| Review of: |
Public administration and public management: The principal-agent perspective by Jan-Erik Lane
Routledge, 2005
Pages: 292. £75 |
| Reviewed By: |
Peter John |
| Reviewed in: |
Public Administration |
| Date accepted online: |
14/01/2008 |
| Published in print: |
Volume 85, Issue 03, Pages 857-883 |
Reviews
Jan-Erik Lane has produced a series of broadly-scoped books on public administration and public management, such as The Public Sector (2000a) and The New Public Management (2000b) as well as a host of other volumes on a wide range of big topics in the social sciences, such as institutions, culture and religion, just to name a few. His books are often characterized by theoretical exposition backed up by examples and evidence. The attraction is that these books can be used both as textbooks on public management courses, where there is dearth of reading with theoretical import, and for academic experts interested in the argument. The other advantage is that he treats formal approaches to public administration seriously, but without going down the road of supporting neo-liberal reforms. Like other European public choice theorists, such as Dowding and Dunleavy, he uses models as a toolkit to unpack thorny problems of collective action, public responsiveness and efficiency in the public sector, rather than as a programme for government. The drawback is that these books often cover the ground too broadly, and the readings are too limited. Public Administration and Public Management fits into this mode of analysis and delivery. It aims to 'to suggest an entirely new perspective on the public sector ' (p. xi), namely the principal-agent approach. Readers of Moe, Huber, Weingast and the many other proponents of the principal-agent approach will probably splutter at this point and say that it has all been done long before and much better. However, it makes sense to give Lane free reign to his ambition and see what he says. Like others, he characterizes the principal-agent approach as a separation of interests and an asymmetry of information between those who command (the principal) and those who receive commands (the agent), which can occur inside a bureaucracy or in other relationships, such as between governments and contracted out service units. The prediction of the principal-agent model is that principals do not get their way because agents wish to be slack and in addition have access to information that would be useful for principals to exercise control over them. However, there may be ways, such as through institutional reform, whereby principals can get ahead in spite of this inbuilt disadvantage. Lane then applies the framework to relationships in the public sector, the economic reasons for government, the issue of rationality in government, the role of law in public administration, the Chicago school of reform in the public sector, the problem of delivering services and of contracting out, enterprises in public ownership, insurance, and the reform of the public sector. What partially justifies the claim of originality is that the North American studies are more focused on particular problems of principals and agents, such as how Congress controls executive agencies, whereas Lane addresses the broad questions of the organization, nature and management of the public sector. He takes principal-agent models seriously as he argues there are many reasons that efficiency or public ends may not be met because of the power of agents, such as bureaucrats when dealing with politicians. Naturally, in the background are the reforms of the New Public Management, which seek to address the problem by placing new constraints and competition upon bureaucrats in place of what are seen as inefficient political and hierarchical structures. But Lane argues that reforms based on privatization and contracting are similarly flawed, partly because they create a new set of principal-agent relationships that are just as hard for principals to monitor. The book, then, gives the reader a balanced perspective. Another of the book's strengths is the many examples of management practice that ground the theory; examples that are useful for students. What is missing, however, is a full discussion of the North American literature. If the author had included this the book would appear more as a dialogue with an existing body of work rather than as working things out from first principles. The first principles material is interesting, however, and the formal models are easy to understand, being mainly conveyed by diagrams, which show some of the non-linear aspects of the relationships, such as the different interaction between wage and effort for principals and agents (p. 55). Overall, I am not sure that Lane achieves his aim of setting out a new perspective, mainly because the perspective is not new, the theory is not as advanced as the extant literature, and the evidence is not applied systematically. But the principal-agent framework does help bring together what could have been a potted account of contemporary public administration and public management.
