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A communitarian perspective on government failure.

Mainstream welfare economics has been centrally concerned with both identifying and elaborating the necessary and sufficient conditions for the efficient operation of market processes. The development of thought in this area spawned a complex classification system for cataloguing generic instances of inefficient market outcomes known as the theory of market failure (Bator, 1958). This theory allowed policy makers to compare observed market processes with their idealized counterparts, and prescribe government intervention, should any marked divergence be present. Until the 1960s no parallel investigation existed into any equivalent conditions necessary for efficient policy implementation. Accordingly, policy makers proceeded on the implicit, if untenable, presumption that public policy intervention was invariably optimal. As Buchanan (1983, p. 16) has noted, "to the theoretical welfare economists, markets 'failed' in the allocative process; 'ideal' government was assumed to be the alternative".

Since then the development of a more sceptical perspective on the case for government intervention has taken several overlapping forms. First, public choice theory represents a comprehensive explanation for collective failure by extending the methodology of homo economicus to the formulation and application of public policy. Second, a derivative literature exists on the economic analysis of bureaucracy, and the phenomenon of bureaucratic failure (Breton and Wintrobe, 1982; Downs, 1967; Niskanen, 1971; and Tullock, 1974). And third, an explicit theory of government failure has been constructed by Wolf (1979a, 1979b, 1983, 1987, 1989) in a conscious effort to provide a conceptual analogue to the theory of market failure.

Taken together these developments represent an attempt to replace a public interest theory of government intervention with an alternative private interest theory of intervention. They are based on an a priori presumption against policy intervention which leads them to stigmatize its results as generally malevolent rather than benevolent. This article will attempt to redress this somewhat unbalanced approach. It will draw on concepts advanced by contemporary communitarian writers to show that the scope for the emergence of the types of non-market failure identified by Wolf may be curtailed in public agencies in which traditions of pursuing excellence in public service are kept alive by their leadership.

Wolf's theory of non-market failure

Wolf's theory of non-market failure represents a deliberate attempt to provide a countervailing analytical apparatus to established arguments based on familiar notions of market failure. It mirrors the orthodox methodology followed in the theory of market failure by seeking to attribute various kinds of non-market failure to peculiarities in underlying "demand" and "supply" conditions.

Non-market supply and demand characteristics

Wolf (1989, pp. 51-5) identifies four basic attributes of non-market supply. First, he argues that "non-market outputs are often hard to define in principle, ill-defined in practice, and extremely difficult to measure as to quantity or to evaluate as quality" (Wolf, 1989, p. 51). Accordingly, inputs generally become a proxy measure for output. Second, Wolf postulates that non-market outputs are generally produced by a single public agency often operating as a legally constituted monopoly. The resultant lack of competition makes any meaningful estimates of economic efficiency difficult, and consequently serves to obscure allocative and productive efficiencies. Third, Wolf (1989, p. 52) argues that "technology of producing non-market outputs is frequently unknown or, if known, is associated with considerable uncertainty and ambiguity", and consequently may exacerbate economic inefficiencies. Finally, Wolf proposes that non-market production activity is usually characterized by the lack of any "bottomline" evaluation mechanism equivalent to profit or loss for appraising success. Moreover, there is often no specified procedure for terminating unsuccessful production.

Wolf (1989, pp. 39-50) identifies five basic "conditions" of non-market demand. In the first instance Wolf (1987, p. 55) postulates that " increased public awareness of market shortcomings" has led to a reduced tolerance of them, and consequently heightened public desire for state intervention. A second characteristic attributed to the demand for non-market activity resides in "political organization and enfranchisement" (Wolf, 1989, p. 40), and the resultant increases in the effectiveness of special interest groups in the political process. Third, maximizing politicians and bureaucrats are rewarded for propagating interventionist "solutions" to perceived social "problems" without reference to the costs of implementation. Fourth, the demand for nonmarket activity is further enhanced by the "high time-discount of political actors" (Wolf, 1989, p. 40) owing to relatively short electoral periods in office and a resultant emphasis on current rather than future costs and benefits. The final "condition" of non-market demand identified by Wolf (1989, p. 41) is "...the decoupling between those who receive the benefits, and those who pay the costs, of government programmes".

Taxonomy of non-market failure

These various peculiarities in the nature of non-market supply and demand form the foundation for Wolf's fourfold taxonomy of non-market failure. The first, and evidently by far the most important, form of non-market failure (Wolf, 1979b, p. 132) resides in "internalities and private goals". These refer to intra-organizational allocation and evaluation procedures which determine distributional outcomes for agencies and agency personnel alike, and accordingly constitute part of their respective utility functions. Although both market and non-market firms must perforce employ an "internal version of the price system" for intra-firm resource allocation, market pressures ensure that the "internal standards" of market organizations are strongly linked to the "external price system", whereas non-market organizations may have internalities largely unrelated to optimal performance. This may mean that the actual behaviour of some public firm may diverge from its intended or ideal role.

Second, "redundant and rising costs" represent another kind of non-market failure. In essence, Wolf argues that, while market processes impose a relationship between production costs and output prices, this relationship is generally absent in non-market activity, since revenues derive from non-market sources, like government tax income. Consequently, "where the revenues that sustain an activity are unrelated to the costs of producing it, more resources may be used than necessary to produce a given output, or more of the nonmarket activity may be provided than is warranted by the original market-failure reason for undertaking it in the first place" (Wolf, 1989, p. 63).

The third type of non-market failure in the Wolfian taxonomy is termed "derived externalities". Derived externalities are the unintended and unanticipated side-effects of government intervention designed to ameliorate perceived instances of market failure. Just as externalities generated in market relationships represent costs and benefits not considered by economic agents, so derived externalities in the non-market sphere"... are side-effects that are not realized by the agency responsible for creating them, and hence do not affect the agency's calculations or behaviour" (Wolf, 1989, p. 77). In common with market externalities, derived externalities may be both positive and negative.

In his classification of market failure Wolf includes "distributional equity" to the conventional categories of externalities and public goods, increasing returns to scale, and market imperfections, despite acknowledging the fact that most economists view market failures exclusively in terms of efficiency (Wolf, 1989, p. 28). Accordingly, in order to maintain the symmetry of his typology of non-market failure with the orthodox theory of market failure, Wolf incorporates adverse distributional consequences as his final category of nonmarket failure. While hypothesizing that "... there is an identifiable process by which inequities can result from non-market activities ..." similar to inequalities flowing from non-market outcomes, Wolf (1989, p. 84) nevertheless argues that non-market inequities characteristically occur in terms of power and privilege, whereas distributional market failures typically appear in income and wealth differences.

Implications and problems

In contrast to market failure, which creates a prima fade case for government intervention, the phenomenon of government failure provides an a priori presumption against policy intervention. Advocates of the pervasiveness of government failure such as Wolf have had a significant influence on mainstream public economics within which the modern view seems to be that before policy intervention occurs in response to clear-cut cases of market failure, the anticipated benefits of such intervention must be weighed against the possible costs accruing from government failure. Moreover, if policy intervention does proceed, then, according to this view, policy makers should attempt to design policies which augment rather than impede market forces, and provide incentives to all participants, including public agencies, congruent with the objectives of the policy.

Does this, however, represent too narrow a conception of individual motivation and the role of the government in addressing social and economic problems? Are there not significant non-material incentives to participate in public actions to overcome these problems? Is there no room in economic discourse for the dedicated Civil Servant as distinguished from the self-interested, empire-building bureaucrat? Must the economic analysis of government resolutely dismiss the traditions of public service and civic virtue which, in many countries, have been cultivated to counter the type of perverse incentives emphasized by the proponents of "government failure"?

These questions are being posed in contemporary political philosophy, particularly by communitarian writers such as MacIntyre (1981,1988), Sandel (1982,1984) and Taylor (1985,1989). The concept of human motivation articulated by these writers is particularly interesting since it explains why the quest for excellence in public service could arise from a source of motivation other than pure altruism.

The pursuit of excellence in public service

Contemporary communitarians seem to share a common emphasis on the way in which human action is situated within the historical contexts of particular communities bound together by particular traditions and the lives of particular persons whose identity is, at least partly, constituted or encumbered (Sandel, 1982) by their attachment to these communities.

MacIntyre and Taylor

MacIntyre proposes that these contexts can provide persons with the opportunity to realize "internal goods" through actions which are situated within them. A government employee, for example, may realize that his work is situated within the tradition of public service borne by the agency he works for. This situation provides him with the opportunity to pursue excellence in public service by subjecting his work to the standards set by past and present practitioners in the hope that he can make a contribution towards advancing these standards and sustaining the vitality of the tradition which bears them.

From this perspective, tradition is not conceived in Weberian terms as a fixed and inflexible manner of doing things. Rather MacIntyre conceives a "living" tradition to be "an historically extended, socially embodied argument, and an argument precisely in part about the goods which constitute that tradition" (1981, p. 222). Similarly, Oakeshotte (1977) has argued that a tradition of behaviour is "a flow of sympathy" which from time to time needs to be revived, abridged and developed in response to the demands of each new generation. At any time a tradition will have both coherent and incoherent aspects. It will both compose a pattern and intimate a sympathy for what does not fully appear. The pursuit of excellence in government employment may therefore involve not only conformity to established standards but also the pursuit of that which is intimated in a particular tradition of public service.

The individuals engaged in this pursuit will, however, not just be seeking to advance these standards of practice. They will also be seeking to change the history of the community in which they provide their services in a worthwhile direction. To do this they may have to form co-operative relationships with voluntary organizations and community groups who are engaged on the same quest. Their quest for excellence in public service may lead them to pursue what is intimated not only in the tradition of the agency they work for but also in the tradition of the community they are seeking to serve.

Their engagement in this quest can be viewed as being situated within the context of each person's quest for the good life. According to MacIntyre "the good life for man is the life spent seeking for the good life for man" (1981, p. 219). It is this encompassing quest which is constitutive of the self's "narrative unity", a unity which resides in the "unity of a narrative which links birth to life to death as narrative beginning to middle to end" (p. 205). By pursuing excellence in public service a government employee may achieve a greater understanding of how this quest can be a partial expression of what it means for him or her to pursue the good life.

Internal goods can be distinguished from external goods such as wealth, status and prestige in that their realization is contingent on the practice of particular virtues[1]. According to MacIntyre, virtues are cultivated human qualities, the possession and exercise of which is necessary to enable persons to achieve particular internal goods and sustain relationships with people, past and present, who have committed themselves to pursue excellence in the same tradition. The internal goods which can be derived from exercising virtues arise from an expanded capacity to pursue excellence in, and understand, the tradition from which this quest emerges and the life which is constituted, in part, by commitments to it.

Taylor's (1985) concept of human agency both parallels and complements that presented by MacIntyre. According to Taylor people on a quest for the good life should be viewed from a "significance perspective" (1985, p. 114) as being in a world of meanings that they imperfectly understand, with the task of interpreting it better in order to understand more clearly who they are and what they ought to be seeking. From this perspective, government agencies can be viewed as being staffed by people who can be characterized according to the degree to which they are "engaged" in a quest for excellence in public service. Engaged staff members will not just be interested in learning and undertaking the tasks necessary to fulfil their contractual obligations as employees. They will also be moved by their sense of the significance of their quest and will seek to articulate and express this sense of significance to those interlocutors who may question it. They will ascribe a personal significance to their commitment to the agency and its quest and will interpret this commitment as being a partial expression of what the good life for them should contain. They will be able to "strongly evaluate" actions taken by themselves and their colleagues according to whether or not they should belong to the life of a dedicated public servant[2]. Quite clearly they will be able to derive internal as well as external goods from their engagement in the agency's quest. On the other hand, disengaged staff members are simply not moved by the significance of the agency's activities (although they may ascribe significance to other projects or relationships) and can only derive external goods from their participation in these activities. They can therefore be represented as the type of self-interested bureaucrat who has attracted the attention of theorists of government failure.

General and specific forms of hope

For agents to be engaged, in the manner described by communitarian writers, they must have a capacity for hope which they activate by committing themselves to particular projects and relationships. A dedicated Civil Servant will, for example, commit himself to a quest for excellence in a public agency as an expression of hope in the potential of such "constitutive" commitments to change the history of the agency, the community it is serving and the lives of the people taking them in a worthwhile direction[3].

Hope falls into the category of what Taylor calls "subject-referring emotions" (1985, p. 59). It can only be experienced if a certain "import" or significance is ascribed to the situations which give rise to it. This ascription of import cannot take place without reference to the subject and his or her experience. It incorporates a sense of what is important, what matters in the life of the subject. It constitutes more than a subjective reaction to an objective situation. As Taylor puts it, "to ascribe an import is to make a judgment about the way things are which cannot be reduced to the way we feel about them" (1985, p. 54). For the purposes of this article, hope can be defined as a subject-referring emotion evoked by an image of a future transformation which the subject of this emotion judges to be both worthwhile and possible.

It is important to distinguish between general and specific forms of hope. A person's general capacity for hope will enable him or her to sustain the quest for the good life despite disappointments experienced with particular projects and relationships. To lose this capacity is to despair of life having any meaning, of there being anything worth doing or becoming in life. This general capacity for hope enables people to place their hope in specific projects or relationships without necessarily attaching an ultimacy to these projects or relationships. A person can then become disillusioned with them without losing hope in the possibility of seeking the good life through other projects or relationships. This general capacity for hope will to some degree be innate but can also, to a significant degree, be developed through social interaction and social influence[4].

The specific hope which individuals have in particular projects or relationships is the type of hope which government employees invest when they engage in a quest for excellence in public service. Although hope is essentially an emotion - of the "subject-referring" type described by Taylor - it is an emotion based on a form of knowledge. This knowledge is the person's image of what his or her own life, and the community in which this life is situated, could become through participation in the quest. Both this knowledge and the emotions it evokes enable a person to derive satisfaction from "savouring in advance" (Hirschman, 1985) the future transformation on which it is focused.

Disappointment and disengagement

At the time individuals engage on this quest, their initial investment of hope will be matched by an allowance they make for disappointment over the course of the quest. This allowance will be revised upwards or downwards as their hope is strengthened or weakened by subsequent experiences and their interpretation of them. On the one hand, this hope may be strengthened by positive experiences which are interpreted so as to give participants more solid grounds for justifying their commitment. On the other hand, negative experiences which are interpreted as disappointments may accumulate in a way which undermines the initial hope placed in the quest.

Participants typically express their hope in a quest by subjecting their supply of time, effort and wealth to the norms of commitment of the group which is engaged by it. This is how they commit themselves - in the constitutive way emphasized by communitarians - to the quest. They do this to show other members of the group (and any other interlocutor) that the quest means enough to them to justify their submission to the group's norms for commitment.

In committing themselves in this way these individuals do, however, expose themselves to various sources of disappointment. First, they will be exposed to disappointments associated with their quest. Owing to their "poverty of imagination" (Hirschman, 1982) individuals will not imagine all the obstacles to its realization. Surprising failures and setbacks may therefore be interpreted as disappointments which weaken their hope in it. Second, they may experience disappointments associated with belonging to a particular group. These disappointments typically arise when group pressures to conform to its norms lead to "preference falsification" (Kuran, 1990) among its members as they over- or under-commit themselves in relation to the degree that they seek to express their hope in the quest. Third, to the extent that individuals internalize group norms and form "second order metapreferences" (Hirschman, 1982) to keep them, they will experience guilt or shame when they fail to comply with these norms.

These sources of disappointment can combine and interact with one another to weaken hope in the quest. For example, obstacles experienced over the course of the quest may necessitate the stepping-up of group norms for commitment. This may, in turn, increase both the degree of preference falsification and guilt among members as they find it increasingly difficult to comply with these norms.

The accumulation of disappointment may, however, take time to affect the observed supply of inputs by individual group members. Eventually, however, disappointments may accumulate beyond the threshold at which individuals lose specific hope in the quest and disengage from it. There are a number of forms disengagement can take. The most easily observed form is one in which disappointed individuals withdraw completely from the group and its activities. This may not, however, occur in the case of employees of a public agency who, despite losing hope in the quest for excellence in public service, refrain from quitting their jobs since they continue to provide them with a sufficient source of "external goods" (MacIntyre, 1981). They may be expected to pursue these goods in the narrowly self-interested manner presumed in theories of "government failure".

There would seem to be a role for leadership in public agencies. The quality of this leadership can be evaluated not only in terms of its capacity to engage a group on a quest for excellence in public service, but also according to its ability to counter the accumulation of disappointment which can lead to disengagement. A theory of leadership which seems to be intimated in the concepts examined in this section must now be considered.

A theory of leadership intimated in communitarian concepts of engagement

Economic theory has traditionally had little to contribute to an understanding of the phenomenon of leadership[5]. In this respect it is out of step with other social sciences within which a considerable body of literature on leadership has developed[6]. This literature contains a wide range of definitions which seem to be converging towards the concept that "leadership is a social influence process in which a person steers members of a group toward a goal" (Bryman, 1986, p. 4).

The capacity to influence the behaviour of the members of a group represents a distinct form of power. While leaders may be in a position to exercise "reward power" by using material rewards to induce subordinates to perform the tasks they set them; or "coercive power" by administering a set of material penalties for non-compliance with their directions, they cannot be said to be exercising leadership if they choose to exercise these forms of power. Less obviously, the power to influence followers does not essentially arise from the social division of knowledge. Leader-follower relationships can be distinguished from those rasing from the superior expertise or knowledge of one party such as teacher-pupil, adviser-client or doctor-patient relationships. Leaders may be in a position to gain access to and process more information than their followers but, in exercising leadership, they are not simply attempting to change their behaviour by supplying them with information they do not have.

We would suggest that leadership more essentially involves drawing the attention of followers towards, and making more explicit, the significance of a form of knowledge they already possess and motivating them to express this increased sense of significance through greater commitment to the collective activities of the group which is subject to this leadership. What then is leadership directed towards? What capacity of followers do leaders try to influence? The position we will take is that leaders essentially attempt to influence the hopes of followers. While every member of a group engaged on a quest may make some contribution to the process of interpreting its significance, leader-follower relationships will emerge in those groups who look to one person to act as a "final respondent", to have the "final word", in articulating the current group interpretation of their quest's significance and timeliness and of the norms which govern their expression of hope in this quest. Leaders can therefore be viewed as the key "hermeneutical" agents in such groups.

The hermeneutical functions of leadership

Through their interpretation of the quest and its significance, leaders will seek to facilitate the convergence of the hopes of their followers into a "vision" which they can share in common. Although this vision does not have to be closed to further interpretation, it does represent a more standardized image of the future transformation which the leader and followers are striving to realize. Leaders can thus be conceived as directing the interpretative process towards provisional resolution in the form of an articulated vision for the group.

In the case of a public agency there will be a number of aspects to the leader's vision. First, it will contain an image of what the community could become if a critical mass of people engage in a quest to overcome obstacles to the realization of the leader's vision. The quality of leadership exercised by the executives of public agencies may be evaluated not only according to the proportion of their own staff who are engaged by such quests, but also by whether they are able to engage and co-opt independent sources of leadership in their client. communities.

Second, the leader's vision may also contain an image of what the quality of agency practice and the lives of public servants could become if they submit to norms of commitment articulated by the leader. Although these norms may be based on established traditions and standards of excellence, the leader can influence these norms by articulating a vision of the type of commitment necessary for a dedicated public servant to meet the "demands of the present hour". As we have argued, these norms can give rise to disappointments from both preference falsification and guilt. Leaders will have to take this into account when articulating their visions. They may, for example, reduce the scope for disappointment owing to preference falsification by adopting a democratic style of leadership, consulting widely to discern the images of a dedicated public servant held by most of their followers and formulating a vision which has as little dissonance with these images as is possible. The scope for disappointment owing to guilt could also be reduced if compliance with the norms derived from the leader's vision is attainable by most followers. This could occur where the leader's vision of a dedicated public servant is someone who learns from his or her failures or mistakes, and who sustains commitment in the face of disappointments about the quest.

Leadership and tradition

In general, it would seem that if leaders are to mobilize a group of followers on a quest to change the histories of communities, practices and the lives of the followers concerned, then they must engage with traditions of behaviour formed over the previous course of such histories. This does not mean that leaders must necessarily be in the antagonistic relationship with the "forces of tradition" which is a feature of the Weberian concept of a "charismatic leadership"[7]. Indeed, it is possible to distinguish between leadership which is "situated" or "unsituated" in its relation to particular traditions.

Situated leadership can be conceived as being directed towards the engagement of followers on quests to preserve the coherence and vitality of "living traditions" (MacIntyre, 1981). The following types of leader and quest would fall within this category:

* "conservative leaders" who engage followers on quests intimated by the incoherent aspects of the tradition with a vision of consolidating it so that it can provide a foundation for future progress;

* "reformist leaders" who engage followers on quests intimated by the sterile aspects of the tradition with a vision of amending it so that its future vitality can be revived;

* "transformational leaders" who engage followers on quests precipitated by the sense of crisis which pervades traditions which have become largely sterile and incoherent, with a vision of transforming them as a whole so that they can be passed on to successor leaders in the vital and largely coherent condition[8].

While transformational leadership is clearly more radical than conservative or reformist leadership, it is still motivated by a vision of historical continuity, with the transformational leader seeking to restore the capacity of a tradition to generate worthwhile quests in future generations[9].

Rationale for followership

The two objects of the leader's influence can be conceived as the hopes of followers and the group norms to which they submit in expressing these hopes. But why do followers allow themselves to be influenced? There are a number of reasons why followers may submit to someone's leadership. First, even for those followers who share the same hope of historical and personal transformation as their leaders, there can still be scope for these leaders to influence their follower's images of the future by clarifying them or filling them in or making them more explicit. Second, followers may recognize that by looking to leaders to interpret group norms they may preclude themselves from an ex post reinterpretation to rationalize their own deviant behaviour. They may simply view their leader's interpretations as being more trustworthy than their own. Third, since followers have a more limited capacity than their leader to influence others, they may perceive submission to this person's leadership as being a way to achieve this influence indirectly. Fourth, by submitting to a leader, a follower may gain the trust of this person to such a degree that the leader entrusts the follower to reproduce his or her leadership. Submission to a leader may thus be viewed as a route to future leadership[10].

Communitarian concepts can thus be used to explain the role of hope in human motivation, how leaders influence this source of motivation and why followers allow themselves to be influenced in this way. The perspective which this gives on Wolf's theory of government failure must now be considered.

A communitarian critique of Wolf's theory of government failure

A communitarian critique of Wolf's theory of government failure could be based on the argument that Wolf essentially conceives public agencies to have dead traditions and disengaged staff members with there being no possibility of transformational leadership emerging to revive these traditions and engage these people on a quest for excellence in public service. The three aspects of this critique will be examined in turn.

First, for "internalities" to be a source of government failure in the way described by Wolf they must constitute an expression of a "dead tradition". There would be no forum within such a tradition for anyone to question the point and purpose of these standards and the exclusively "inward orientation" of the agency staff who seek to conform to them without entertaining any hope of being able to make a significant difference to the lives of the people they are meant to be serving.

Moreover, these intra-organizational allocation and evaluation procedures would be unresponsive to changes in the external environment of the agency, including the unanticipated side-effects of its activities which Wolf termed "derived externalities". If agency personnel are exclusively motivated to pursue external goods then their behaviour will also be unresponsive to environmental changes and derived externalities, since the distribution of these goods will be determined by the agency's internalities. This assumption seems to be implicit in Wolf's theory since he does not allow for the possibility that these personnel may be motivated to pursue excellence in public service. He treats them as being essentially disengaged[11].

Once it is recognized that not all public servants may be disengaged then the factors which can mitigate the tendency towards "redundant and rising costs" in the provision of public services can be identified. First, Wolf's argument that public agencies tend to use more resources than necessary to produce a given output ignores the possibility that their executives may exercise leadership, motivating engaged followers to supply more time, effort and wealth than they are contractually obliged to as an expression of their commitment to the leader's quest. The potential savings from such supplies will be enhanced where this executive succeeds in co-opting voluntary organizations into the provision of public services.

Second, in a Wolfian public agency staffed by disengaged employees, expensive systems would have to be established and sustained to monitor and penalize their wasteful or opportunistic behaviour. Where, however, a significant number of employees commit themselves to the agency's quest they can be trusted to eschew opportunism. As Casson (1991) has pointed out, the establishment and preservation by a leader of a "high trust culture" can lead to significant savings in monitoring costs. Effective leaders are able to place their trust in particular persons, their followers, rather than in the systems which can be designed to monitor their performance[12].

Engaged staff can also be trusted to practise the virtues necessary to realize internal goods from their agency's quest. These internal goods differ from external goods such as wealth, status and prestige in that they can only be derived by persons who commit themselves to the quest concerned; they are not dependent on the success of a particular quest; and although their acquisition may be the outcome of competition to excel, their achievement is a good for the whole community bound together by a particular tradition of pursuing excellence so that this is unlikely to lead to the inequities which Wolf accepts emerge in the distribution of external goods.

Wolf's scheme generally allows no scope for the exercise of effective leadership. This is apparent in his representation of the non-market sector as having a supply-side characterized by ill-defined output and technology and a demand-side shaped by maximizing politicians and bureaucrats with a high time discount proposing solutions to social problems in a way which benefits themselves and their constituents and disperses costs among other groups. The vision of an effective leader would address these problems by articulating a vision for public agencies, addressing the viability of their practices and bringing groups with diverse interests together in pursuit of a shared hope of historical transformation. The role which such leadership can play in the execution of public policy must now be considered by way of conclusion to this article.


Leadership can have an important role to play in the execution of public policy. A government's chief executive - its prime minister or president - would have to come to terms with the "vision thing" - as George Bush put it. This person would have to place the government's policies within the "frame" of a vision of "the good society".

A vision of a "welfare society" as opposed to a "welfare state" would be one such vision. It could engage different levels of leadership in a quest to make society more inclusive by seeking to provide for the welfare needs of its members. The executives of the public agencies responsible for implementing social policies would need to reproduce their chief's leadership so that their own staff can be engaged by this vision and take the opportunities to derive "internal goods" by committing themselves to its realization. In addition, independent sources of leadership in client communities could be engaged in joining with government agencies in pursuit of this vision. A "pluralist" approach to social policy which exemplifies the "politics of the common good" advocated by communitarians could thereby emerge in which the government allows an expanded role for voluntary organizations in the provision of social services[13].

The challenge for leadership would be to sustain this approach over time. To achieve this leaders would have to counter the accumulation of disappointment among their followers since their disengagement not only would require the substitution of statutory for voluntary provision of a given level of social services but could also raise the cost and lower the quality of statutory provision along the lines predicted by Wolf. It is probably not coincidental that, in the USA, the post-1970 emphasis on government failure in the theory of social policy appears to have parallels in its practice as widespread disillusionment was expressed with regard to the programmes implemented in the 1960s to realize President Johnson's vision of a "great society".


1. MacIntyre's list of such virtues includes "an adequate sense of tradition" which, according to MacIntyre, "manifests itself in the grasp of those future possibilities which the past has made available to the present"; "justice" which is reflected in a propensity to "recognize what is due to whom"; "courage" which involves being prepared to "take whatever self-endangering risks are demanded along the way"; and "honesty" which is reflected in a willingness to listen and respond carefully to criticism.

2. Taylor endorses Frankfurt's (1971) distinction between first and second order desires where the latter are derived from a reflective evaluation of what a person wants his desires to express. However, he suggests that second order desires may give rise to both "strong" and "weak" evaluations. Strong evaluations involve discriminating between desires according to an assessment of their worth, while weak evaluations only require that certain desires be overruled because it is more expedient to give others full expression.

3. From a communitarian perspective, expressive commitments can be characterized as constitutive commitments since the people making them do not just commit their time or wealth - they may also commit themselves to the projects or relationships they are placing their hope in. Such commitments can have a formative effect on the character of the people making them so that their selves come to be "encumbered" or "constituted", at least in part, by these commitments (Sandel, 1982).

4. Religion can play an important part in the development of this capacity. The essential function of religion would seem to be to explain the meaning of life in ultimate terms, so that, for any who believe, the explanation given can be enabled to "make sense" of life, especially of their own lives and particularly of those aspects of their lives which have been a source of disappointment (Kelley, 1972). By providing a transcendent focus for a person's general hope, a religion such as Christianity can protect this sense of hope from erosion by the disappointments, "trials and tribulations" experienced during life.

5. An important recent exception in this regard is Casson (1991). The theory developed in this section differs from Casson's in that it focuses on the way leaders primarily influence followers by appealing to their sense of hope rather than their sense of guilt.

6. An exhaustive bibliography of this literature has been compiled by Bass and Stogdill (1990).

7. Weber (1947) conceived charismatic leadership as a revolutionary and creative force, "opposed to all institutional routines, those of tradition and those subject to rational management" (p. 52), occurring in times of crisis, opening the way to a new future. In charismatic movements people no longer obey custom or law; instead the followers submit to the imperious demands of a heroic figure, the charismatic leader, whose orders are legitimated not by logic, nor by the leader's place in any ascribed hierarchy, but solely by the personal "power to command" of this charismatic individual. For Weber, these charismatic leaders have an important historical role since they can inspire the creation of movements or organizations which subsequently become traditionally or bureaucratically managed.

8. A similar understanding of the quest of a transformational leader is reflected in studies of the role this type of leader can play in the "turnaround" or revitalization of moribund organizations. Tichy and Devanna (1986), for example, characterize transformational leaders as engaging their organizations in a "three-part drama" in which the "first act" centres on the challenges the leader faces when he or she attempts to alert an organization to its need for revitalization in response to threats from the environment; the "second act" involves the leader's struggle to focus the attention of a critical mass of followers on a vision of a worthwhile and possible future state for the organization; while in the "third and final act" the leader seeks to institutionalize the transformation "so that it will survive his or her tenure in a given position".

9. Usually the type of transformation envisaged is too comprehensive to be entirely intimated in the traditions these leaders are seeking to transform. To formulate these visions they need to be able to see how their traditions are embedded within, and situated in relation to, other traditions. By establishing a connection between their sterile or incoherent traditions and traditions with a longer history or greater geographical scope, transformational leaders may be able to derive intimations of how their traditions can be made more vital and coherent through assimilating salient aspects of these deeper and broader traditions. At the very least, these leaders may be able to look outside their own tradition in order to draw inspiration from the tradition of transformational leadership itself.

10. From a Kantian liberal perspective, it could be argued that, in submitting to someone else's leadership, followers are failing to satisfy a strong concept of moral autonomy which requires them to "lead their lives from the inside" (Kymlicka, 1989) and have the "final word" on the principles which are to direct these lives. Since communitarians seem to view the capacity to hope rather than the capacity to choose as being the fundamental human capacity worthy of universal respect, they would regard relationships in which leaders encourage followers to exercise this capacity as being moral provided that followers place their specific and not their general hope in their leaders and quests so that they can disengage without losing hope in the possibility of pursuing the good life through other projects and relationships.

11. This treatment could be justified by the argument that the phenomenon of engagement lies beyond the reach of conventional economic discourse. This argument fails to stand up to closer scrutiny since it presumes that no one can derive any satisfaction from participation in public action. This source of satisfaction may, however, be treated along the lines proposed by Stigler and Becker (1977) as a "commodity" which individuals "produce" with human capital and other inputs. If the specific hope engaged members place in the quests of their agencies is treated as a form of human capital then there would be scope to model engagement within a recognizably economic framework. A problem with a Beckerian model of engagement, though, is that it would treat disappointments as raising "shadow prices" and inducing smooth and continuous adjustments of inputs supplied to produce satisfaction from participation in a quest in relation to those supplied to produce other commodities. To deal with engagement along communitarian lines it would have to be modified to recognize that individuals commit themselves constitutively by submitting to group norms of commitment. They would only guiltlessly flout these norms and withdraw inputs from the group when their level of disappointment has risen above the threshold at which they disengage from its quest.

12. There would seem to be three levels of trust through which followers can ascend in their relationship with their leader. At the lowest level, followers can be trusted to monitor themselves, since their hope in the quest conforms with the leader's vision and the commitment through which they seek to express this hope conforms with group norms. At the intermediate level, followers can be trusted to bring their peers into line with the leaders vision. They can influence the convergence of the specific hopes of their peers towards conformity with this vision and communicate disappointment to peers who deviate from the group norms for commitment. At the highest level, followers can be trusted to reproduce the leader's leadership. They can be trusted to engage their own followers on quests which have only been intimated in the leader's vision. They can be trusted to preserve the vitality of the tradition of leadership "bequeathed" to them by their leader.

13. This "pluralistic" approach to social policy has been promoted by writers who have argued that a flourishing voluntary sector with its emphasis on local decision making, innovation and self-help could constructively intervene between large government and the individual (Gladstone 1982; Johnson 1982). In addition, voluntary organizations can provide services in a cost-effective way through their ability to mobilize volunteer support.


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Author:Wallis, Jan; Dollery, Brian
Publication:International Journal of Social Economics
Date:Apr 1, 1995
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