What
a Type
ype of
o Public
u cU
Utility
y for
o Re-municipalisation?
e u c pa sa o
Debating Company Models of Legitimacy Regarding Actors‘ Interests
and Challenges of Public Sector Economy
Dr. Carsten Herzberg
University of Potsdam
1
Argument: There is no typology providing sufficient
orientation in debates of re-municipalisation.
The purpose of this presentation is to propose a
typology of public utilities based on legitimacy
structures.
The typology can be used as a compass in debates of
re-municipalisation. Furthermore, some theorybuilding on actors
actors’ preferences and the problem
problemsolving of current challenges of public economy is
drafted.
drafted
2
What Kind of Legitmacy?
Output
Legitimacy
Procedural
Legitimacy
Input
Legitimacy
3
Business Form and Loss of Control
Within the same business form, public utilities can be very different.
4
Concept of Steering: A Dichotomist View?
Insufficiently
Steered Public
Utilities
Well Steered
Public Utilities
Within the same business form, public utilities can be very different.
5
Six Models of Public Utilities
Based on Three Types of Legitimacy – Weberian Ideal Types
Black Box
Modern Service Provider
Participative Utility
Political Utility
Profit Maximiser
Bureaucratic Institution
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Input legitimacy
1. Manager’s formal autonomy
Output legitimacy
1. Price policy/Profits
2. Power balance between 2. Service Quality
council and company board
3. Wage policy
3 C
3. Composition of ii
f
company board (including different parties and workers)
Procedural legitimacy
1. Manager’s personality
2. Procedures on Accountability
3. Protest and NGOs 7
Black Box
Reduced input legitimacy structures: The board is the centre of power, and
therefore private law status is needed.
needed Behind closed doors,
doors an oligarchy of
mayor, manager, and leaders of major parties make policy arrangements. Despite
this black box structure, this model can be a comfortable tool of governance for
the mayor if he has a good relationship with the strong manager.
manager
Modern Service Provider
Al
Almost
all
ll parties
i are represented
d in
i the
h company board.
b d These
Th
enlarged
l
d
structures of input legitimacy are in alignment with good service quality. In order
to get feedback on products, citizens are involved as ‘clients’ in forums and
through other forms of procedural legitimacy. However, the consensual
orientation of this model can hamper spontaneous reactions to market needs. This
model is p
possible in p
private law status and p
public law status,, but also as PPP in
some cases.
Participative Utility
While the modern service provider seeks to strengthen classical structures of
democracy, this model goes beyond representative democracy. Boards are opened
for NGOs and associations in a way that is disadvantageous to some party
groups. Procedures of structural legitimacy are elaborated and help to bridge
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some gaps in output legitimacy. This model relies on public law status.
Political Utility
This utility is far removed from council control of input legitimacy or NGO insights of
procedural legitimacy.
legitimacy In fact,
fact the head of the company is not a manager,
manager but a
politician – a ‘friend of the government’. For this uninhibited position, private law
status is needed. To ensure medium service quality, a technical director is employed. In
order to be maintained over time,
time this model sometimes needs a ‘protector’
protector from upper
levels of government.
Profit
P
fit Maximiser
M i i
This model is organised as a public-private partnership in private law status. Both the
public partner and the private partner have an interest in profit accumulation of output
legitimacy. Service quality varies according to strategic needs. This model is susceptible
to protest from NGOs because its structure lacks transparency. However, this model can
ggain some p
public support
pp if p
profits are used for subsidising
g other services of g
general
interest.
Bureaucratic Institution
Even if all interested council members could at least passively assist at board meetings,
there is less interest in utility policy. This utility is organised in public law status. The
head of the utility is a ‘technical
technical director
director’ who ensures good service quality.
quality Even if
insights are evaluated positively, this model has difficulties in reacting to competition
and tendencies of privatisation due to its ‘old-fashioned’ way of working.
Illustrating Differences between Public Utilties
BUREAUCRATIC
INSTITUTION
BLACK BOX
Potsdam (2002-2011)
PROFIT
MAXIMISER
Berlin (2010)
MODERN SERVICE
PROVIDER
Norderstedt
Münster
Cordoba
Paris
POLITICAL
UTILITY
PARTICIPATIVE
UTILITY
Illustrating Differences between Public Utilties
BUREAUCRATIC
INSTITUTION
BLACK BOX
Potsdam (2002-2011)
Potsdam (1989)
Potsdam (since 2012)
PROFIT
MAXIMISER
Potsdam PPP (1998-2000)
POLITICAL
UTILITY
MODERN SERVICE
PROVIDER
PARTICIPATIVE
UTILITY
Actor Groups and Model Preferences
Consensual models
Modern service provider (bureaucratic institution)
Conflicting models
Participative utility,
utility political utility
Ambivalent models
Black box, profit maximiser
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Public Utilities and Challenges
Protection for
Privatisation
Modern service
provider
Competition
Democratic
Control
+
(+)
(+)
Participative
utility
(+)
(+)
+
Black box
(+)
(+)
-
Profit
maximiser
((-))
+
-
-
-
+
(-)
-
-
Bureaucratic
institution
Political utility
Table 4: Public Utility Models and Challenges (hierarchical list)
+ = positive effects are expected; (+) = positive effects are possible; ~ = no effects are likely/neutral; (-) = negative effects are possible; - =
negative effects are expected.
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Thank you for your attention
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