Infusing Public Law into Privatized Welfare: Lawyers, Economists, and the Competing Logics of Administrative Reform

• Published date: 01 December 2016
• Date: 01 December 2016
• DOI: http://doi.org/10.1111/lasr.12238

Infusing Public Law into Privatized Welfare:

Lawyers, Economists, and the Competing Logics of

Administrative Reform

Avishai Benish Asa Maron

Along with the trend toward “New Public Management” (NPM) and replacing

the legal culture of public bureaucracies with market logic through privatiza-

tion, we are also witnessing instances of “publicization,” the application of

public law norms and mechanisms to privatized services. The article explores

the role of government lawyers and economists in the dynamics of these

administrative reforms. Using a detailed case study of welfare-to-work reform

in Israel, it shows that the reconstruction of decision making and accountabili-

ty patterns under NPM was the result of competing efforts by these profes-

sional groups to appropriate the “privatized state” to accord with their own

institutional logics and interests. While economists advanced a “market” logic,

lawyers tried to reproduce the logic of “law” in the post-bureaucratic setting.

The study demonstrates how eventually public law norms were re-infused

into privatized welfare as a result of the increasing institutional power of the

lawyers in the regulatory space, along with wider political and social support

for the entrenched legalistic mechanisms of the administrative state. However,

in addition to the “battle of norms” between lawyers and economists, there

were also concessions that led to the redrawing of the boundaries of public

law along more functional, rather than formal, lines.

The practice of power and discretion by agents of the state—

whether in government offices, courts of law, or welfare

bureaus—has always been a source of potential contention

(Kagan 1978, 2001, 2010; Mashaw 1983). Historically, public law

provided the framework for both constituting administrative

The authors would like to thank Michael Adler, Sharon Gilad and Ronen Mandelkern

for their insightful comments on an earlier draft of this article, as well as the editors and

the anonymous reviewers for their valuable and helpful comments. The article also

benefited tremendously from discussions with Tomas Burke, Lauren Edelman, Malcolm

Feeley, Liora Isra€

el, J

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ome P

elisse, and Rachel Stern. Avishai Benish would like to thank

the Center for the Study of Law & Society and the Institute for Jewish Law and Israeli

Studies at the Faculty of Law, University of California, Berkeley, forgreatly facilitating the

writing of the manuscript by providing an intellectually inspiring environment and impec-

cable hospitality during his term as a visiting professor in 2014–15. Asa Maron would like

to thank the Israel Institute and the TaubeCenter for Jewish Studies at Stanford Universi-

ty for their generous support, and the Department of Sociology at Stanford University for

their outstanding hospitality.

Please direct all correspondence to Avishai Benish, The Hebrew University of Jerusa-

lem, Paul Baerwald School of Social Work and Social Welfare, Mount Scopus, Jerusalem

91905, Israel; email: avishai.benish@mail.huji.ac.il

Law & Society Review, Volume 50, Number 4 (2016)

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C2016 Law and Society Association. All rights reserved.

953

power and controlling it in the name of democratic values

(Krygier 2002; Selznick 1969; Stewart 1975). However, the pivot-

al role of law in public institutions has been severely challenged

over the years, first by the logic of professionalism, and more

recently by the logic of the market (Adler 2003, 2006). Over the

last three decades, we have witnessed the proliferation of New

Public Management (NPM) reforms (Hood 1991), which strive to

adopt market values and mechanisms in the delivery of public

services and to re-conceptualize the state as “entrepreneurial gov-

ernment” (Osborn and Gaebler 1992). Privatized welfare, which

is at the core of this study, has become a domain within which to

experiment with these ideas (Brodkin 2007; Diller 2000; Gilbert

and Gilbert 1989; Lens 2005, 2013).

The introduction of “market logic” into the governance of

public services where, historically, the “logic of law” has prevailed

is a source of tension which remains understudied in the socio-

legal literature (Halliday and Scott 2010). While most of the liter-

ature emphasizes the fact that privatization devolves powers to

actors who are beyond the jurisdiction of public law (e.g., Aman

2005; Minow 2003), a strand in the literature points to instances

where the push toward privatization is pulled back by the appli-

cation of public law to the private agents—what Jody Freeman

terms “publicization” (Freeman 2003. Also see Rosenbloom and

Piotrowski 2005). Such instances of publicization are documented

in empirical studies, for example, in the fields of privatized utili-

ties (Prosser 2000), privatized prisons (Feeley 2014), and priva-

tized welfare (Benish 2010, 2014; Benish and Levi-Faur 2012;

Mulgan 2000).

1

Nonetheless, little is known about what might

explain privatization and publicization dynamics and the forces

and agents that drive them.

The article explores the roles of government professionals—

lawyers and economists—in the privatization-publicization

dynamics, and considers how they influence the trajectory of

NPM reform in terms of accountability and decision making

structures. Theoretically, the article builds on the socio-legal liter-

ature on the organization of administrative decision making sys-

tems (Adler 2003, 2006; Kagan 1978, 2010; Mashaw 1983) and

on the sociological and socio-legal literature on new institutional-

ism and institutional logics (Edelman et al. 2001; Friedland and

Alford 1991; Gilad 2014; Talesh 2009, 2015; Thornton and

1

Similarly, in a central study on the effects of NPM, Pollitt and Bouckaert conclude

many states resisted the pull toward market-like public governance by

favoring traditional law-based administration (what they call a neo-Weberian model). This

trajectory, in which privatization is accompanied with regulatory growth, connects with

what Levi-Faur (2005) calls “regulatory capitalism”.

954 Infusing Public Law into Privatized Welfare

Ocasio 2008). Empirically, it builds on a detailed case study of the

Israeli welfare-to-work reform, which, inspired by welfare reform

in Wisconsin, started as a radical experiment in privatized and

incentive-based welfare governance but underwent a significant

shift back to law-based governance.

The contribution of the article is twofold. First, while prior

research on administrative justice in socio-legal scholarship has

focused almost entirely on public agencies (Halliday and Scott

2010; Kagan 2010), this article sheds light on the organization of

decision making and accountability under privatized and marke-

tized forms of governance. Second, it recognizes the unique role

of government lawyers and economists in the process of re-

organizing accountability and decision making under NPM. By

tracing their roles in the policy process, it provides an empirical

observation on the competing, and at times conflicting,

“institutional logics” of the lawyers and economists on what con-

stitutes appropriate governance of privatized welfare. In doing

so, it illustrates the active role lawyers and economists play in the

diffusion of the logics of “law” and the “market” across the tradi-

tional public/private boundaries as they attempt to appropriate

the “privatized state” to accord with their own institutional logics

and interests. The article also shows how changing power rela-

tions and unfolding distrust of the contractors’ decision making

ultimately advanced the legal logic of governance, a move led by

government lawyers after gaining the support of other actors in

the regulatory space.

The article starts with a discussion of decision making pat-

terns in the public sector and their transformation with the shift

to NPM, focusing on shifting sources of public and political legiti-

macy. The following section introduces the notion of “institutional

logics” as a prism through which to study the role of government

professionals in the design of new decision making patterns. After

accounting for the methodology of the study, it shifts to the

empirical case: processes of privatization and publicization of the

Israeli welfare-to-work reform. This is followed by a discussion of

the ramification of these dynamics on the trajectory of the

reform, and more broadly, on the agents and mechanisms of

publicization affecting NPM reforms.

Dynamics of Change in Administrative Decision Making

Systems

How are administrative decision systems organized? Kagan

(2001), in his seminal work on adversarial legalism, provides an

illuminating typology of administrative decision making. Building

Benish & Maron 955