Analyzing Criticisms of New Public Management

New Public Management promised a leaner, faster, more responsive state. By borrowing tools from the private sector – competition, performance targets, contracting out, and a customer-first mindset – reformers from the 1980s onwards hoped to fix the slow, rule-bound machinery of traditional bureaucracy. The model spread rapidly across the world, including into reform agendas here. But after decades of practice, a serious body of criticism has built up. Scholars and practitioners now argue that the market logic at the heart of NPM can quietly corrode the very public values it was meant to serve. This post examines those criticisms in depth, focusing on three big problem areas: the commodification of public services, the obsession with performance metrics, and the erosion of accountability and transparency.

The commodification of public services
Equity versus efficiency
When the public interest disappears
The overemphasis on performance measurement
Goal displacement and gaming
Short-term results over long-term goals
Accountability and transparency under strain
The hollowing out of the state
Transparency, ethics, and accountability are not the same
Why these criticisms led to new approaches

The commodification of public services

The most fundamental criticism of NPM is that it treats public goods as if they were ordinary commodities to be bought and sold. When a hospital bed, a school seat, or a water connection is framed as a product with a price and a “customer,” the underlying purpose of public provision – meeting need, regardless of ability to pay – begins to slip away. This is not a minor side effect. It strikes at the difference between a citizen who holds rights and a consumer who holds purchasing power.

Equity versus efficiency

The classic tension here was identified early. In his foundational 1991 analysis, Christopher Hood noted that NPM has been most commonly criticised as a clash between equity and efficiency values. A market-oriented system rewards serving customers who are profitable and easy to reach. It has little incentive to serve people who are remote, poor, or expensive to help. The result is a structural bias against the disadvantaged – the exact groups public services exist to protect.

This plays out clearly in essential sectors. In healthcare, the steady expansion of private provision alongside an underfunded public system has deepened inequality. Public health spending sits at only around 2.1% of GDP, while over 60% of total health expenditure is paid out of pocket, pushing millions into poverty each year. Market logic, critics argue, cannot fix this because health is not a normal market. Patients rarely have the information to judge treatment quality, cannot easily “shop around” during an emergency, and face a wide knowledge gap with their doctors. Education shows a parallel pattern. As private schools cluster in better-served areas and charge fees that depend on financial means, marginalised communities – including Dalits, Adivasis, and girls – are progressively excluded, widening gaps that already run along lines of caste, gender, and geography.

When the public interest disappears

A deeper version of this criticism is about ownership and control. NPM encourages governments to step back from direct provision and act as a buyer of services from private suppliers. But once the state hands over ownership, the lever it once had to enforce the public interest weakens. Critics point out that with full privatisation, the state eventually loses control, and the question of public interest can become almost meaningless unless tight regulation is built in. The provider’s primary obligation shifts from the citizen to the shareholder.

This is why disinvestment of public sector units is debated so fiercely. Supporters argue that loss-making units drain resources better spent on core services, and that competition improves quality and pricing – visible, for example, in how telecom service improved after private entry. Critics counter that for genuine public goods like health, education, food security, and drinking water, profit-driven delivery cannot guarantee universal access. Both sides agree on one thing: market reform without strong regulation tends to leave the weakest users behind.

The overemphasis on performance measurement

The second major criticism targets one of NPM’s signature features: explicit standards and measurable targets. Hood’s original description of NPM listed explicit standards and measures of performance, and a greater emphasis on output controls as core doctrines. The logic seems sound. If you measure performance, you can manage it, reward it, and improve it. The problem is that what gets measured starts to crowd out what actually matters.

Goal displacement and gaming

When rewards, sanctions, and reputation are tied to a handful of numbers, organisations and officials begin responding to the measure itself rather than to the public purpose behind it. The landmark study of target regimes in the English health service by Gweneth Bevan and Christopher Hood found that what is measured can become what matters institutionally, even when this produces distortion, gaming, or substitution away from important but unmeasured goals. They identified specific failure modes. Output distortion means hitting the measured target while neglecting everything not measured – also called tunnel vision or cream skimming. Threshold effects occur when a uniform target pressures poor performers but removes any reason for good performers to excel. Ratchet effects push staff to deliberately underperform now, so that next year’s target, based on this year’s figures, stays comfortably low.

“Cream skimming” is especially damaging to equity. If a hospital is judged on how many patients it treats successfully, it has a quiet incentive to avoid the sickest, most complex cases that might spoil its numbers. The patients most in need become the patients least wanted. This is the same equity problem from a different angle: the metric, not the mission, drives behaviour.

Short-term results over long-term goals

Performance regimes also tend to favour what can be counted quickly. Targets are usually annual and visible, while many genuine public goods – preventive healthcare, foundational learning, environmental protection, institutional trust – pay off slowly and resist neat measurement. A system fixated on this year’s dashboard tends to underinvest in next decade’s outcomes. Indian public health offers a clear example, where a hospital-centric, curative model attracts attention and funding while the slow, unglamorous work of preventive and primary care – the original vision of equitable, universal health – is neglected.

There is also an honesty problem. Where targets are rigid and information is unevenly held, officials can simply misreport. The research literature treats gaming as more likely under intense competition, exactly the environment NPM creates. The metric meant to improve transparency can end up manufacturing a flattering fiction.

Accountability and transparency under strain

The third cluster of criticism concerns democratic accountability. Traditional bureaucracy, for all its faults, had a clear chain of responsibility: officials answered to ministers, who answered to the legislature, who answered to voters. NPM complicates this chain by inserting private contractors, autonomous agencies, and public-private partnerships between the citizen and the state.

The hollowing out of the state

As functions are contracted out, the government’s own capacity to deliver – and to know what is happening on the ground – can erode. This is sometimes called the “hollowing out” of the state. Heavy reliance on outside consultants and contractors has itself been criticised for hollowing out the public sector and weakening its institutional memory. When something goes wrong with an outsourced service, responsibility becomes blurred. Did the agency fail, the contractor, or the minister who designed the contract? Citizens lose a clear address for their grievances.

A related and counter-intuitive concern was raised in the post-NPM literature: by removing senior civil servants from policy-making and pushing them toward purely managerial roles, reforms can leave political executives feeling they have lost control over implementation, making them hungry for even more control. The promise of cleaner lines of authority can produce the opposite.

Transparency, ethics, and accountability are not the same

NPM was supposed to improve accountability through measurable results and contracts. But accountability and transparency are not interchangeable, and market mechanisms can weaken both. When private providers deliver public services, much of their operation sits behind commercial confidentiality, beyond the reach of public scrutiny that a government department would face. Critics note that a poorly regulated private sector often has little answerability to government over its functioning, which opens the door to financial or physical exploitation of users.

The greater discretion handed to managers carries its own ethical risk. EBSCO’s overview of the model notes that the increased flexibility given to public officials may inadvertently lead to corruption or misrepresentation of results. Loosening the rigid procedural rules of old bureaucracy was meant to free officials to perform – but those same rules also served as safeguards against abuse.

Why these criticisms led to new approaches

Taken together, these criticisms were serious enough to shift the field. The strong focus on output and efficiency was seen to encourage disregard for other public values, such as equity and democratic values, prompting some scholars to declare NPM exhausted. This gave rise to a wave of “post-NPM” thinking – approaches like Public Value Management, the Neo-Weberian State, New Public Governance, and Digital Era Governance. These were designed to either soften NPM’s worst effects, such as fragmentation and weak political control, or to replace it outright. Indeed, a hard-hitting evaluation of three decades of reform in the United Kingdom by Hood and Ruth Dixon concluded that government had ended up with higher costs and more complaints, not the leaner, cheaper state that was promised.

It is worth keeping balance here. NPM’s defenders argue, with some justification, that efficiency and equity need not conflict, and that equity goals can be written directly into targets and performance indicators when there is enough political will. Performance measurement, customer orientation, and competition did bring real improvements in responsiveness and value for money in several areas. The criticisms are not a verdict that NPM failed entirely. They are a warning about what market logic neglects when it is applied without strong regulation, careful metric design, and a firm commitment to public values.

What do you think? When a public service is judged mainly by efficiency and measurable targets, which less visible values are most at risk of being lost – and how would you design a system that protects them? If the state contracts out a service but remains accountable to citizens for it, where should responsibility ultimately rest when things go wrong?

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References

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Table of Contents

The commodification of public services 🔗

Equity versus efficiency 🔗

When the public interest disappears 🔗

The overemphasis on performance measurement 🔗

Goal displacement and gaming 🔗

Short-term results over long-term goals 🔗

Accountability and transparency under strain 🔗

The hollowing out of the state 🔗

Transparency, ethics, and accountability are not the same 🔗

Why these criticisms led to new approaches 🔗