New Public Management

Conceptual Overview

New public management is based on two types of theories: new institutional economic theory and management theory, which point in rather different directions. New institutional economic theory, like public choice and principal-agent theory, focuses on elements of NPM reforms connected to centralization, coordination, and control, and the use of contracts as central instruments of coping with devolution, so that deregulation and reregulation are connected. One central idea is to “make the managers manage” using incentives to motivate them. Management theories, on the other hand, stress structural devolution, decentralization, and delegation. Here the maxim is “let the managers manage,” that is, that managers should be empowered and have the freedom to choose appropriate means of fulfilling public goals. Worldwide, the management and decentralization elements of NPM have generally been stronger than the centralizing ones.

New public management has two main meanings. First, it comprises an ideology or set of ideas about how to organize and run public-sector organizations. In this respect, it is connected to a neoliberal ideology of “rolling back the state” and to economic theories inspired by this ideology. NPM as an ideology has its roots in Anglo-American countries, but has spread all over the world, helped partly by international organizations like the OECD, the World Bank, the International Monetary Fund, and the European Union, which have functioned as “concept entrepreneurs.” In the second sense, NPM means a set of more practical reforms, which vary considerably from one country to another, because different countries have chosen to implement different elements of NPM, and the extent of their application also varies.

So how has it come about that one reform ideology produces both similarities and such variation in implementation and practice? In order to answer this question, one should consider NPM ideology in the context of theories of myths and symbols. It has come to be taken for granted that NPM provides the answers to the problems of modern public organizations, such as how to make them efficient and effective. Owing partly to its espousal by international and national organizations, NPM has become ideologically dominant and has spread rapidly around the world, exerting strong environmental pressure on different countries. The so-called TINA (There Is No Alternative) principle has prevailed. Moreover, there are significant political-symbolic victories to be won by claiming that NPM has been a success everywhere. NPM has thus become decontextualized and is generally deemed appropriate for any country or policy sector.

...