New market liberal theory/ideology guides the political thinking and policies of today, and in general supports deregulation and more market competition in the public sector. Accordingly, public services of general interest (SGI) are organised as arms’ length activities away from central and local government control and exposed to market competition. This leads to negative fragmentation, because institutions are organised as independent bodies from public administration, i.e. as legal person agencies and public companies. In some European countries, and also in Norway, this happens even for services which public authorities are specially obliged to maintain regardless of competitiveness. Such outsourcing of public services and governance discard and outrage traditional democratic steering and control principles. This concept leads to a democratic deficit and lack of transparency and legitimacy.



In the book The Competitive Society – how democratic and effective?, professor Noralv Veggeland analyses these developing aspects of European politics from both a national and an EU point of view. Using both a theoretical and a descriptive approach, he concludes that the competitive society concept threatens the efficiency of the democratic welfare state for three main reasons: first, because of the failure of special public obligation in the service sector, second, the fragmentation of the public sector for competitive purposes, which produces fast growing administrative transaction costs, reduces spending in substantial activities, and third, technocratic governance replaces decision-making of elected governments at all levels. The conclusion gains support from the recently published (2002) OECD Report on Distributed Public Governance: Agencies, authorities and other government bodies. Here the conclusion is that outsourcing of public services and governance to the market “have come to a stand-still in many countries”. Due to an uncovered democratic problem, growing control problems and administrative inefficiency, governments now promote action against the fragmentation and market exposure of services and support increased steering capacity to elected assemblies.