The Competitiveness of Nations in a Global Knowledge-Based Economy
Patrick Birkenshaw,
Ian Harden & Norman Lewis
Government by
Moonlight: The Hybrid Parts of the State
8. Conclusions
Unwin Hyman 1990, 272-293.
The
preceding chapters will, we hope, have convinced the reader that the
relationship between public and private presupposed by orthodox accounts of the
British constitution no longer exists in the real world. We have traced in detail the complex ways in
which public and private actors and purposes are enmeshed in contemporary
However,
as we explained in Chapter 1, it has not been our intention to examine
corporatism as a contribution to retheorizing the nature of the state. For our purposes, it has been enough to
identify ‘public actors’ in a conventional way, by focusing on those who - on
any constitutional reckoning - form part of ‘government’. We have then examined the involvement of
‘non-government’ actors in the decisions and non-decisions of public
actors. This approach, together with use
of the familiar public law concept of delegation of powers, enabled us to bring
most of what we have identified as ‘corporatism’ into the net of constitutional
analysis. The combination of a critical
view of constitutional expectations and a more conventional approach to
the identification of constitutional actors has led us, in the preceding
chapter, to propose various reforms to improve upon existing arrangements for
accountability. We regard the
implementation of these proposals as being necessary to ensure that existing
constitutional expectations are realized in the circumstances we have
described.
In this
concluding chapter we examine the structure of the orthodox views in more
detail and consider the ideological obstacles which such views present to
implementation of the
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reforms suggested in
Chapter 7. Finally, although we have not
felt it necessary for our constitutional argument to treat critically the
concept of the state, we cannot entirely neglect the longer term constitutional
future of public and private in
The
old constitutional orthodoxy about public and private is based on a
nineteenth-century interpretation of the seventeenth-century constitutional
settlement. A fundamental presumption is
that public power will be limited, not intruding too far on the market and
community relationships which constitute the private sphere. In the seventeenth century, constraints on
government power were not framed as limits on the ‘state’, for the concept of a
distinct and unitary public power was alien to English jurisprudence and
political thought. [2] Nor were the limits of constitutional
government embodied in restrictions on Parliament, which had been the winner in
the century’s political conflicts and whose victory was celebrated as the
triumph of tradition and continuity over novelty. Chief Justice Coke’s ‘historical myth of the
English constitution’ made Parliament the defender of the ‘ancient and
excellent laws of England’: ‘the birth-right and the most ancient and best
inheritance that the subjects of this realm have, for by them he enjoyeth not
only his inheritance and goods in peace and quietness, but this life and his
most dear country in safety’. [3]
Constitutional
limitations were placed on the Crown,
which had sought to invade this ancient birthright of the common
law. The Bill of Rights sought to
provide constitutional guarantees against what the Stuart monarchs had
attempted to do, not by limiting public power as such, but by making the
consent of Parliament a precondition for valid use of the instruments of
government which the victors claimed the Stuarts had sought to abuse. Hence the
jurisprudential concept which embodies public authority in
The
seventeenth-century constitutional settlement was thus
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built on the idea that the
sphere of legitimate government could be delimited by reference to the
traditional rights of individuals, as embodied in the common law. Public and private were equivalent to meum
et tuum as between the subject and the king - a conception of the nature of
public law which received its definitive form in the nineteenth-century
constitutional jurisprudence of A. V. Dicey. [4] Since the common interest of all those
subjects who counted for political purposes was represented by Parliament,
constitutional limitations on the Crown in Parliament itself were wholly
unnecessary. The Crown in Parliament as
the embodiment of public authority was self-limiting because, after 1689, it
contained its own internal ‘checks and balances’.
Only
in the 1960s did the judiciary - in hesitant and confused fashion - begin to
develop the common law in response to the realities of arbitrary, unconfined
and unstructured discretionary power in the administrative state. In the process of doing so, they perpetuated
the idea that the traditional common law rights of individuals are the focus of
public law regulation of the processes of government. Individual interests not based on common law
rights have received a lesser degree of judicial protection. More fundamentally, the courts have been
unwilling, since the attempts by Coke, to develop the common law so as to
structure the policy process in the public interest. The concept of ‘policy’ remains an
unpersuasive rationalization of judicial torpor. [5]
It
would be wrong to deny the significance of the major
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expansion of judicial
review of administrative action during the past quarter of a century. Old doctrines have been reworked and
reapplied and new ones have been invented.
In the process, some areas at least of the public sphere have been
subjected to a greater degree of legal structuring than existed
previously. The ‘coming of age’ of
administrative law in Britain was marked by a bold judicial attempt to
distinguish public from private rights and to subject the vindication of the
former to a distinctive set of procedures. [6] Nor is it only the judiciary which has been
modernizing the quaint byways of public law in Britain. It is no longer possible to marvel, for
example, at the fact that most local authority expenditure on non-advanced
further education is probably ultra vires, nor to point to the
University Grants Committee as a constitutional monstrosity. Even non-departmental public bodies have been
recognized as a distinct category within the public sphere and provided with a
‘constitution’ of sorts. [7]
However,
the modernization of administrative law in Britain has not been
premissed on any conscious re-examination of constitutional fundamentals,
either by the judiciary or by government.
None the less, it does imply a realization that constitutional
legitimacy can no longer be based on the supposed continuance of a traditional
relationship between public and private, guaranteed by the political
representation of civil society in Parliament.
Here, for example, is H. W. R. Wade on administrative law:
Up to about the end of the nineteenth century administrative law kept
pace with the expanding powers of the state.
But in the twentieth century it began to fall behind. The courts showed signs of losing confidence
in their constitutional function and they hesitated to develop new rules in
step with the mass of new regulatory legislation... At the same time Parliament
was losing its control over ministers, so making it all the more obvious that
the law was failing in its task of enforcing standards of fairness in the
exercise of statutory powers. [8]
It is
a great irony that even before the development of a legal framework appropriate
to a ‘modern’ state has been completed,
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the revised assumptions
about public and private on which the new framework is based have themselves
been fundamentally eroded.
In
the 1930s, and then for the post-war period, the changing relationship between
public and private was understood largely in terms of a spatial metaphor:
expansion of the public sphere and a contraction of the private. ‘Public’ and ‘private’ still carried the same
theoretical connotations, although the area denoted by each was different from
that which the old constitutional orthodoxy had assumed. Education, housing and welfare, for example,
had formerly been exclusively private matters.
The state had now expanded so as to take them, partly at least, into the
public sphere. This spatial
interpretation was shared both by those who supported such changes and by those
who opposed them.
As
we have already remarked, conscious attempts at reassessing constitutional
fundamentals are not a British tradition.
However, it seems to us that the spatial metaphor of the ‘expanded
state’ has indeed become the new constitutional orthodoxy about public and
private, as in the extract from Wade quoted above. Public and private are no longer seen as
territories divided by natural and agreed frontiers; ‘the state’ has expanded
to occupy formerly private territory.
This has consequences for the mechanisms and processes of legal accountability
of government which, belatedly, are being explored; in the Justice/All Souls
Review, Administrative Justice, for example, which appeared in 1988. [9]
Constitutional
thinking has not yet really begun to absorb the changes that have taken place
since 1979, nor to measure them against the new orthodoxy of the ‘expanded
state’. We have referred at various
points, in earlier chapters, to the rhetoric of markets and the private sector
which has accompanied these changes.
This rhetoric assumes that the spatial metaphor is adequate to
understand the role of the state, and that the boundaries of public and private
are a matter of political conflict and choice.
For example, industries that were nationalized and became part of the public
sector can be privatized and thus rejoin the private sphere: just as Alsace and
Lorraine were part of France, were then annexed by Germany and were
subsequently reabsorbed by France.
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The
most likely response of mainstream constitutional thought is simply to take at
face value claims that the shift from private to public is being partially
reversed. This would represent a
continuance of the tradition of ‘intuitive realism’ in constitutional analysis
in Britain: the simple intuition or apprehension of the object of inquiry. [10]
We
shall not repeat here explanations that we have offered elsewhere as to why
this cannot be a satisfactory basis for identifying a constitution. [11]
However, conclusions supposedly based on intuitive realism cannot simply
be dismissed on the grounds of methodological and theoretical inadequacy; after
all, enough monkeys with typewriters may produce Hamlet. We must consider, therefore, whether
constitutional insouciance about public and private might be defended on
grounds more relative.
The constitution of economic liberty?
It
is unlikely that any significant strand of constitutional thought in Britain
would seek to reinstate, in conscious and articulate fashion, the ‘natural’
boundaries of the state which the ‘old orthodoxy’ took for granted. As we have explained, within the British
constitutional tradition the doctrine of Parliamentary supremacy and the
absence of a bill of rights mean that there are no mechanisms for entrenching substantive
limitations on the exercise of political choice. This is not the case in some other
jurisdictions, and in the United States, for example, the Supreme Court
interpreted the constitution in the late nineteenth and early twentieth
centuries as guaranteeing certain market freedoms by way of the doctrine of ‘substantive
due process.’ [12] We feel confident that it would not be
possible to construct a persuasive argument that market freedoms are an immanent
expectation of the British constitution.
In any event, such a theory could function only as a highly critical
perspective on current processes of government.
The empirical evidence which we have adduced in Chapters 3 and 4 shows,
not abstention by the state from interference in a sacrosanct private sector,
but more or less stable arrangements involving bargaining, persuasion, deals
and trade-offs between public and private.
Our
belief is that these patterns of interaction between government and private
interests are, in part at least, a necessary response to the complexities of
the modern world. Even if we are
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wrong on this point, it
remains the case that the empirical phenomena we have described do not
represent a return to the relationship between public and private presupposed
by the old constitutional orthodoxy. In
these circumstances, it seems to us that any revived version of that theory is
likely to function not as a genuinely critical conception of constitutional
legitimacy, but as an ideology, concealing what it purports to criticize. Let us pursue this argument by turning once
more to the question of rational responses to complexity.
The constitution, the state and the economy
There
is a body of economic literature which argues that any attempt to replace or
modify the market is misguided, and that free markets constitute a more
rational response to problems of complexity than can state action in any
form. In this view, the market
represents the rationality of civil society to be set against the collective
irrationality of state administrative planning.
In vulgarized form, these sentiments have become part of the ideology of
Thatcherism: a return to the market, to private responsibility, private
provision and choice in the production and distribution of goods and services
should replace state and ‘corporatist’ decision-making.
Corporatism
is here identified with the interventionist state, which is seen as inefficient
and also illegitimate in its authoritarian denial of market freedoms. There are echoes in this perspective of the
‘state’ form of corporatist ideology, lumped together with the command
economies of eastern Europe. Corporatism
has also been seen as a response to the failures of the interventionist
state: a palliative to avoid the worst consequences of a lack of control, of
legitimacy and of resources for rational decision-making. In this view, there is an attempt to rely on
tripartite institutions to effect what government has been unable to achieve by
itself; political direction of economic decisions and consent to the
abridgement of market freedoms. From the
perspective of believers in the market this cannot work, because tripartism is
no substitute for market disciplines in ensuring rational decisions. The effect is merely to abridge freedom
further by licensing elements of civil society to impinge on the natural
workings of the market and thereby overreach their legitimate role.
We
have tried to show that this understanding of corporatism is
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too narrow, and in many
ways a distortion of reality. The crux
of our argument has been that forms of associative conduct, of public-private
interaction, continue to flourish under Thatcherism. They have been, and are, endemic in the
economic sphere and in relation to ‘welfare’ matters. There are compelling reasons why this should
be so; reasons that are to be found in the complexity of modern societies, the
failure of attempts at comprehensively rational planning and administration and
the decline of territorial politics as a source of legitimation. What we are witnessing is not a return to autonomous
markets, but the delegation of public policy functions to ‘private’ actors who
are not subject to any effective forms of constitutional accountability, and
activity by undeniably public actors which is similarly
unaccountable. There has been no return
to the old orthodoxy of a stable traditional relationship between public and
private.
Nor
does it seem to us that the trends we have identified are likely to be
reversed. On the contrary, the growing
internationalization of economic activity will continue to produce strong
pressures to engage in corporatist styles of policy intervention, even in
states with liberal economic traditions and governments that espouse
neo-liberal economic ideologies. The
argument is made with great force and clarity by the Department of Trade and
Industry, discussing the advent of the single European market:
The Government are working to ensure that the single market in goods
and services is achieved, and in ways beneficial to the UK... The Government
want to see that industry and commerce understand and prepare for the
fundamental changes in the way the European market operates which will take
place between now and 1992. To that end,
DTI wants to establish a closer partnership with business so that Britain’s
commercial interests can be taken into account.
Over the last two years, DTI and British
telecommunications manufacturers and operators have cooperated to secure
agreement in Europe on the launch of a European-wide mobile communications
network for the beginning of the 1990s.
The European-wide market which will result gives European industry the
opportunity to take a lead in mobile communications. DTI lead the UK effort necessary to bring together
national governments, telecommunications operators
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and manufacturing companies and to secure agreement in Europe on common
technical standards. At the same time,
British manufacturers are forming trans-national collaborative alliances to
help break down nationalistic purchasing decisions. As 1992 approaches, Government and company
efforts will need to come together in many other areas to achieve similar
results. [13]
The
calculus of economic rationality requires all governments to pursue comparative
advantage for their own industries, even though some might regard the situation
as a version of the prisoner’s dilemma.
The methods used are likely to be increasingly subtle and invisible,
depending on corporatist frameworks of the type we have described in Chapter 3,
rather than direct administration or legal regulation.
Furthermore,
governments which once enjoyed the luxury of public expenditure rising faster
than national income as a whole are now subject - some more willingly than
others - to real and unavoidable fiscal constraints. The combination of international competition
and fiscal stress makes it increasingly necessary for public goals, in both
economic and social fields, to be pursued through bargaining and co-operation,
as well as by direct administration and the external regulation of private
endeavour.
Public, private and political choice
Another
possible constitutional response to the challenge to the ‘new orthodoxy’
presented by contemporary developments is to regard the boundaries of public
and private as a ‘political’ matter: logically separate from, and prior to,
public law structuring and regulation of whatever area the government happens
to choose that the state should encompass.
Of course, it can hardly be denied that the relationship between public
and private is, in one sense, a constitutional matter. However, every constitution leaves some
matters to political choice - why should not this be one such matter in the
British constitution?
If
public and private are thought of as separate territories, then they can be
identified by drawing lines in advance of particular decisions, policies
and controversies. Government can then
be bound by rules, announced in advance, which decide the area of public
accountability. In this way constitutional
legitimacy might
280
be combined with pure
political choice over the extent of the public sphere. [14]
A more perceptive
form of this analysis might anticipate a shifting and uncertain border between
public and private and thus a need for legal mechanisms and principles to
resolve disputes at the margin, of which the first example might be R v Panel
on Takeovers and Mergers ex parte Datafin. [15]
This
sort of approach would recognize that the development of judicial principles
for resolving marginal disputes was a constitutional matter, but would find
difficulty in seeing why the accountability mechanisms which we outlined in
Chapter 7 fell into the same category.
To understand why such devices are constitutionally required, it
is necessary to trace, as we have, the sharing and delegation of power by
public actors. When that is done, it
becomes clear that what we have called the ‘spatial metaphor’ is no longer
appropriate; ‘public’ and private’ are now aspects of the structure and
behaviour of all organisations. We
cannot first identify a sphere of ‘public’ organizations and then ask how they
should be made constitutionally accountable.
That way of proceeding makes no sense because, as we have seen in
Chapters 6 and 7, mechanisms of accountability themselves contribute to the
organizational structures and performances which count as ‘public’ and
‘private’.
If
‘public’ and ‘private’ are dimensions of the activity of organizations then
they cannot be delimited by rules announced in advance - not at any rate
without crippling the ability of the organizations to respond to change in
turbulent and complex environments. The
claim that the extent of the public sphere is a matter for politics thus
amounts to saying that government decides when it shall be accountable by accepting
or refusing to acknowledge responsibility, on an ad hoc basis, in
respect of particular decisions and policies.
That
is often a fairly accurate description of how accountability tends to work at
the present time, as Chapters 6 and 7 have abundantly illustrated. We have noted that the seventeenth century
assumptions about the relationship between the state and civil society were
such that it seemed unnecessary to design the constitutional framework in such
a way as to make those assumptions explicit.
As the empirical basis of the assumptions has disappeared, so government
in Britain has been able to exercise power unconstrained by constitutional
guarantees. This unconstrained power
does indeed exist in the relationship
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between public and
private, but we cannot present this as a constitutional theory of legitimate
government. Any attempt to do so ends up
in the reductio ad absurdum that there is no British constitution
and thus no legitimate authority at all; power comes out of the barrel of a
gun. [16]
This
does not mean that the constitution cannot leave any room for political choice
in the relationship between public and private.
As we have already emphasized, British constitutional arrangements
currently contain no substantive provision for an irreducible private
sphere. Nor have we sought to argue for
an irreducible substantive core of public functions. Rather, our claims about the British
constitution have focused on procedural requirements of openness and
accountability. Substantive political
choices cannot be left unconfined, unstructured and unchecked, and in Chapter 7
we have suggested accountability mechanisms which seem to us necessary and
appropriate to perform these functions.
The
question of the substantive constitutional relationship between public and
private is one that we shall briefly address.
However, before doing so we must consider yet another potential
objection to the procedural proposals that we have already made. A possible response to the evidence we have
presented in this book is to accept both that the ‘old orthodoxy’ cannot be
revived and that public and private are not separate territories, but then to
claim that the institutions and processes we have described contain their own
solution to the problem of public accountability.
Market accountability in the public sector
Far
from believing that untrammelled market forces produce rational decisions,
government itself now recognizes the need for the continuing and active use of
public authority to establish and maintain ‘open’ markets. Once again, the point has been made clearly
by the Department of Trade and Industry:
Open markets are the best guarantee of incentive and efficiency. Closed, insular markets kill enterprise and
effort, with a consequent loss of dynamism.
But open markets are not to be confused with unfettered market forces,
for these can lead to closed, protected and monopolistic conditions. DTI will strive to promote open markets
through the exercise of its
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competition policy, through privatisation, deregulation and
international trade negotiations.
Regulation has sometimes limited the operation of markets in the past
but it can be used, and will be used, to encourage competition and to ensure
that markets work properly and enjoy the confidence of informed investors and
consumers. [17]
It
might be argued that such use of public authority can and should be guided by
values and principles immanent in the concept of the market itself; that these
sufficiently structure the discretion necessary for effective public action to
create and maintain markets; and that to demand further public accountability
is to miss the point. From this
perspective, greater accountability could serve only to provide a point of
entry for values and principles other than those immanent in the market,
thereby reintroducing the distortions associated with planning and
‘corporatism’ which are, ex hypothesi, the very problem to be
tackled. We hope that this puts the case
against our view at its strongest. In
constitutional terms this would amount to replacing ‘public’ and ‘private’, in
the old orthodoxy, with ‘market’ and ‘political’ spheres.
The
argument seems to us to be profoundly mistaken at a number of levels. As we have already shown in Chapter 5, the concept of ‘efficiency’
in its market form cannot provide any meaningful guide for public action,
even action to maintain markets. Once
this is recognized it is impossible to avoid (or even to bracket off) the
question of choice of goals. We would
not seek to deny that efficiency (in its various meanings), incentive,
enterprise and effort are important matters; but they are not the only
ones. To take a few random examples,
public health, national security, preservation of the environment, and
technological innovation are also important.
Views about the relative importance of different goals differ, as do
views about how best to realize desired goals.
One way of reconciling such differences is through markets, another is
through politics. We cannot, however,
simply translate ‘markets’ and ‘politics’ into ‘private’ and ‘public’ because
governments act as players in the market; as ‘meta-players’ with power to
modify the rules; and as umpires, enforcing and interpreting the rules. [18]
In
other and more traditional terms, governments have executive, legislative and
judicial functions. This combination of
roles produces tensions
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and conflicts which cannot
be resolved by appeal to principles immanent in the concept of the market. The provision of a framework for the exercise
of executive, legislative and judicial functions is the job of a constitution. A democratic constitution is one
in which, inter alia, different views can compete through the political
process - but, as we have already argued, the political process presupposes,
and is not a substitute for, a constitutional framework.
The
argument that the public aspects of corporatist arrangements can and should be
guided by principles immanent in the concept of the market is not the same as
the idea of ‘substantive due process’ which we mentioned earlier. In fact, it is a procedural claim;
that a large class of public decisions should be made through processes from
which those who do not possess the relevant economic power are wholly
excluded. Such a claim is in constitutional
terms a bold and impudent novelty, fundamentally at odds with basic
constitutional principles of openness and accountability. There are, of course, good reasons for some
abridgement of these principles where there is a clear countervailing public
interest. Freedom of information
legislation, for example, always provides for exceptions. [19]
The
point, however, is that the exceptions are a limited incursion on a basic
principle of openness, not a blanket denial that the principle of openness has
any relevance. It will not do,
therefore, simply to allow the state to act as any other market player. On the other hand, a constitution which fails
to allow any room for flexible approaches to policy delivery, and for
co-operative public/private interactions, seems to us to be one that condemns
government to ineffectiveness.
We
are not, of course, the first to point out that pure ‘market’ and ‘state’
approaches to social and economic ordering are inadequate as rational
approaches to dealing with complexity. Nor are we the first to seek to map new types
of response in terms of their legal characteristics. As we have already noted, the concept of
‘associative’ activity (which seems to us to embrace much public/private
interpenetration) has strong affinities with he idea of ‘reflexive law’. In this type of law, it will be remembered,
groups at an intermediate level between the state and the individual have
responsibility for regulating their own affairs, the state’s role being to
oversee the design and functioning of the self-regulatory systems and the
relationship between different systems. [20]
These
developments cannot be self-legitimating solely by virtue of the fact that -if
and when completed - hey will involve less ‘state’ control over specific
outcomes than does the classic form of public administration. The first point to be made in this regard is
that the growth and development of public/private interactions must be seen in
the context of changes in the sphere of ‘government’ itself. From a constitutional perspective, it would
be highly misleading to conceptualize changes in, for example, education as a
‘retreat’ of the state, merely because local government is being
displaced from its former role as a bureaucratic provider of education. The powers of central government -
both its legal authority and its practical ability to achieve its policies -
have grown in the field of education, not diminished. It is trite wisdom to observe that the state
is not a unitary organization, but it is important to recognize the increasing
centralization of authority in Britain.
Furthermore, the fact that ‘the state’ retreats from responsibility for
the outcomes of policy (in terms of their effect on the welfare of individuals)
enhances, rather than diminishes, the present government’s capacity to
formulate and implement the kind of policies in which it is interested.
In
general, the use of public/private hybrids as policy instruments has been
accompanied by a willingness to use to the full the legislative and executive
powers of the state; as, for example, in the enactment of the Education Reform
Act, 1988, and the de facto abolition of the Training Commission/MSC in
September 1988, by ministerial diktat. [21] Furthermore, the ‘power of the purse’ - which
now belongs to government not Parliament - is used as an increasingly subtle
and flexible instrument; to put pressure on recalcitrant organizations or to
outflank them; to reward existing friends; to facilitate the creation of new
organizational ‘partners’ for government.
Thus the failure to establish a ‘modern’ framework to make accountable
the budgetary powers of the state during the period of its growth now allows
government in Britain to exercise ‘consumer sovereignty’ in markets and quasi-markets
created by its unfettered legislative and executive powers. In a sense we are here standing on its head
the problem of the ‘contract state’ as it has usually been understood. [22]
The
issue is not how government can make its
285
contractual partners
accountable, but how government itself can be made accountable for its
decisions on what it wants to buy and the price it is prepared to pay.
As
we have tried to show throughout the book, this does not mean that the problem
of making private actors accountable for the exercise of public
authority delegated to them has disappeared.
Government itself is undoubtedly concerned to present the shift away
from direct bureaucratic administration and provision as a ‘rolling back’ of
the state, in which power is ‘returned to the people’. ‘The people’ is supposed to consist, for
these purposes, of a new Thatcherite yeomanry of ‘active citizens’ in which
Everyman is a consumer, shareholder, parent and Good Samaritan. However, as we have seen in Chapter 6, there
is little in the organizational forms available for public/private activity to
supplement market forces, based on contract and property rights, as the basis
of internal accountability.
There
seems to us to be no good reason to think that there are forces immanent in the
social, economic and political developments of ‘associative’ order which
guarantee that it will operate - in such a way as to guarantee legitimacy. To imagine otherwise seems to us to reproduce
one of the most indefensible elements of naive pluralism. As we have tried to demonstrate in this book,
there is nothing in the shift from direct state administration and provision to
reliance on corporatist and/or post-corporatist frameworks which guarantees that
policy processes will not be factional, arbitrary and biased. ‘Reflexive’ law, like any other type of law,
necessarily presupposes a constitutional framework for distinguishing between
what is legitimate and illegitimate conduct.
As
we have also argued, the lack of constitutional constraints on government in
Britain enables it to blend its formal legislative and executive authority with
the power of the purse. The result in
many fields has been an increase in the power, de facto and de
jure, of central government. If the
break up of monolithic state bureaucratic structures is to result in processes
of government which are more accountable to civil society, and more effective
in responding to its needs and aspirations in a complex and changing world, it
can only be within a framework of constitutional legitimacy. Our suggestions for improved mechanisms of
accountability, discussed in Chapter 7, are directed towards this end.
These
proposals necessarily have a limited compass.
As we indicated in Chapter 1, our focus has been on relatively stable
institutional arrangements for corporatist decision-making and on ways in
which the exercise of public power and its delegation might be brought within
the compass of constitutional accountability.
However, we have also noted both more evanescent forms of public/private
interaction, and manifestations of the ‘state as market player’, which may not
always involve stable corporatist arrangements.
The legal regulation of ex parte contacts is potentially a
powerful instrument, in certain contexts, for controlling even single contacts;
though many such contacts may unavoidably escape the public record, either de
jure or de facto.
The ‘expanded’ state — unfinished constitutional
business
The more
general phenomenon of the ‘state as player’ raises a number of issues about the
absence of constitutional restraints on the executive power of government. The state in Britain has never received clear
constitutional definition and the lack of such a definition has both a
‘quantitative’ and a ‘qualitatitive’ aspect; how much does the state do
and how does it do it? The
failure of constitutional theory to readdress the ‘quantitative’ aspect of
traditional beliefs about public and private has, belatedly, been partially
remedied. The ‘new orthodoxy’ recognizes
the expanded state and, during the past quarter of a century, has made some
limited progress in designing and implementing legal mechanisms of
accountability. Our own view, set out in
detail elsewhere, is that the new orthodoxy remains blind to a wide range of
constitutionally significant phenomena besides corporatism. [23]
However, central government still largely resists the measures that
would be needed to ensure proper constitutional accountability, even over that
part of the range of its activities which the new orthodoxy recognizes.
We
shall do no more here than merely refer to arguments which we have made in
detail elsewhere about the constitutional framework of central government. [24]
Even
the most basic requisite - freedom of information - has been introduced only at
local government level, and then not as a matter of principle but (by first
intention at any rate) as an instrument of political advantage. Furthermore, the parliamentary power
of the purse has been rendered largely ineffective because parliamentary
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financial procedures were
not modernized during the period of growth of public spending. This failure now facilitates government’s use
of the characteristic budgetary instruments associated with corporatist
arrangements, such as contractual power, tax expenditures and loan
guarantees. Although tax expenditures
require legislative form and hence are subject to parliamentary approval, the
secrecy surrounding preparation of the Budget, and the absence of any real
parliamentary input into it, make bargaining over particular tax regimes a
matter of wholly unfettered executive discretion. [25]
Guaranteed
loans are a significant instrument of leverage, whilst at the same time largely
escaping financial accountability mechanisms and imposing relatively small
budgetary burdens. The discretionary
nature of loan guarantees, as also of grants and interest relief subsidies
(‘soft loans’), makes them eminently suitable for bargaining in Britain by a
state seeking to act as a market player.
In relation to government contracts, existing legal doctrine makes no
concession to the notion of public interest or to the need for public
accountability, either of the government or of those with whom it
contracts. On the contrary, the doctrine
of ‘privity’ insulates the contractual partners from external claims, and
existing corporatist devices such as the Review Board for Government Contracts
operate, as we have seen, in the constitutional shadows.
The
constitutional problem of public and private as it presents itself today is
thus a double one. First, we are faced
with the continuing consequences of the failure to restructure accountability
mechanisms so as to encompass the ‘quantitative’ increase in state
activities. Second, the qualitative change
in public/private relations, that has occurred since the demise of the world
pictured by the old orthodoxy, is still not being addressed by mainstream
constitutional thought. As the first
failure feeds into the second, the consequence is that much of the relationship
between public and private escapes the constitutional net altogether.
It
is our belief that the methods we have used demonstrate that it is necessary to
expand that net, in order to keep faith with the values that underpin more
orthodox approaches to constitutional analysis.
We hope that our proposals for reform, if implemented, would go some
considerable way towards restoring the legitimacy of our processes of
government. We cannot conclude, however,
288
without at least raising
certain issues about the changing role of the state which seem to us to be of
constitutional importance, but which are outside the scope of the methods of
constitutional analysis that we have used in this book.
The future of
constitutional accountability
The qualitative
aspect of the lack of a clear constitutional definition of public and
private can now be recognized to have had serious effects in the past -
especially in the relationship between government and industry, particularly
the nationalized industries. [26] It is the qualitative aspect which is
fundamental to an understanding of contemporary constitutional changes, as
government ‘retreats’ from direct public administration as a way of achieving
policy goals, in favour of the kinds of bargained public/private relationships
that we have described.
We
have argued that existing constitutional expectations impose requirements of
legitimacy on these relationships. These
requirements are ‘procedural’ in that, in a formal sense, they do not restrict
substantive policy outcomes. However,
this must immediately be subject to qualification. In the application of tests of validity such
as the ‘hard-look’ standard of judicial review (or even the humble home-grown Wednesbury
test), substance and procedure may be impossible to disentangle. This is only one aspect of a more general
relationship between procedure and substance.
A procedure which has no possible impact on the substance of a decision
is usually (though not always) a worthless formality.
At
one level we are unabashed by the procedural emphasis of our constitutional
analysis, for we are not alone in believing that to concentrate on procedural
(as opposed to either formal or substantive) legitimacy is both a necessary and
desirable response to problems of complexity and change. [27]
However, there is also another reason - and one with which we are
ultimately less comfortable - for focusing on procedures:
Our model takes as its starting point the largely uncontested notion of
the omnicompetence of Parliament.
When we say ‘uncontested’ we do not mean that the idea
of parliamentary omnicompetence would satisfy the sociologist or political
scientist, still less the natural lawyer or moral
289
philosopher. Rather we mean
that, in so far as we have any clear constitution at all, parliamentary
omnicompetence is axiomatic. [28]
In
terms of public and private, parliamentary omnicompetence means that the
substantive effects of the procedural requirements we have outlined can be
outflanked by legislation. The process
of legislation is itself subject to various types of procedural constraint, but
it remains the case that statute can create and destroy any legal duties and
powers, whether public or private. In
effect, this means that there is no irreducible private sphere nor, apart from
parliamentary sovereignty itself, any irreducible public sphere.
To
constrain parliamentary sovereignty in the field of public and private would be
to effect a major constitutional change in Britain. The most debated of such changes is the idea
of an entrenched document to protect certain fundamental rights. The concept of human rights is usually taken
to delimit an irreducible ‘private’ sphere within which the state must not trespass,
and documents such as the European Convention of Human Rights mainly embody the
traditional liberal individual freedoms.
There is no doubt in our mind that the British constitution would be
improved by, for example, the incorporation of the European Convention into our
domestic law in order to protect individual freedoms against encroachment. However, the fact that public and private in
the contemporary world are increasingly aspects of the structure and behaviour
of all organizations seems to us to complicate the issues in ways which
perhaps have not been sufficiently addressed by those who have advocated a bill
of rights or a ‘written constitution’ for Britain.
An
influential strand in thinking about human rights has emphasized social and
economic security for individuals. Such
rights - if recognized - might require an irreducible core public sphere, at
least in the sense of needing public authority to require some degree of
redistribution within a market economy.
There is no necessary reason, however, why the actual task of
administration should not be entrusted to ‘private’ organizations. Indeed, if the offloading process that we
discussed in Chapter 4 were successful, the ‘public’ element in social and economic
security might, in theory at least, amount to nothing more than an ultimate
guarantee that never needed to be invoked.
However,
in so far as we are discussing rights, the European Convention contains
in article 6 a provision which is of considerable importance: ‘In the
determination of his civil rights and obligations... everyone is entitled to a
fair and public hearing within a reasonable time by an independent and
impartial tribunal established by law’.
Potentially, at least, this provision might provide a basis for
requiring public action to ensure that the decision-making procedures of
private organizations to which public functions are delegated meet standards of
fairness, natural justice and legitimate expectations. We must refer to ‘potential’ because the
interpretation and application of article 6 by the Court of Human Rights has
been somewhat self-restricted to date.
The
implications of this extend beyond the area of welfare to encompass delegated
public tasks of all kinds where decisions affect individuals. The notion of ‘regulated autonomy’, discussed
in Chapter 6, might thus become a source of limits on the extent to which
public functions can be carried out without fair procedure. Parliament, for example, could legislate for
the provision of a particular public service through contract rather than
direct administration; but to fail to provide remedies for aggrieved
individuals against the contractor might be unconstitutional.
There
is a further aspect of individual human rights which seems to us to confront
the public/private issue directly. The
idea of a right to participate in processes of government and public
service (other than through voting in elections) is not included in the
European Convention or its protocols.
However, article 25 of the International Covenant on Civil and Political
Rights provides that: ‘Every citizen shall have the right and the opportunity…
without unreasonable restrictions... (c) To have access on general terms of
equality to public service in his country.’
Likewise article 21, para. 2 of the Universal Declaration of Human
Rights provides that: ‘Everyone has the right to equal access to public service
in his country.’
The travaux
préparatoires indicate that these provisions were directed at systems of
entry to the civil service. [29] It is difficult to see why such a provision
should be thought important except as an aspect of a more fundamental
commitment to the democratization of public life and indeed this is the context
of both article 21 of the Universal Declaration and article 25 of the Covenant. If
291
public functions are
entrusted to ‘private’ organizations, the extent to which the resulting policy
process meets democratic criteria is, as we have seen in Chapters 6 and 7,
questionable in contemporary Britain. Once
again, ‘regulated autonomy’ may need to impose limits on parliamentary
sovereignty if the idea of individual rights against the state is not to be
outflanked by contemporary developments.
It would be a fine irony if British citizens were to get a bill of
rights only to find that the ‘public’ authorities against which the rights
might be impleaded had largely been replaced by ‘private’ bodies, which could
be rendered accountable only through private law mechanisms.
1 Harden and Lewis,
1986.
2 Dyson, 1980. -
3 Quoted in Hill, 1965,
Pp. 257-8.
4 ibid.; Dicey, 1939.
5 On ‘confining and
structuring’ discretion, see Davis, 1971.
On ‘policy’ as a excuse for judicial torpor see, e.g., Bushel! v Secretary of State for the
Environment [1981] AC 75.
6 O’Reilly v Mackman
[1983] 2 AC 237.
7 The Legal Basis of
Further Education: A Review by Officers from
the Department of
Education and Science, the Welsh Office and the Local Authorities
(DES, 1981); Education Reform Act, 1988;Harden, 1987.
8 Wade, 1988, p. 17.
9 Administrative
Justice: Some Necessary Reforms (Oxford
University Press, 1988). -
10 Collingwood, 1940.
11 See Harden and Lewis, 1986.
12 See, e.g., Allgyer v Louisiana 165
US 578 (1897); Lochner v New York 198 US 45 (1905); Schwartz, 1965, PP.
32-58. Lochner v New York and following cases are now ‘universally
acknowledged to have been constitutionally improper’: Ely, 1980, P. 16.
13 DTI - the
Department for Enterprise, Cm 278, January 1988.
14 On the rechtsstaat,
in which legitimacy is based on the fact that public power is confined by
pre-established rules, see Dyson, 1980; Poggi, 1978.
15 [1987] QB 815.
16 For the claim that
there is no British constitution see, e.g., Ridley,
1988.
17 DTI - the
Department for Enterprise, para. 1.14.
292
18 Zysman, 1983.
19 See Birkinshaw,
1988.
20 Teubner, 1983, and
see ch. 6 above.
21 Department of
Employment, Statement by the Secretary of State: the TUC and the Training
Commission, DE Press Notice 205/88 (1988).
22 See, e.g., B. L. R.
Smith, ‘Accountability and independence in the contract state’ in Smith and
Hague, 1971.
23 Harden and-Lewis,
1986.
24 ibid., esp. chs 4
and 5; Birkinshaw, 1988.
25 On tax expenditures
see, e.g., Willis and Hardwick, 1978; Armstrong Committee, 1980.
26 Prosser, 1986, and
see chs 3 and 7 above.
27 See Habermas, 1979.
28 Harden and Lewis,
1986, p. 5.
29 A. Rosas, in Nordic
Yearbook of Human Rights, 1989.
293