The Social Context Of A Value For Money Based Reform


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The administrative reform programmes of developed countries consist of tools which refer to different scientific models. The old schism between the rational–normative and empirical–descriptive sciences still seems to exist despite the efforts to surpass it. VFM constitutes a step towards the required unifying concept: economy and administration are organized and analysed on the basis of a common theoretical model, which adds to the administrative action one more analytical and practical dimension: the economic.

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The Social Context Of A Value For Money Based Reform

  1. 1. The social context of a ‘value-for-money’-based administrative reform Panagiotis Karkatsoulis Introduction Browsing through the administrative reform programmes of developed countries (OECD 1997a, 1998a) and the related bibliography (Halachmi, 1999), it is obvious that these programmes consist of tools which refer to different scientific models. No doubt, all these programmes have some common ideas, but they lack a unifying concept that could serve as a comprehensive descriptive and analytical framework and, at the same time, produce new actions and combinations of actions. The lack of a homogenous theoretical background for administrative reforms, which could be attributed, among others, to the general theoretical insufficiency of modern administrative science, can not be overcome by just solving problems pragmatically. This reaction, although insufficient, has been adopted by the majority of experts, politicians and bureaucrats and has set the pace for modern administrative reforms. It is worth mentioning that the old schism between the rational–normative and empirical–descriptive sciences still seems to exist despite the efforts to surpass it (Luhmann, 1966). As we wait, however, for administrative science to react ahead of the adminis- trative reality, it has become imperative to elaborate descriptive models for the comprehension of administrative reality — or better still administrative realities. Such models are of great value for countries and administrations that apply reform programmes, since they provide a framework and help to avoid unneces- sary actions in the sense of resources saving. In search of such a concept we meet the ‘value for money’ (VFM) principle. There is no doubt that the VFM principle is implicit in most — if not all — modern administrative reforms. Better Quality Services at Optimal Cost (Cabinet Office, 1999) seems to be a self-evident strategy for public administrations that undertake a reformative process. This principle, substantiated in modern administrative reforms, unifies the two different managerial philosophies that are known through the entrepreneurial Dr Panagiotis Karkatsoulis is Scientific Advisor to the Ministry of Interior, Public Administration and Decentralization, Athens, Greece. CDU: 65.012.3(100) International Review of Administrative Sciences [0020–8523(200009)66:3] Copyright © 2000 IIAS. SAGE Publications (London, Thousand Oaks, CA and New Delhi), Vol. 66 (2000), 463–478; 014029
  2. 2. 464 International Review of Administrative Sciences 66(3) management and total quality movements, respectively. In this sense, we con- sider that the VFM principle constitutes a step towards the required unifying concept: economy and administration are organized and analysed on the basis of a common theoretical model, which adds to the administrative action one more analytical and practical dimension: the economic. The administrative action is no longer analysed or realized only with legal considerations; it also addresses the economic aspect. Today ‘value’ constitutes an important parameter of the administrative action and ‘economy’ — the economic dimension of administra- tive actions and reforms — is fully incorporated in modern scientific, political and administrative analysis and practice. Besides, through the reinforcement of the traditional ‘transparency’ or through the ‘Quality Movement’, everything that up until now has been considered to be an appropriate practice for ‘good administrative services’ was embodied in the VFM principle. However, in the process of incorporating economy into administrative science and the practical management of the state, especially in the field of rendering services to the citizens, we face two major perils. The first one lies in the process of decision-making if the economic dimension of administrative actions and reforms is considered to be only of marginal interest. Legality generally constitutes the cornerstone for the approval or dis- approval of an administrative action — when this criterion is violated, the action/decision is immediately eliminated or annulled. This does not apply to the criterion of economy, since administrative actions may ignore what economy dictates without their essence being annulled but it is impossible to ignore legal/constitutional orders. This fact indicates the hierarchy between the legitimization criteria for admin- istrative action and, therefore, for administrative reforms. The justification of economic or managerial principles, namely their functioning as ‘ultima ratio’ for administrative action, has not yet been achieved, despite the theoretical and practical progress that has been made in recent years. What the adherents of administrative reform must do is more and better work in order to achieve this strategic goal. The second danger is the exact opposite: the risk of administrative action and reform becoming ‘economized’. When the principle of VFM is interpreted as a way to ensure low economic cost, we witness the shrinking of the administrative action to one of its dimensions, i.e. the economic. Although the administrative phenomenon has many economic aspects, it is not identified with the economic one. If we insist on the reductive thinking that there is no difference between private and public, between market and state, the state will lose its socially differ- entiated functions. What we need, instead, is the redefinition of the state — its ‘reinvention’, to express ourselves in a trendy term; this is impossible though as long as the economic system displays a pure interventionist character, violating the autonomy of the other social subsystems. In the absence of a wider scope that could provide the VFM principle with new referential points beyond ‘legalism’ or ‘economism’, we will be forced to choose
  3. 3. Karkatsoulis: VFM-Based Reform 465 between one or the other, mutilating each time the dynamic of the administrative reform. This paper has a double purpose: on the one hand to indicate the danger lurking in one-sided reforms; and on the other hand to present a theoretical ‘umbrella’ for modern administrative reform and, especially, for the VFM principle that will be wider than the ones presented by legal, political and economic science. Modern social theory provides us with such a perspective. Hence, in the first part of this paper, a list of management tools based on the VFM principle is presented and criticized from a sociological point of view. In the second part, the methodologi- cal limitations of the scientific fields involved are indicated and the theory of self- referential social systems, which could transcend these limitations, is analysed. In the third part, the implications of the theory of self-referential social systems in the administrative reform are elucidated. Background methodological assumption of reforms that incorporate the VFM principle Appraising the success of the reforms, which have incorporated the VFM principle, we consider such programmes to serve two major objectives: 1. the rationalization of budgets through limiting the deficits, increasing the revenues and applying the rationale of ‘cost–benefit’ — as in the market economy — to administrative action; and 2. ideological support to the political/administrative system in order to resolve the legitimization crisis arising from inefficient policies which did not correspond to the citizens’ needs and expectations. We presume that these objectives are common to both continental European and Anglo-Saxon countries and that the political, economic or cultural particular- ities of each country are expressed in the way in which they implement reform. Management tools for the rationalization of the budget Administrative downsizing. Achieving the first objective was tried through tools that contribute directly or indirectly to the rationalization of budgets such as privatization, the merging of services and, generally, every functional or struc- tural reform that was aimed at administrative downsizing. We can distinguish two periods in which the actions within this scope were taken by both central and local authorities. With respect to Europe, we can place the first one during the Conservatives’ terms of governance, during which the drastic downsizing of the administration constituted an absolute priority (Cameron et al., 1995). Size, how- ever, was not related to the operations for which the organizational structures exist. According to this understanding, the number of these structures should be curtailed in as much as they present certain pathologies, such as overlapping, a control and coordination deficit, lack of individual responsibility and a low degree of collective responsibility. In the second period, that of social-democratic government, we trace a different managerial style, though it is not always accompanied by a different kind of practice. Nowadays, the emerging trend is to
  4. 4. 466 International Review of Administrative Sciences 66(3) define the administrative size of a public organization according to the functions it performs and not according to the specific structural characteristics. The motto of the 1980s, ‘small is beautiful’, seems to be replace by another motto, ‘beautiful is beautiful, no matter whether it is big or small’. The ‘regulatory reform’ movement. In this category of tools we can also place the simplification of administrative procedures and the institutionalization of rules for better regulations, namely ‘regulatory reform’ (OECD, 1997b, 1998b). The efforts, mostly by supranational organizations, to create a common orienta- tion and reference framework for legislative matters concerning the deliberation of markets, the enhancement of competition and the creation of new jobs seem to have had a good reception by the participant countries. The scepticism of some of them reflects nothing but the significance of their institutional, social, political and economic circumstances and the need for further conceptual elaboration. It is true that regulations illustrate not only the instrumental logic in solving specific economic and social problems, but also the patterns of the socially legitimized collective behaviours and actions, which sometimes are based on popular beliefs and superstitions, i.e. on a very special ‘Weltanschaung’ that often constitutes an irrational value system. In this sense, we have to bear in mind that an adequate common orientation pattern for legislative matters can occur only by speculating on the very specific national circumstances and values and on the painful procedure of their continuous osmosis with global reform ideas. Otherwise, the danger of oversimplification and generalization becomes evident. If we do not proceed in this direction, any circumstantial choice might either be legalized as adequate and conforming to the general model or dropped as inadequate and non-conforming to national particularities. Performance-based budgeting and the performance-related incentives. Top- ranking reformative instruments, which reflect par excellence the VFM principle, are performance-based budgeting and financial management, especially the per- formance-linked pay of staff/line personnel. The difficulties in implementing such systems lay, in particular, in their con- flict with the values and practices consolidated through the bureaucratic system of administration. Inside the red tape, public services and public servants stand for the common interest — a notion that cannot be estimated in economic terms. Budgetary assistance to public services as well as the remuneration of public servants have a symbolic significance which results in the notion of compensa- tion for their services rather than a salary based on the quantity and quality of their work. According to traditional bureaucratic doctrines, payments and budget do not constitute important preconditions for the existence and operation of a service. The general philosophical principle, on which payment and the budget are based, is that of equity — i.e. almost equal compensation for equal service. Bearing in mind that differentiated work does not exist in a bureaucracy, the equallization of salaries is a natural consequence. This traditional belief has been eroded in modern public organization — especially in the case of public services with economically measurable work —
  5. 5. Karkatsoulis: VFM-Based Reform 467 and many attempts have been undertaken to introduce and apply modern systems of financial management in the public sector. Nevertheless, the constitutional consolidation of the equity principle, in combination with the equalizing inter- pretation of regulations concerning the pay system by the courts and the dominant corporate culture, raise heavy barriers for a wider application of modern pay systems, which are tailored according to the VFM principle. Thus, it is imperative to continue to redefine the key notions of public accounting methodically, to re-organize the competent services and to affect the legal culture of the judges. Reformative tools for the ideological support of the political/administrative system To realize the second objective, namely ideological support for the political/ administrative system, the reforms strengthening the VFM principle often include actions of environmental scanning, strategic planning and policy analysis, monitoring and evaluation in different levels of government. The attempt to incorporate managerial principles in both their earlier (e.g. PPBS) and newly fashioned forms (e.g. strategic planning) has stumbled especially over bureau- cratic rationales and structures, which do not reinforce the conduct and operation of such actions. The degree of resistance to such reformation efforts varies according to the intensity of the bureaucratic culture in each organization. Nevertheless, the fact that the dimension and the quality of administrative reform differ in every national and social order, since reform includes values and tradi- tions of this very society, must not be overlooked. That is to say that the extent to which traditional and modern managerial principles are incorporated into the administrative system depends on the specific social character of the public organizations in each country, e.g. the extent to which a culture of organizing, evaluating, controlling, etc. exists in a society and its public organizations. Decentralization in the context of VFM In order to enhance the effectiveness of the political/administrative system, measures such as an extended decentralization of competence and resources management to lower governmental and local authority levels are implemented in different public administrations. Although decentralization is most significant for the central political/administrative system, since it is forced to find a more strategic role, its positive performance at lower levels is doubted. The effective- ness of decentralized administration in problem-solving in everyday life raises a lot of questions about the adequacy of the applied differentiation between central and local planning and coordination. The measures that are usually undertaken for the improvement of these administrative actions are frequently neutralized by the unpredictable social dynamic concerning the definition of ‘centre’ and ‘local’. By this we mean that the quest for a stable rational criterion to distinguish between local and state affairs cannot be accomplished, since the viewpoint of the observer — the one who draws the distinction — changes every time. This means that the framework for evaluating the decentralization attempts also changes.
  6. 6. 468 International Review of Administrative Sciences 66(3) Nevertheless, there is a general trend not only to transfer competence to the governmental level closest to the citizen, but also to form an all-embracing net- work of state services at the local level. It stands to reason that the results of local governance are different in every country, according to the existence of etatism and to the quality of the culture of accountability during the exercise of state power. Benchmarking in the VFM concept Measures under the VFM rationale also comprise the rearrangement of govern- ment, especially those agencies that are responsible for the reform. In order to achieve better results many useful instruments with a significant additional value have been developed: systems of linear organization and alternative frameworks for labour relations on the basis of individual responsibility (e.g. contracts between employers and employees, managers and politicians in charge) are help- ful tools for this goal. To these tools ‘benchmarking’ should also be included. The idea developing some kind of competition between the various public organiza- tions is one more step towards the new managerial state. In the case of benchmarking, the impact of the dominant social and political culture is decisive for its success and its expansion between more public organi- zations. A low-risk estimation is that benchmarking has more possibilities of succeeding in Anglo-Saxon countries, where there is a strong tradition of com- petition and where the state is more subsidiary in character. In contrast, in most European countries, where a tradition of etatism and protectionism prevails, com- parative performance measurement between services does not evoke favourable reactions. If we contemplate the globalization of this measure, namely to encourage countries to follow benchmarking proposals, we have to find a way to combine their particular values and practices with those of benchmarking. Total Quality Management and VFM. In the category of reformative actions that reinforce the social legitimization of the state by strengthening the VFM principle, we also include the ones that improve the communication between public organizations and citizens-users of the provided services. The tool that has been most successfully used and has proved to be enduring is ‘Total Quality Management’ (TQM) (Juran, 1995). In many countries, not only Anglo-Saxon or European ones, which promote the improvement of quality of public services, we witness an extended application of the statistical methods of social sciences along with the conduct of customer satisfaction surveys (Klages and Masser, 1997). The standardization of quality control for both products and services with the aid of electronic technology seems to be an adequate way to overcome the weak- nesses of the classic bureaucracy in providing services that stand up to the modern citizen’s expectations and needs. The Quality Movement, in the way it appeared and was implemented more in the private and less in the public sector, had its biggest success in administrations in which the social values and administrative culture were sympathetic with its principles. The Quality Movement is based — as is well known — on the
  7. 7. Karkatsoulis: VFM-Based Reform 469 principles of Zen Buddhism and was first inspired and developed in the Far East. However, its attractiveness is not to be found in the idea of continuing improve- ment, but in that of the internal and external client. Quality-oriented management attempts to upgrade the ‘human capital’ of the enterprise and re-establish the ‘subject of the administrative action’, namely the ‘employee’, putting him/her at the centre of administrative planning. It is obvious that the anthropocentric dimension of ‘quality’ motivates the administrations actuated by these values and reproducing this kind of culture more than those which consider the rationalization of the system (structure and functions) to be more important. In any event, it is worth mentioning that the initial quality concept was especially fruitful, since — being so flexible — it was enriched with special cultural characteristics from the American and the European tradition. The structure of the current quality concept has left the initial concept intact. In this way, ‘quality’ evolved to be a universal and global model of governance with a multicultural character that permits its easy adaptation to different social, politi- cal and cultural circumstances. At the same time, its main disadvantage, inherent in every concept with such a flexible and wide structure, transforms it into a quasi ‘platform concept’ that loses its analytical ability while possessing a great descriptive force. Information technology in the service of VFM A notable contribution to the achievement of a modern legitimization of the state through VFM reforms has been made by information technology. The intensive incorporation of new electronic technologies into the new administra- tive practices creates the necessary conditions for a citizen’s access to public policies. The dominant culture in every society plays, of course, a very important role in the degree of integration of electronic technology into the administrative system (Korac-Kakabadse and Korac-Kakabadse, 1996). We can measure this integration on a scale from ‘elementary’ to ‘full incorporation’. In the first case, administration has only an instrumental relationship with information tech- nology, while in the latest, administration moves from the bureaucratic model to a new administrative system characterized by values like standardization, speed, accuracy, effectiveness, etc. The need for an interdisciplinary approach to the understanding of administrative reform methods and practices Political and administrative executives responsible for planning, implementing and evaluating reforms in the spirit of the VFM principle hardly ever occupy themselves with epistemological/theoretical and practical concepts that propose alternative solutions to relevant problems, considering that it ‘is none of their business’. Their job is, supposedly, to find ‘practical’ solutions to problems induced by bureaucracy. In the course of time, some of these ‘solutions’ are proven to be not particularly original, while others create bigger problems than
  8. 8. 470 International Review of Administrative Sciences 66(3) the ones they solve. On the other hand, scientists either fall silent or barricade themselves in ‘their’ science, showing no interest in ‘practical’ problems. Reforms seem to take place ‘automatically’. A kind of ‘spontaneous order’ appears as a substitute to the interdisciplinary discourse in demand, which is, after all, very difficult to articulate. Previous efforts during the 1980s to establish reliable and viable interactions between the social sciences, in which administra- tive reform is a preferential domain (e.g. economy, sociology, psychology, legal and political science), produced good impressions rather than good results. The major problem with these endeavours lies primarily in the fact that even when the analysis is satisfactory, the proposed solutions are not. Sometimes they are not even reliable. This phenomenon probably originates from the special multi- significant nature of administrative ‘action’ itself, which cannot be interpreted by a single theory or a cluster of theories from a single scientific field (Parsons and Shils, 1951; Luhmann, 1984). The limits of every single discipline to justify the VFM reforms It is a fact that every discipline that treats questions of administrative reform keeps on dealing with these issues in the particular way of its methodology. The interpretative space that each science occupies is analogous to the scientific and public feeling it arouses. Taking the economy as an example, it imposes a certain style and structure on administrative reform that is, in turn, attached to particular political choices and government aesthetics. On the other hand, it is widely known that the ‘monetarization’ of social action meets its limits at the principles of ‘Rechtstaat’ and the code of democracy. Our assumption is that all social subsystems (in our case economy, law and political/administrative system) collaborate, in a certain way, for the construction of social meanings and actions. The inability to devise a comprehensive theoretical model in which political/ administrative, economic and legal theories and practices can coexist seems to have led to an administrative ‘tri-lemma’. Every time we need to make decisions about the significance of social issues, we have to choose between three alterna- tives: 1. The political/administrative values and practices are forced to adjust to the priorities of the legal system, and vice versa. 2. Political/administrative values and practices are forced to adjust to those of the economic system, and vice versa. 3. Every group of values and practices evolves and reproduces itself without interaction with the other two. It is obvious that each of these possible choices/answers to the administrative ‘tri-lemma’ entails certain advantages and disadvantages. The result in favour of the one or the other depends on the degree to which each system is developed, as well as on the existence or not of an interventionist culture in each one of them. The lack of an adequate and homogenous theoretical background for adminis- trative reforms induces three major malfunctions in public administrations:
  9. 9. Karkatsoulis: VFM-Based Reform 471 1. The first one relates to the absence of connection between the new practices and their values and the particular national/organizational cultures that prevail in every country/organization. In this case, the reformative process as a whole assumes a fashionable and instrumental character with poor or temporary results. 2. The second problem refers to the lack of an appropriate operational plan for the merging of new values and practices with the traditional ones. The con- sequence of such a misfit is the development of parallel and never meeting mean- ings and the coexistence of different organizational cultures within the same organization; a fact that leads frequently to organizational paralysis. 3. At the same time, a third problem emerges. The VFM principle or the ‘lean state’ — however labelled — being the scientific paradigm in the new era of Public Administration, will not be able to gain its differentiation, if it does not develop an identity code in the form of internal rules (meanings and values). Such an internal ‘dogma’ can only exist if the new forms of management are able to assess the different national and organizational experiences and supply the actors with a system appropriate for the interpretation of their acts. Therefore, we need to elaborate an adequate model for theory and practice in a way that each one constitutes the necessary environment for the existence of the other. The theory of self-referential social systems gives a satisfying response to our needs. A theoretical proposal for an interdisciplinary analysis of reform models that are based on the VFM principle Trying to establish not only the theoretical legitimization of the new managerial model according to the self-referential doctrine, but also its relationship to other dominant doctrines elaborated during the last decades within Public Administra- tion and Public Management is simultaneously an easy and a difficult task. With this paradox we imply that, if we do not outline very clearly the principles and the strategic goals of the ‘new managerialism’, as well as the desired practical results, it would be very easy to find quite a few theoretical models or ideas deriv- ing from different disciplines that may seem quite similar to the self-referential approach and, at the same time, to identify many results of the reforms as self- referential. On the other hand, if we set out explicit preconditions for what should be characterized as self-referential, it would be very difficult to achieve a com- prehensive approach that could provide new theoretical boundaries to the reforms. Our first thesis is that all discussion about administrative reform could find its best theoretical justification within the framework of a social theory; that is to say, if it is conceptualized as a social phenomenon. One could argue that there is nothing new in this proposal, since interesting analysis — especially within Organizational Theory — on the role of organizations in society could be found (e.g. Scott, 1981). Yet, there are many distinct differences — as well as potential similarities — between the well-known concepts of Public Administration and the self-referential doctrine; in order to detect these differences, let us review the
  10. 10. 472 International Review of Administrative Sciences 66(3) most representative of the traditional administrative concepts in comparison with the notions of self-reference: 1. Many authors engaged in the administrative phenomenon encourage the substitution of the old traditional state by the individual responsibility of the single actor. We can find this same idea in a variety of forms from anarchist to egocentric theories (Buchanan and Tullock, 1962: 119ff.; Olson, 1978; Elster, 1987; Axelrod and Keohane, 1985). According to these approaches, the legit- imization crisis of the state could only then be overcome, when the collective rationality inherent to the state, is replaced by the interaction of single actions taken by individual actors. Since the founding fathers of sociology (Durkheim, Weber, Parsons) estab- lished the meaning of ‘society’ as something more than the sum of individual actions by individual actors, undoubted progress in the field has been accom- plished with the emergence of the ‘system’. In the theory of self-referential systems, the individual actor is a very important element, but s/he is conceived as a ‘psychic system’. On the other hand, the social system has its proper identity that does not depend on the identities of single subjects. Both social and psychic systems are independent and interactive with each other, i.e. they communicate in as much as the meanings that they share permit. 2. We have also to distinguish self-referential social systems from those sys- tems which are more ‘images of reality’ and less the reality itself. Such ‘virtual systems’ have been prominently elaborated by social scientists as well as by analysts of organizations (Meyer and Rowan, 1977; Burrell and Morgan, 1979; Berger and Luckmann, 1967; Powell and Dimaggio, 1991). ‘Social Con- structivism’ together with the old and the new ‘Institutionalism’ have one thing in common: the denial of anything being real outside our conceptions, our beliefs and our attitudes. Although the constructivists, as well as the institutionalists, have contributed a great deal to the enlargement of social theory by proving the actuality of the mental constructions of reality, they do not recognize the presence of two partners in the game of cognition (Brown, 1979). If we do not accept the existence of a reality apart from our conception of it, then the danger of solipsism is present. In this case, every positive contribution of the phenomenological approaches — such as the previously mentioned theories and trends — will be lost. Beyond every other approach, the theory of self-referential systems advocates the idea of the distinction between our ideas about the world — no matter what form they take and on how many levels they are organized — and the world per se as an external reality. Although the theoretical analysis of the relationship between the two is rather limited, it is clear ‘that our knowledge about the world is created while the world appears to us through our knowledge’ (Maturana and Varela, 1984). 3. The most difficult task for disciples of the theory of self-referential systems is its scientific labelling: Theory, Meta-theory, Grand Theory or Methodology? Putting aside the difficulties in giving concrete content to these perplexing terms,
  11. 11. Karkatsoulis: VFM-Based Reform 473 one should be mindful that the theory of self-referential systems has a history of its own. The first comprehensive version of this theory appeared only in the mid- 1980s with Niklas Luhmann’s monumental book Soziale Systeme. In his work, Luhmann not only made explicit the notion of the autopoietic system — initially developed in biology — but also applied it in sociology and other social sciences (Luhmann, 1998). In comparison with middle-range partial theories, the output of his work can be identified as a ‘grand theory’. Clearly, it contains all the advantages and disadvantages of such a theory, but it also permits us to compare different and often mutually exclusive meanings and assumptions from different social sciences (law, economy, psychology, pedagogic, etc.). At this point, a question may be posed: Does this theory constitute another juridical, economic, pedagogic, i.e. partial, theory; or does it provide us with new insights into the understanding of the differentiated meanings that each scientific discipline gives to its key notions? We can assume that the theory of self-referential systems instructs us on how to consider other theories. In this sense, it is also a ‘meta-theory’. Moreover, inasmuch as it offers new definitions to key sociological notions, such as action, actor, system, meaning, communication, etc. and also a method of combining them in an entity, we can describe it both as a ‘grand theory’ and a methodology. 4. Recording the implications of the theory of self-referential systems for both sociological theory and practice, we could summarize them in two sentences: (i) The theory of self-referential systems could be considered a ‘Paradigm Shift’ in the social sciences (Kuhn, 1970). (ii) It gives us the desired flexibility, which is a prerequisite for the practical implementation of reforms. The basic assumptions of the social theory of self-referential systems To conceive the special way, in which the theory of self-reference can help inter- disciplinary communication, we have to refer to the basic assumptions implicit in it: 1. The society is understood as a system that consists of autonomous subsys- tems. 2. The social subsystems (in our case, political/administrative, legal and eco- nomic) consist of the same basic substance, i.e. meanings. 3. Meanings are created, reproduced and withdrawn through a constant com- municative process. 4. Communication between social subsystems is indirect and lateral. Each system deposits in the mutual discourse the meanings that it considers communi- cable. To the extent that they prove to be so, they become the possession of every participant system. 5. Communication is unequal and defined by the rate of differentiation of each system. Those more differentiated interfere with the less differentiated ones (Luhmann, 1990).
  12. 12. 474 International Review of Administrative Sciences 66(3) The effects of a self-referential analysis on administrative reform theory Establishing common ground between the different disciplines involved in administrative reform would have the following positive effects: 1. Primarily, it would safeguard the autonomy of each discipline, since the inviolate condition for their successful communication is their independence. 2. It would substantially promote each and every one of the involved scientific disciplines, since it would supply them with new inputs that could not have been produced by their self-reference. 3. It would give existence to a third, interdisciplinary entity enriching and challenging scientific knowledge. From the theory of self-referential systems, we expect the widening and redefi- nition of the notions and practices of administrative science (old and new), as well as of the principles of administrative reform in order to support theoretically the new legitimization of the modern state and administration. Within such a theoretical framework, management could be inhibitory to simplistic viewpoints according to which the state and its values have exhausted their dynamic and must be replaced by ideas and practices that are not, alas, novel and advanced, but often long worn out and narrow. This way of dealing with the state is dogmatic and old-fashioned. A description of administrative reform and the VFM principle on the basis of self-reference In the previously mentioned theory, where society is conceived as a non-centre system constituted by subsystems with a high degree of self-reference, public administration is defined as distinct and autonomous from the others. Its mission is the production of socially binding decisions: a task that no other social sub- system can achieve (Dammann et al., 1994). In order to attain this goal, public administration draws plans, sets the goals, chooses the means, evaluates the results and redesigns its own actions. To avoid any misunderstanding, it is crucial to point out that all the previously mentioned tools should be understood, within the framework of systems theory, as products of the administrative system itself. The hard core of these tasks (planning, monitoring and evaluating) can only be developed inside the system itself through a self-referential communicative process. It has been argued that all the previously cited managerial functions can only then have a positive response on behalf of the system, i.e. the proper results for the needs and capacities of the system. Any hetero-definition of these functions may cause irrelevant results for the administrative system; that is to say, the system does not understand, ignores or rejects the managerial ‘modus operandi’, whether traditional or modern. In this case, all reformative attempts are meant to fail. We consider the previously described theoretical concept as an appropriate basis for the improvement not only of the discussion on administrative reform, but also of various implementations of reform. Two facts prove the correctness of
  13. 13. Karkatsoulis: VFM-Based Reform 475 our assertion: First, within such an interpretative framework, we can clearly define not only certain managerial meanings, but also their relationship. Second, that if administrative reform is conceived according to this concept, it will gain in social legitimization since it will be organized and formulated both as a techno- cratic and a social project. Most of all, we believe that the self-referential concept can provide the appro- priate justification for different models of administrative reform. We will mention in the following, some dimensions of the Greek experience in adminis- trative reform that seem to confirm the self-referential approach. The Greek experience from the implementation of the VFM principle in administrative reform The implementation of the VFM principle in Greek public administration is very interesting, considering that, apart from the obvious interest of a case study, it is implemented in an island area and particularly in the many, small and isolated islands of the Aegean Sea. The theoretical interest of such an attempt lies in the fact that the plan of any administrative intervention in an island should be integral and not rely on the benefits of synergy between different, more or less similar, reform acts, which, in other cases, could be important for the success of the reforms. The Greek reform programme ASTERIAS (STARFISH) relates to the improvement of the administrative services rendered to the citizens of the islands by public administrations and constitutes part of a wider reformative programme called ‘Quality for the Citizen’. ASTERIAS refers to the services provided in the Citizens’ Bureaux, which operate as one-stop agencies in each municipality on every Greek island. An employee, specially trained in the use of electronic technology, provides the citizens with the following services: (1) general admin- istrative information; (2) specific information about various administrative cases from websites of national and supranational organizations on the Internet; and (3) application forms for administrative procedures in competences other than the municipality organization (prefectures, regions, ministries, etc.). The applica- tions, which can be found in electronic form at the website of the Ministry of the Aegean which is responsible for the islands (, are down- loaded, printed and sent either by fax or by e-mail to the public service whereas previously the citizen — usually working people — would otherwise have to go in person. It is crucial to note that the peculiar nature of the islands obliges us to design a highly networking administration with the whole spectrum of public services concentrated at one point and with multiskilled employees in a linear hierarchy. The island requires, ex definitione, an all-inclusive reform plan with much inter- action between its elements. The experience from the first year of the ASTERIAS implementation, con- cerning the ratio economic cost/outcome, is especially favourable. The need for
  14. 14. 476 International Review of Administrative Sciences 66(3) citizens to travel for administrative purposes has been drastically reduced, the number of man-hours saved is noteworthy and the quality of services provided by the Citizens’ Bureaux has been proved to be better than the one citizens would get directly from the competent agency. To sustain all this, we should extend the system to the interior of the adminis- tration, namely, to the procedures that are necessary for final decision-making. This field seems more difficult than the previous one, where we only had to cope with the citizens’ scepticism. We have already faced significant resistance on the part of the public services that are responsible for the issuing of supporting documents and certificates. Legalism, bureaucratic culture and corruption moulded with the special culture of the island are the most powerful impedance to the island public services. Therefore, we have to elaborate an appropriate strategy in order to overcome these resistances and problems. Conclusion Incorporating the discussion on administrative reform and on the specific reforms based on the VFM principle into a wider theoretical context can have positive results for all their social, political, juridical and economic dimensions. The elaboration and development of a ‘sociology of administrative reform’ can be very fruitful not only for the specific reformative tools and actions, but also for the social theory itself. The theory of self-referential social systems has been proved, through its various applications in different scientific fields (e.g. economy, law, psychology, pedagogy), to be complex enough to cope with the social, political and economic circumstances of every country involved in administrative reform. The intensification of such a discussion is, therefore, an imperative to the scientists engaged in reformative issues. If we continue to elaborate the new, managerial reformative tools and princi- ples by aligning them with the self-referential ones, we will gain: 1. More alternatives to the practical problems that the new managerial model deasl with. The result of the combination of different disciplines will be an applicable solution based on the interdisciplinary principles of the theory of self- referential social systems. 2. Better coordination between the different reformative tools. If we compre- hend the rules and the boundaries of the reformative process as a whole according to the doctrine of self-reference, we will be able to lend more flexibility to the reformative tools stemming from different disciplines. The modernization process leads to the enhancement of the self-referential ability of every system involved in it and, therefore, broadens the communication between them. Each partner is informed of the special properties of the other. 3. Unification of different theoretical/practical models to a new, meta- theoretical one. The VFM principle can be transformed from a summation of single actions and tools, justifiable under different methodological concepts, to a unified, but flexible model for reforming the public sector, with an explicit dogma.
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