Is New Public Management Really Dead? by Jouke de Vries by OECD Journal on Budgeting (2010).
New public management (NPM) is related to the changing balance of power between economic theories since the 1980s. The economic doctrines of Keynes, which ruled after the Second World War, grew outdated in the 1980s. Keynes’ economic theory could not explain stagflation, a combination of inflation and long-term unemployment. Consequently, the Keynes theory was attacked by three alternatives: monetarism, supplyside economics and public choice theories. The combination of these ideas is collectively known as neo-liberalism. Economic neo-liberalism is currently in deep trouble as a consequence of the worldwide financial crunch. After more than 30 years of ideological hegemony, neo-liberalism today seems powerless to explain developments in the real world. Does this also have an effect on the ideas of new public management, clearly an offspring of neo-liberalism? Ideas about paradigms and paradigm shifts are based on the work of Thomas Kuhn. He makes a distinction between periods of normal science and revolutionary science. Reality can be observed through a new theoretical lens following a paradigm shift. However, according to Kuhn, an old paradigm will not disappear immediately. Kuhn’s theory was used by Peter Hall to examine and understand the change in economic policy making in the United Kingdom. When Margaret Thatcher came to power, the dominant ideas of Keynes were replaced by neo-liberalism. Hall elaborated on the theory of paradigm shifts and connected this with decision-making and policy-learning theories. According to Hall’s theory, there are three possibilities for change: changes of the first, the second and the third order. A first-order change is very small: a marginal change. A second-order change is slightly bigger, but is still incremental. A third-order change is a general paradigm shift. Small changes are a consequence of technical learning by civil servants and specialists. A general change is a consequence of societal learning. A general or paradigmatic change is mostly the result of a crisis or anomaly.