A Framework for Analyzing Network Governance of Public Assets

Abstract:     
This paper provides a framework for evaluating the strengths and weaknesses of public assets owned by: (i) The State, (ii) A State owned corporatized body, (iii) Private investors or (iv) By a network of constituents. A basis is presented for analysing these four governance architectures based on their (i) Accountability, (ii) Quality of service, (iii) Operating costs, (iv) Funding (v) Cost of finance, and (vi) Political outcomes. Network governance augments and/or replaces the centralized communication and control of the other three alternatives with distributed: communications, intelligence, decision making, and control to prodigiously reduce information overload and bounded rationality that can facilitate more dynamic, efficient and effective operations. At the same time, network governance can improve the volume and integrity of information and control for detecting and correcting errors to improve economy, efficiency and effectiveness while enhancing self-regulation to minimize the dead weight cost of regulation and compliance.

Other attractions of governance by a network of private sector constituents arises from: (i) No increase in government debt; (ii) Replacing Ministerial accountability with accountability by constituents to constituents; (iii) Enriching democracy by direct citizen participation; (iv) Changing the role of government from direct intervention to establishing the rules of the game for self-governance; (v) Increasing economy, efficiency and effectiveness by replacing private sector competition for control through markets and regulation with internal organizational competition for control among constituents with competing interests; (vi) Avoiding autocratic or plutocratic control of public assets by investors that undermines democracy and creates resentment. In these ways, network governance can reduce cynicism of politicians and government that can generate social alienation and disengagement.

Keywords: Accountability, constituents, democracy, network governance, privatisation, public private partnerships, stakeholders

JEL Classifications: D02,D20,D60,D70,G30,H10,L20,L30,G34,M41,M48

Working Paper Series