Written by a leading academic of the left, who is now working in 10 Downing Street, ‘Motivation, Agency and Public Policy’ examines the theory and practice of ‘quasi-markets’ for public services. Melding theory with practical recommendations Le Grand takes on two themes: should government employees be assumed to be altruistic or self-interested, and how much choice should people have about the public services that government provides to them?
The book is based on the contention that the welfare state was built on the false assumption that all public servants were ‘knights’ (honourably committed to the public good), and that all members of the public were ‘pawns’ (submissive, ignorant and self-sacrificing). In fact, as Le Grand points out, public servants often behave like ‘knaves’ (interested only in personal gain), while consumers can, and in the case of the middle classes often do, behave like ‘queens’ (autonomous and demanding). The object, then, is to design a system which helps the staff become knights and the consumers become queens, in a way which overcomes the persistent imbalance that has marked public services since their foundation.
The book is short, accessible and insightful. The arguments are lively and original, and the most striking one is when Le Grand makes the leftwing case for market forces. Le Grand does not simply argue that markets should be reluctantly accepted as necessary, but that they should be celebrated in principle. The important feature of market exchange, he argues, is that it promotes respect for other people: ‘To offer something in exchange is to make an effort to understand the needs and wants of the other party to the potential exchange and to persuade them that what is on offer will meet those needs or wants.’
He argues the exploitation of labour or the intensification of poverty often wrought by capitalist markets should not confound the case for quasi-markets in public services in which consumers have purchasing power depending on their needs. The left has a long-held dislike for mixing markets and public services. A common belief is that government when acting as providers, do what they think is good for society, not what they think is good for themselves. Also, the left sees recipients of public services as having no scope for action on their own initiative.
As Richard Reeves has noted, choice was last political season’s black and the debate is not about to go away. Many people still argue that people – usually other people – don’t want choice, that instead they just want a single excellent school and hospital on their doorstep. However, choice isn’t an end in itself. It is one important mechanism to ensure that citizens can indeed secure good schools and health services in their communities. Choice puts the levers in the hands of parents and patients so that they, as citizens and consumers, can be a driving force for improvement in their public services. The choice the government and the left should advocate is choice open to all on the basis of their equal status as citizens not on the unequal basis of their wealth.
Le Grand boldly takes the left on, arguing they are not only wrong but also anti-egalitarian in their approach to choice. He shares the left’s concern about the inequalities that arise in ordinary markets, but this issue is not to the fore in the quasi-markets he concentrates on. Governments often pay for universal access to public services such as schools. The question in such cases is whether those public services, which may well matter more to the poor, who lack alternatives, than to the rich, are any good. The point is that properly designed quasi-markets improve quality and value for money.
This book is one of the most fascinating books on public services to come out recently. It blends political philosophy and economic theory, along with empirical evidence and policy proposals. It illustrates how governments can use markets to provide the right incentives to their employees, and create more choices for citizens. It suggests that properly designed markets and quasi-markets work better than the alternatives in delivering public services, and it provides the evidence to confront the ideological critics, whose minds sometimes seem set against competition and markets in whatever context. Whether they will take note is another