Transcending New Public Management: The Transformation of Public Sector Reforms by Tom Christensen & Per Laegreid

Author:Tom Christensen & Per Laegreid [Christensen, Tom & Laegreid, Per]
Language: eng
Format: epub
ISBN: 9780754671176
Goodreads: 2127849
Publisher: Routledge
Published: 2007-05-28T00:00:00+00:00

Source: Marcussen (1999, 389)

Figure 7.3 outlines, at a quite general level of analysis, a reform path – an ideational life-cycle – which seems to be indicative for the diffusion and translation of central banking reform ideas in the four countries discussed in this chapter. The point of departure is a situation in which macroeconomic policy-makers consider ‘integrated central banking’ to be the natural state of affairs. The broadly shared consensus that the central bank is a multi-purpose institution which is fully integrated into the rest of the state apparatus amounts to what can be characterized as an ideational equilibrium. This is a situation in which the basic functions, relations and structures of the central bank are essentially uncontested and taken for granted. Of course, as the Danish and Australian cases illustrate, such a consensus about institutional forms might de facto be in direct conflict with the formal statutes of the central banks in question. But for the actors concerned, there is typically no perceived misfit between the formal structures of the central banks and their shared beliefs. As long as central bank behaviour is in full accordance with shared norms, the formal structures are secondary. During the 1970s, a defining characteristic of central banking in these four countries was that politicians not only thought it was possible to directly intervene in monetary policy-making, but also that it was their duty as responsible politicians to make monetary policy support their general political objectives of full employment, international competitiveness, social security and so on.

Such broadly based consensus seems to be quite robust. The ideas underlying public management structures, functions and relations do not very often go through paradigmatic changes. Therefore, it normally takes a change in government in combination with a generally perceived crisis for actors to begin to look for new ideas. In New Zealand, Australia and Denmark these conditions were already present in the early 1980s. In Sweden it took a further decade before a serious currency crisis forced the Riksbank governor to withdraw the kroner from the European Exchange Rate Mechanism. As a result of the perceived crises in the four countries, the newly elected governments were suddenly thrown into what can be called an ideational vacuum. This is a situation in which old ideas have been given up and in which the government and other decision-makers are looking around for new ideas to help them make sense of what seems to be a complex and unruly reality. Since New Zealand was a first-mover, much of the inspiration for central bank reform in that country seems to have come from purely theoretical sources. The time-inconsistency literature (Kydland and Prescott 1977) appears to have played a role in its move towards central bank independence, while the principal-agent literature seems to account for the model according to which the governor signs a performance contract and consequently is held personally responsible for achieving the inflation target.2 Thus, it may have been the case that an epistemic community of monetary experts inside and outside the country acted as ideational entrepreneurs.

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