John Waterbury, Exposed to Innumerable Delusions: Public enterprise and state power in Egypt, India and Turkey (1993)

Summary: _ Main argument is that, against class and culturalist explanations of public-sector failure, that the _property regime_ is decisive.  These state agencies, while initially effective, tend to break down because of the logic of principal-agent relationships (relations between principals – the state owners – and their agents – the public sector managers – break down, monitoring isn’t possible – it becomes ‘rational’ for the manager to pursue his own personal agenda. A logic of irresponsibility) This also means that the idea of vested institutional interests in the public sector is false – state enterprises seem unwilling to engage in collective action to halt reforms.  For Waterbury, all of the actors he examined (managers, civil servants, minsters, labour representatives) were _rent-seekers._

 

However, a principal-agent explains too much and too little.  Too much if public ownership is taken as necessarily entailing a logic of irresponsibility. Too little because they fail to help us understand any significant variations in public-sector performance, if irresponsibility is equally rampant everywhere.

 

Main point is that the property regime creates a series of principal-agent problems that no state (in the study) seems able to avoid. The property regime’s structure of rewards and punishments produces sub-optimal outcomes over time. Where state-owned enterprises were once important, they are now falling victim to the logic, and being eroded.

 

 

_Methodology:_ Cases were selected that had one policy in common: intensive efforts over a substantial period of time to build an industrial base of state-owned enterprises