The Free-Market Innovation Machine and New Public Management

Abstract

This essay on New Public Management (NPM) is inspired by Baumol's recent book about capitalism as the free-market innovation machine. While most studies of NPM are from the micro perspective Baumol calls for a macro perspective. If the free-market innovation machine is capitalism's contribution to society's development, what is the contribution of NPM to the development of capitalist society? Common to the free-market innovation machine and NPM is competition. Following the materialist conception of history, it may be argued that NPM fulfils a dialectical process, by which the capitalist method of competition has been installed in three waves subsequently expanding its validity to all of society. In the first wave competition was installed in the Base and the private sector of the economy (the market). In the second wave, competition was installed in the Superstructure and the selection of representatives to the legislative branch of government (democratic elitism). The third and final wave, NPM, is a synthesis, occurring in the Base and Superstructure simultaneously. In the Base it affects the public sector of the economy, the service provision of the welfare state. In the Superstructure it affects the executive branch of government and public administration.

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