We often read the frustrating logic that national budgets are limited or need to be cut and therefore there is no alternative but to reduce services. Such logic emanates from a particular view of economics; a static perspective focused on price and cost, in which innovation is marginal and efficiency within existing service models predominates.
From a governance perspective, Osborne (2010) criticises this outlook. Our contribution explores these logics from an economic perspective. Building from our earlier piece on using values to define and measure public value (2017), we use new economics frameworks (ecosystems, agent-based economics, relational economics) to create a new perspective for the economic framing of public services (in opposition to the neo-liberal, neo-classical agenda). This builds upon our theoretical contribution using the ecosystem approach to analyse the evolution of independent living in Finland and Scotland (2017a).
We draw upon evolutionary economics; ecosystems, innovation economics to offer an new framework with which to evaluate the economies and financing of public services: ecosystems. The major theorist of the economy as an ecosystem is Arthur (1994; 2009; 2010; 2015); other important texts include Arrow et al (1988); Waldrop (1992); Gell-Mann (1995); Beinhocker (2007); Allen and Holling (2008) and Holland (2014). In a wider sense of including social relations and power (i.e. distributional issues) within economic analysis, complexity economics traces back to the political economy of Smith; Ricardo and Marx.
Important points in our approach include conceptualising complex service systems as inherently dynamic and not prone to equilibrium, the drivers of dynamism and adaptation are learning by active agents (co-creating users and providers). We argue that conventional neo-classical economic models assume closed systems and (in line with the 2nd Law of Thermodynamics) necessarily feature depleted energy/output i.e. entropy. Referencing our services-as-a-system (SAAS paper 2017c) work, we therefore justify the necessity of open innovation in public service systems. We have shown how co-production and co-design (2017b) provide positive system feedback in services-as-a-system validating the idea that from an economic perspective these are value-positive.
Our main points are:
- Neoclassical economic frameworks wrongly portray and evaluate public services simply in terms of prices and efficiency, yet still the presumption in much of public management theory, when this framework can be maladaptive and unsustainable over time.
- As we argued in values-to-value paper (and learning and innovating paper) embedding learning in SAAS design migrates values into value i.e. the system privileges information from users making learning (and adaptation) the key driver for effective SAAS. This individual learning/unlearning and its distribution making collective learning, likens CAS to Vygotsky’s zones of proximal development i.e. the learning is culturally situated and subjectively references actual practical experience.
- The task of leadership in SAAS is therefore to (a) promote experimentation and diverse positive feedback and (b) to select and integrate positive feedback (equivalent to Chinese point-to-surface pragmatic innovation), (c) encourage a learning /unlearning environment (DeBono) and (d) co-implementation.
We provide illustrative evidence of the ecosystems perspective with case studies of how independent living ecosystems have evolved in Finland and Scotland.
The complexities of building an evidence-base and conducting evaluation in an era of co-pr
