Putting value creation back into “public value”: from market-fixing to market-shaping
Citation:
Work data:
ISBN: 1748-7870Alternate URL:
https://www.tandfonline.com/doi/epdf/10.1080/17487870.2022.2053537?needAccess=true
Type of work: Article (academic)
Categories:
Economics | Policy & RegulationTags:
new public management, new public governanceAbstract:
In conventional economics, value creation occurs in the private sector with the state limited to correcting for “market failures”. Public management scholars have developed the term “public value” to describe how public sector managers can engage citizens in shaping effective policy. A more ambitious concept of public value rejects the “market failure” framework and puts public value at the centre of the economy. Public value is created by public sector actors creating and co-shaping markets in line with public purpose. This direction-setting role enables different sectors to collaborate to address major societal challenges, such as climate change and inequality.
Downloads:
Mazzucato, M. & Ryan-Collins, J. (2022). “Putting value creation back into “public value”: from market-fixing to market-shaping”. In Journal of Economic Policy Reform, 25 (4), 345-360. Abingdon: Taylor & Francis.
Notes:
| Correcting failures | Creating public value | |
Justification for the role of government |
Market or coordination failures: |
All markets and institutions are co-created by public, private and third sectors. Role of government is to ensure markets support public purpose, also by involving users in cocreation of policy |
Business case approach |
Ex-ante cost-benefit analysis employing allocative efficiency, i.e. assuming all else remains equal (prices/relationships etc.) and incorporating possibility of government failure |
Focused on systemic change to achieve mission – dynamic efficiency (including innovation, spillover effects and systemic change) |
Underlying assumptions |
Possible to estimate reliable future value using discounting and backward-looking datasets.System is characterised by equilibrium behaviour |
Future is uncertain because of potential for novelty and structural change; system is characterised by complex behaviour, nonlinear feedback loops |
Evaluation |
Focus on whether specific policy solves market failure and whether government failure avoided (Pareto-efficient) |
Ongoing and reflexive evaluation of whether system is moving in direction of mission via achievement of intermediate milestones and user engagement. Focus on portfolio of policies and interventions, and their interaction |
Approach to risk |
Highly risk averse; optimism bias assumed |
Failure is accepted and encouraged as a learning device |
Table 1. Approaches to public value: correcting failure vs. creating public value (p.355)
Mazzucato, Ryan-Collins (2022). Putting value creation back into public value. From market-fixing to market-shaping.pdf
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