The transformation of cities has generated a series of crises and conflicts, polarization between the socially excluded and the better-off, growing disillusionment with traditional governing classes, the deleterious environmental impact of production ...
The transformation of cities has generated a series of crises and conflicts, polarization between the socially excluded and the better-off, growing disillusionment with traditional governing classes, the deleterious environmental impact of production and distribution, and the failure of welfare statism and neo-liberalism to come up with effective policy solutions.
There has been a marked decline in the proportion of people employed in full-time and permanent jobs while those working part-time, on short-term contracts and in self-employment have grown. Women at present occupy almost half of the workforce. Subcontracting, out-scouring, and informal employment have become integral features of urban labor markets. The services sector has waxed while manufacturing has waned. Pursuit of economies of scale has been replaced by an emphasis on small-batch production and niche marketing of goods and services. Large-scale, hierarchical organizations have given way to small and medium-sized enterprises with flatter managerial structures, the demanded for workers in high technology occupations as well as low paid and labor intensive sectors appears to be growing. The impact of these on urban forms has given rise to the notion of a post-Fordist city.
Urban as well as local governments acquire revitalized political role through the structural crisis of authority and power affecting nation states in the new global system. Nation states are too small to control the global flows of power, wealth, and technology, and too big to represent the plurality of social interests and cultural identities of society, thus losing legitimacy both as representative institutions and as efficient organizations.
However, local governments have two important advantages over the nation states. They enjoy greater representativeness and legitimacy. They have much more flexibility, adaptability, and room for maneuver in a word of flows, changing demand and supply, and decentralized technological systems. Certain municipal situations found around the world are dominated at best by disinformation and bureaucracy and at worst by local bigwigs and corruption. But the potential of urban governments to be flexible forms for managing the global, with the cooperation of their guardian institutions at national and international level, can be developed through enhancing the skill of their staff, modernizing their management technology, and increasing their financial resources and their areas of authority.
The reasons for the promotion of partnership to the top of the political agenda have much to do with the economic restructuring of local economics and a deep-seated changes in the machinery of government. The need for some form of public-private partnership exists in all advanced societies. Growing competition between cities for investment, and the role of business interests in local decision making have increasingly shaped the urban terrain. Decentralization and shifting responsibilities, increased financial constraints, and the development of privatized services have also created additional complexities for local governments. Urban governments are increasingly working through and alongside other interests. Partnership is conceived "not only as an essential adjunct of policy but as the most important foundation of government's strategy towards urban areas"
Partnership represents a particular form in cities around the world. As defined by Keating, an urban regime is "a set of arrangements through which policy decisions are made, encompasing formal structures and informal relationships among political and economics elites comprising the governing coalition." It is also a response to the impact of neo-liberalism on social life, a recognition of the need to deal with the problems of social disintergration and poverty which have accompanied deregulation and restructuring. Rising crime, urban riots, and social discontent might give rise to political opposition, especially in the form of extreme urban social movement. The legitimacy of the political system is, thus, threatened by increasing social exclusion.
Partnership is an attractive concept to government, because it commits other interests to regeneration, it diffuses responsibility for success or failure, and ensures that low levels of public expenditure can be used to lever large amount of private investment. Further, potential conflict about means and ends is transferred to the agencies within the partnership and thus is excluded from wider public debate. Integration is the key objective and this may be attained by various methods, of which the democratic form is only one. So a crucial question for partnership approach is to what extent it can deliver accountability, along with a balancing of efficiency and equity. Without a firm base in democratic principles, partnership could become a system for co-opting institutions into an extended system of repressive control. Crucial questions, therefore, include: which interests, and which players, will be included in partnerships and which will be left outside? Who will be the leaders within partnerships? Whose agenda will prevail?
Government is used to refer to the formal institutional structure and location of authoritative decision-making in the modern state. The concept of governance is wider and directs attention to the distribution of state power. Its focus is on the interdependence of governmental and non-governmental forces in meeting economic and social challenges. Public-private partnership is situated in the context of these trends in governing and public management. This argument is explored in four major areas of this study. First, the evolving concept of governance is explored. Second, attention is paid towards explaining why interest in governance has grown. Third, the implications of changing forms of governance for understanding community power and the role of the state are described. Fourth, the challenge posed by public-private partnerships to conventional public administration notions of control, accountability, equity, and efficiency are examined.
Public-private partnership has become an almost universal theme in urban policy and government on both sides of the Atlantic, offering low-cost solutions to urgent problems and transcending the ideological divides. In the United States, the concepts of the state is virtually unknown. Government is conceived as a matter of brokerage among interests in a fragmented and pluralist system. The European state, by contrast, is conceived as a policy actor, custodian of a broad "public interest" which is more than a mere aggregation of private interests and compromises among them. The prerogatives of private capital are not unchallenged but have historically been contested by politicized labor movement. European states have large, professionalized, and rather unitary bureaucracies. The U.S. has a fragmented bureaucracy, in which sections of the bureaucracy align themselves with private interests against other parts of the bureaucracy. This tendency is sometimes observable in Europe, but a markedly lesser degree.
In the U.S., relationships between local governments and business interests tend to be direct. In Europe, they are usually mediated by national governments or the European Union. This enhances the power of capital in the U.S., since it can play localities off against each other, extracting bonuses in the process. In Europe, bonuses are regulated by national governments or the European Commission. The easiest way to tie down mobile capital to localities is to concentrate on capital-intensive projects. In particular, there is a bias towards land and property investments as a form of economic development, an approach which may do little for employment or to increase the value-added in local output. This bias is enhanced in the British/American model of stock-market capitalism, which requires very high rates of return over short periods. Further bias is created by the use of the "leverage ratio" as a criterion of success in partnerships. The more private dollars are mobilized for each public dollar, the more successful the partner is said to be. This may prove to be regressive, since it directs public dollars into least needed activities merely guaranteeing a rapid and high rate of return. Often public money is substituted for private investment, giving rise to "reverse leverage".
Partnership does not necessarily constitute more efficient mechanism for achieving projects. Many large-scale infrastructure projects are natural monopolies and partnership may even be used to establish an effective private monopoly by the use of public powers. On the day the privately financed Skye Bridge in Scotland was opened, the profitable publicly owned Caledonian MacBrayne ferry service was closed. Where local government has a weak resource base and a problematic bond rating, and faces mobile capital, it will have no choice but to go into partnerships. This is the case of many American jurisdictions. The European states, however, are more autonomous of private capital and better able to define investment priorities. Political bias arises from the difference between the value system of government, grounded in openness and accountability, and that of business, grounded in secrecy and competition. Since the aim of the partnership is to lever investment resources, the owners of capital are given a privileged position. Labor interests, together with social advocates, tend to be excluded as the dominant development colaition is reconstituted. Projects largely financed and underwritten by government and undertaken using government powers of eminent domain and zoning, can be proclaimed as triumphs for free enterprise.
The new public management, by blurring the public-private distinction and doing away with the concept of the state, also does away with accountability, transparency, and democratic choice. The best it can do is to offer competition and marketization as substitutes. Partnerships are often sought by the private sector to control competition and enlist public powers behind sectional ends. In Europe, politics is more than brokerage among private interests and the absolute prerogatives of capital have historically been questioned. Equity has always been highly valued as a principle of public policy. The autonomy of the state is an important principle in Europe. It may have been appropriated by the bureaucrats, it may be under pressure in the global political economy; but it remains a vital principle of action in a truly liberal democracy. Without it, society becomes nothing more than a market place; or, even worse, becomes the object of private monopolies.