over an implausibly long period. Virginian type explanations have greater power in explaining both nationalization and its so-called'failure'thereafter. It is more difficult to explain privatization satisfactorily in Virginian terms.     

APPRAISING THE NEW INSTITUTIONAL ARRANGEMENTS FOR PRIVATIZATION OF KOREAN STATE-OWNED ENTERPRISES

Privatization is a long-term and complex process involving changes in attitudes, values, perceptions, and mentality. The president of the Republic of Korea and line ministries are pursuing an ambitious course of privatization. Based on common research questions concerning privatization policy, this paper has two objectives: first, to review the past performance of South Korea's privatization policy, and second, to evaluate the new institutional arrangements for the privatization of state-owned enterprises designed by the current government.     

POLICY MAKING AND THE DEMONSTRATION EFFECT: PRIVATIZATION IN A DEPRIVED REGION

The aims of public policies are not always clearly articulated by ministers. Further the aims that are stated may not reflect all – or indeed the most important – aims. In some cases declared policy aims bear little relationship to the real intentions of ministers in undertaking an initiative. In other cases policy decisions are intended as symbolic statements, demonstrating government attitudes on a range of issues beyond the specific matter under consideration. These ideas are explored in the context of the privatizations of Harland and Wolff and Shorts, two major industrial government-owned companies in Northern Ireland. The article concludes that government sought to use the privatizations as a symbolic statement, namely to demonstrate that the heavy dependence on the public sector within Northern Ireland had to be reduced.     

MARKETS OR POLITICS? THE DETERMINANTS OF LABOUR RELATIONS IN A NATIONALIZED INDUSTRY

This article examines 'market' and 'political' explanations for the nature of nationalized industry labour relations, using British Rail as a case study. The market perspective suggests that market insulation generated 'cosy' industrial relations since it allowed managers to acquiesce in restrictive practices. More robust labour management recently is the result of greater exposure to market forces. This explanation is rejected because BR was exposed to competitive pressures before the Thatcher era, and because there is no simple relationship between market forces and managerial actions. Instead political uncertainty is the primary determinant of the state of industrial relations. In the 1970s British Rail management and unions formed a 'tacit alliance' to limit the potential damage of government interventions. This alliance has broken down in the 1980s not primarily because of market pressures but because government interventions have become more explicitly concerned with industrial relations.     

PRIVATIZATION UNDER MRS. THATCHER: A REVIEW OF THE LITERATURE

Public Administration not only publishes original articles but it also seeks to provide material which will be useful to teachers and students alike. In order to strengthen this facet of the journal, the editors are introducing an occasional series of articles which will review the current state of the literature in the various sub-fields within the subject of Public Administration. This contribution by David Marsh reviews the 'state of the art' on privatization in Britain. The objective is to draw together the extensive literature in a systematic fashion by identifying key texts and the main research findings. His review examines the origins of privatization, the several meanings of this term, the objectives of government policy, and assesses the extent to which objectives have been realized. He also draws attention to lacunae in the literature and important areas requiring further research.
The editors would welcome suggestions for future articles in this series. Any prospective author should contact the editors to discuss the proposed topic and, where feasible, we will provide assistance by obtaining books for review.     

THE PRACTICE OF CONTRACTING IN PUBLIC PRIVATE PARTNERSHIPS: TRANSACTION COSTS AND RELATIONAL CONTRACTING IN THE IRISH SCHOOLS SECTOR

This paper explores the practice of contracting in public private partnerships (PPP). Focusing on the first Irish PPP to provide secondary schools, it draws on perspectives from transaction cost economics and socio‐legal theory. It finds that the ex ante contractual setting was undermined by pushing forward with the PPP before conducting an adequate level of project appraisal. It explores the experiences of key stakeholders in the ex post contracting stage and concludes that the conduct of contracting practice was not characterized by the shift to relational contracting expected under PPP. Whereas this approach to contractual governance did not hinder the development of broadly trusting relations between the client and contractor, this was not manifest in terms of relations between the contractor and schools. A significant degree of conflict was evident in some schools‐contractor relations, something which can be attributed to sources of transaction costs, including incomplete information, bounded rationality and uncertainty.     

‘THE GREAT DOCK AND DOLE SWINDLE’: ACCOUNTING FOR THE COSTS AND BENEFITS OF PORT TRANSPORT DEREGULATION AND THE DOCK LABOUR COMPENSATION SCHEME*

Deregulation of the port transport industry was predicted to bring much needed jobs and investment to Britain's ailing dockland areas, lower prices for port users and consumers, and improved international competitiveness. These benefits were anticipated to far exceed any attendant costs. But the benefits have failed to materialize, largely because the government failed to appreciate the non-competitive structure of the industry or the effects of the National Dock Labour Scheme on the economic performance of the ports, while the costs were substantially underestimated. Consequently, the costs of deregulation have exceeded the benefits. As in the past, current industrial policy has been dictated by the apparent‘labour problems’of the docks, but the new system of deregulation, founded on the mass redundancy of exregistered dockers and a re-assertion of managerial prerogative, has exacerbated rather than resolved the underlying structural weaknesses of the industry. In particular, deregulation has ushered in a new era of casual employment on the docks. Unless, or until, public policy addresses these problems the costs of deregulation will continue to accumulate.     

EXPLAINING THE PRIVATIZATION BOOM: PUBLIC CHOICE VERSUS RADICAL APPROACHES

Public choice theories of bureaucracy, especially the budget maximization thesis, have been influential in stimulating the drive towards privatization in Britain and the USA. But these accounts are strangely silent about why changes in state agency practices have come about under'new right' governments. They apparently attribute the scope of change entirely to'virtuous' political direction overcoming previously inherent features of bureaucratic behaviour and democratic politics.
By contrast, a radical reconstruction of instrumental models of bureaucracy explains the privatization boom in terms of the primacy of bureau-shaping motivations in the welfare functions of policy-level bureaucrats. Privatization is seen as a development of earlier strategies (such as the separation of control and line agencies, the creation of'dual state' structures, and automation) by which the class interests of senior bureaucrats have been advanced at the expense of rank and file state workers and service recipients. An examination of divergences in the internal and social costs of public agency functions explains why legislators and policy-level bureaucrats (especially in control agencies) push ahead with the'inappropriate' privatization of public service delivery systems where overall social welfare is reduced.     

TRANSACTIONS COSTS IN RURAL DECISION‐MAKING: THE CASES OF FUNDING AND MONITORING IN RURAL DEVELOPMENT IN ENGLAND

Public domain decisions in rural England have become more complex as the number of stakeholders having a say in them has increased. Transactions costs can be used to explore this increasing complexity. The size and distribution of these costs are higher in rural areas. Grouping transactions costs into four – organizations, belief systems, knowledge and information, and institutions – two of the latter are evaluated empirically: growth in the bid culture, and monitoring and evaluation. Amongst 65 Agents of Rural Governance (ARGs) in Gloucestershire, both were found to be increasing over time, but those relating to finance were a greater burden than those of monitoring: the latter can improve ARG performance. Increasing transactions costs in rural decision‐making appears to be at variance with ambitions of achieving ‘smaller government' through, for example, the Big Society. Smaller government is likely to be shifting the incidence of these costs, rather than reducing them.