Tuesday, June 11, 2013

Public Choice Theory in Public Administration

Public Choice Theory in Public Administration leads the attack on state monopoly for delivery of public goods and services. This approach forwards the idea of "institutional pluralism" to satisfy the consumers. James Buchanan, Gordon Tullock, Vincent Ostrom and William Niskanen are the principal exponents of this approach. The basic assumptions of this theory are:

  • With adequate information and an ordered preference individuals act rationally

  • Individuals are utility maximizer

The public choice school opposes the domination of politico-bureaucratic combine over the society in the name of "general will" or "public interest". They question the assumption that bureaucracy is neutral and rational. According to them, actually bureaucrats are self aggrandizing, manipulate the public resources and have their own interest different from the public interest. After all both the bureaucrats and politicians are human beings and so they behave as "utility maximizers". Politicians are interested only in the votes. This politico-bureaucrat combine instead of ensuring the provision of goods and services for the general public often act out of the self-interest. These so called civil servants act as the private vested interests and hijack the functioning of the government.

Public Choice Theory in Public Administration

The public choice school is a critique of the bureaucratic model of administration and searches for an appropriate form of 'political organization' which may meet the needs of the citizens of the post industrial age. In this new form, a variety of institutional arrangements are entrusted with the responsibility of providing goods and services to the citizens. Citizens are rational consumers of public goods and services, so they are ultimate source of administrative power: The dominant bureaucratic structure has amassed lot of power which is at present unchallenged and does not have to face any competition. This administrative power has to be divided and handed over to the citizens by several ways in-consonance with their wishes and preferences. This school of thought sees the organization as sovereign individuals making organizational decisions.

Vincent Ostrom in his work "Intellectual Crisis in American Public Administration", 1974 has put a question mark on the basic assumptions of the classical public administration such as

  • Politics-administration dichotomy

  • Single center and source of power in governments

  • Hierarchy being seen as efficiency maximizing structure

Instead of above concepts, he advocates that diverse decision making structures should be there in the provision of supply of goods and services to the citizens. Popular participation in the functioning of administration should be there to make it accountable & responsive so that the monopolistic nature of governmental services could be minimized. The monolithic structure of government keeps the citizens and the administration apart thus alienating the bureaucrats. In such an environment when bureaucrats pursue their personal interests instead of public interest, it goes unnoticed by the people. To solve this problem, Ostrom proposes "dispersed administrative authority" along with its decentralized exercise closer to the people. It also creates diversity to the citizens providing them more choices.


Vincent Ostrom disputes the organisational efficiency of bureaucracy in comparison to other alternative organizational forms. The alternative forms, according to Ostrom, should be based on

  • Decentralized democratic administration

  • Competitiveness in the process of provision of goods and services

The above views suggest that the public choice school proponents were the strong votaries of dispersed decision making authority and favored taking into account the "individual preferences" in the process of decision making. The governmental organizations had monocratic hierarchical bureaucratic structures which do not promote efficiency and choice. Instead of such structures, "competition" should be the basis of forming various organizations. Multi-organizational structures or institutional pluralism will promote this kind of democratic and healthy competition. This approach says that if the democratic principle of choice is exercised along the above lines then efficiency is maximized in terms of human and material resources.


The main recommendations of public choice theory encompass the following areas of concern:

  • Reducing the discretionary powers of the politicians and role of the government

  • Reducing the government monopolies and ensuring institutional pluralism for the provision of delivery of goods and services

  • Reforming the organization based on the principles of dispersed authority and competition

  • Constitutional checks and increased accountability of governmental institutions to the public to limit the powers, such as deficit budgeting and taxation powers, of politico-bureaucrat combine and the various vested groups around them

  • The role of governmental operations should shift to the advisory and regulatory areas. As the functioning of market may also have distortions & not based on healthy competition, regulation by government is necessary. Wherever delivery of goods and services is entrusted to the government, it should be subjected to competition and should not be allowed to develop monopolies

  • The functions like providing educational and health care facilities should be optional for the government. They should preferably be privatized.

  • The big governments should give way to lean and thin government i.e. the size of government should be reduced. This is because the visible hand of the government may not always be benevolent and even in popular democracies government may not be framing rational economic policies for the long term development of the society. "Public interest in not thus guided by public choice"

  • The expenditures incurred by governmental sector should be reduced.

  • Among the public agencies also competition should be encouraged

  • The self-seeking behavior of the government officials tends to sustain status quo. This prevents the development and innovation. Changes should be brought about to keep pace with the rapidly changing socio-economic conditions

The multilateral institutions such as the World Bank and the International Monetary Fund also support the market led and market friendly approach to development. This view has been reflected since the World Development Report, 1991. The state should keep its activities to minimum and keep itself mainly confined to the regulatory activities as well as to the areas which do not offer profit to the private sector e.g. building material & social infrastructure, defense, law & order, provision of social security for the vulnerable sections of people and environmental protection etc. Thus according to this view taken by the various international agencies also the central actor in the development process should be the market only and not the government.


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