Hollowing Out the State: Public Choice Theory and the Critique of Keynesian Social Democracy

Abstract

This article considers public choice theory as a component of the New Right critique of Keynesian social democracy in the 1960s and early 1970s. More specifically, it details the nature of the challenge it posed to the conception of public bureaucrats, public bureaucracies and the ethos of public service that informed the Keynesian social democratic agenda and discusses its dissemination through think-tanks and other media. It also assesses its consequent impact and legacy, arguing that public choice theory struck at the heart of Keynesian social democracy and left a legacy more profoundly destructive in this regard than either monetarism or Austrian economics.

The roots of Dutch frugality: the role of public choice theory in Dutch budgetary policy

“…When the economic and political crisis of the 1970s occurred, this new body of economic literature was able to supply a powerful diagnosis of 'state failure' in advanced liberal democracies (Butler, 2012;Hay, 2007;Streeck, 2014;Thompson, 2008). The key argument in what was to become known as 'the overload thesis', was that the state had become overburdened by popular demands and had reached a point of fiscal crisis.…”

“…Various scholars have identified public choice theory as key to the framing of the stagflation crisis of the 1970s in the Anglophone world (Butler, 2012;Hay, 2007;Streeck, 2014;Thompson, 2008). Our analysis centers on a network of leading Dutch economists within the discipline of public finance, closely involved with actual policymaking at the Ministry of Finance.…”

Partnerships between operators and public transport authorities. Working practices in relational contracting and collaborative partnerships

“…In the late twentieth and early twenty first centuries many European countries have seen moves from direct government provision of public services towards greater privatization and public-private provision in which government secures services from private or nongovernmental organization not only in the public transport area. For its proponents, privatization and contracting out public services to private sectors, would bring efficiencies from processes in which private organizations compete with each other to provide services, and this would enable a move away from the bureaucracy which is assumed to hinder public sector efficiency (see Considine & Lewis 2003, Mueller 2003, and for a critique see Thompson 2008). Yet there has been increasing concern about the forms of procurement and provision associated with this privatisation and contracting, especially in relation to its capacity to effectively provide services in the public interest.…”

Review of periodical literature published in 2008

“…The existence of multifaceted relationships between politics and economics, and the role of the public choice paradigm in analysing these relationships, featured as important parts of the study of contemporary history. Thompson observes that the public choice framework assumes that public servants pursue their own rather than the public interest. Public choice theory, according to Thompson, therefore provides a New Right critique of social democratic and Keynesian assumptions on public servant behaviour.…”