Editorial: The commodification of the public good—who wins and who loses?

Picture the scene. The location is a primary care trust (PCT) in England in the mid 2000s. It has recently transformed from a small, district-based National Health Service (NHS) trust, responsible for the primary and community care of its local population, into a county-wide trust responsible for commissioning almost all healthcare for its half million residents. It is still called a ‘PCT’, but all else has changed.

The occasion is an inspection by the Department of Health’s World Class Commissioning (WCC) team. It is assessing the progress made by the PCT as a commissioner. The team comprises a group from the management consultancy that has been contracted to develop the WCC programme. It is led by a mid-career consultant, with fairly extensive experience of advising the NHS, and two young colleagues—intellectually impressive but largely inexperienced members of the firm.

The inspection highlights the shift in emphasis in the PCT’s role from spending and paying for services to commissioning them. From its inception, the NHS has been based on centrally-allocated funds being spent locally and managed and audited accordingly. As PCT finance staff readily acknowledge, it is challenging enough to keep track of spending and to demonstrate authorization in what has developed as a demand-led disease service. Proactively specifying content and cost for the health of the UK’s population is hugely demanding on NHS skills and requires a different, some would say more sophisticated, conceptualization of commissioning than is being promulgated by the inspectors. They are prioritizing the commissioning of discrete interventions with clear agents, stages and identifiable costs, and relegating others less amenable to the new purchaser–provider model. The PCT, on the other hand, is emphasising its population’s health needs analysis to inform its commissioning role.

These experiences have also been mirrored in other policy sectors that we have been involved in over the past 40 years. They have often been expressed through a confusing lexicon of privatization, contracting out and markets, of private and public goods, and of the monetization of public value. Looking at them from the service user end, however, brings into focus significant changes to the relationships between providers and users of services. Those changes are arguably less to do with public and private ownership than with the commodification of service, that is the way care is being operationalized as an entity that is bought and sold, that is traded. For their proponents, there are advantages in sharpening up the construct of public service, including making it clearer who is paying, who is providing and what is being provided. For the detractors, meeting need appears to be giving ground to marketability and profitability.

The articles presented in this Public Money & Management theme are explorations in understanding what has been going on. Specifically, they are responses to the following questions that were asked at a conference in Nottingham, UK in 2022:

• What do we mean by the commodification of the public good?

• What are the empirical manifestations of commodification?

• What are the philosophical, economic, social and political drivers of commodification?

• What are the impacts of commodification, for example on service content and outcomes, on the relationships between commissioners, providers and users of services, and on the wider governance of the public good?

• What are the gains (and who gets them) and what are the losses (and who bears them) from commodification?

Spicker (2023) argues that the case for competition and marketization of public services has been made ‘through the application of formal economic reasoning rather than practical experience. Efficient market production relies on a process of defining services in terms which allow for competition, choice and the substitutability of tradable products’. He points out that the evidence for this theoretical position is mixed and argues that public services may be judged by different criteria.

Corcoran and Albertson (2023) take this a stage further. They theorize some consequences of reforging care into more transactional forms of commissioning and illustrate public service impacts in the criminal justice system in England and Wales. They identify an interplay of incentives for corporate providers and governments that produces a collective artificial intelligence that promotes marketization and economic productivity over socially beneficial indicators of service.

Sheaff et al. (2023) suggest that a different approach may be required for commissioning services from third sector providers than from corporate or public providers. They observe that English systems for commissioning third sector providers include both commodified competitive segregated elements and collaborative integrative relational elements: ‘When the two elements conflicted, commissioners and third sector organizations tended to try to work around the commodified elements in order to preserve and develop the collaborative aspects’. This implies that de-commodified, collaborative methods are better suited to the commissioning of third sector organizations.

Exworthy et al. (2023) explore the ways NHS foundation trusts are becoming more entrepreneurial in generating commercial income. They note that a stronger entrepreneurial ethos of commercialization has arisen as a result of both tightened public spending and the relaxation of the regulation of alternative income. They observe that as such income generation accelerates, ‘the NHS risks becoming predicated upon commercial logics, thereby undermining public service logics’.

Chau and Yu (2023) provide a contrasting analysis. Using a time-conditions framework, they explore the effect of the commodification of public goods on women’s lives directly and indirectly through the impact on the family of Hong Kong government practices during the Covid 19 pandemic. In showing the defamilization effects on women and their families, they raise questions about the relationship of commodification to shifting boundaries between public and private goods.

Stafford et al. (2023) turn to the evaluation of commodified services and the commodification of evaluations. Drawing on Weiss’ well-established models of research use, they identify ‘how well the models reflect policy-making and evaluation practice; the role assigned to politics in policy evaluations; the importance of agenda setting and power in determining who and what gets evaluated; the legitimacy of the evaluations; the degree of accountability of the evaluator; and the nature of the evaluation output’. They stress that the legitimacy of commodification evaluations requires those conducting evaluations to be explicit about their purpose and use and to publish their results in full.

Machin and Reynolds (2023) analyse the commodification of medical assessments that determine the eligibility for social security benefits. These assessments are now conducted primarily by commercial companies whose standards of service have been criticised by stakeholders. Drawing on experience of working directly with claimants for Personal Independence Payment (PIP) and Employment and Support Allowance (ESA)/Universal Credit (UC) who have mental health disabilities, the authors present distinctive research and professional reflections on the impact of commodification. They argue that the ‘current system of commodified medical assessments is fundamentally flawed’. To support vulnerable benefit claimants to navigate the current system, they provide a set of best practice guidelines.

Commodification: meaning, manifestations and drivers

What do the articles collectively contribute to our understanding of commodification, its manifestations and drivers? Readers may find the following helpful for interrogating the articles.

First, the articles suggest a broad conceptualization of commodification as embodying one or more of:

• The transformation of public goods, including services, ideas, evidence and publics themselves, into entities that may be traded or exchanged in markets.

• The reorganization of public services into trading units with their own products and sometimes prices.

• The use of trading to allocate benefits, determine costs and manage risk in public service provision.

Second, the articles identify a range of empirical manifestations of commodification that include but are not limited to:

• Externally-traded services for individuals, communities and populations.

• Service entities designated for internal management and financial reporting purposes.

• Commissioners who determine service content and purchase it on behalf of publics.

• Incorporated business entities that provide public services.

Third, the articles identify a variety of philosophical drivers of this commodification including:

• Economic theories about the efficiency of markets as allocators of resources and benefits in society.

• Political theories about the role and scope of the state.

• Social theories of modern industrial societies.

The renewed ascendency of market economics as a political creed in the past four decades may have been overstated but it would be hard to refute its role as a driver of public service reform throughout, even in the Labour years between 1997 and 2010. It seems manifest in the privatization of some public assets, the franchising and outsourcing of the management of others and the development of internal markets to improve the economy, efficiency, and even the efficacy, of services. As a result, commodification may have become the orthodox mechanism for determining who gets what, when and how. In which case, that justifies our turning now to the impacts of commodification.

Commodification: impacts, gains and losses

We draw attention here to two sets of systemic impacts: those on the governance of public services and those on the relationships between service providers and service users.

First, we note that commodification brings an increasing emphasis on governance through contract and a consequent diminishing of governance through command and communion. By ‘governance’ we mean the political arrangements by which authority and function are allocated, rights and obligations are established and regulated and through which policies and practices are put into effect. The contract mode of these arrangements emphasised by commodification is based on an inducement–contribution exchange agreed by commissioners and providers. Under contract, the legitimacy for actions derives from the terms of the agreed exchange, that is the contract itself. The strengths of contract as a mode of governance lie in the temporal certainty of contracts, the motivation to perform up to contract expectation and the consequent high probabilities that planning assumptions will be acted on. Its weaknesses include the tendency of contracts to reduce behaviour to that specified in the contract and the difficulty in the face of changing circumstances to alter specifications without undue cost.

Commodification promotes governance by contract as a way of determining who gets what, when and how in the state. As such it presents both strategic and operational risks. The strategic risks include:

• The inappropriate development of transactional contracts in place of caring and ethical frameworks.

• The undermining of a whole system view of the public good.

• The downgrading of evaluative mechanisms.

The operational risks include:

• Inappropriate contract design for their specific function and context.

• Marginalizing of protocols for integrating operational and resource decisions across different contracts.

For good or ill, these characteristics contrast with the traditional modes of public governance: command and communion. Under command, based on the rule of law emanating from a sovereign body and delivered through a chain of authority, the legitimacy for actions comes from their being within the bounds prescribed through due process by the institution. Its strengths as a mode of governance lie in the efficiency and effectiveness of control and accountability; its weaknesses in rigidity and conservatism in the face of changing environments. Under communion, a relationship based on an appeal to common values and creeds, the legitimacy for actions derives from their consistency with this shared frame of reference. Its strengths as a mode of governance lie in the guidance afforded by its shared values through different environments; its weakness in its insularity from those environments and a consequent failure to adapt its normative order.

This shift in emphasis on contract as a mode of governance is reflected in the greater emphasis on customer relationships between service providers and users and away from those in which the user is citizen and client. In citizenship, services are essentially undifferentiated, based on equity, rights and universal access. Everyone has the same right to receive the same service at the specified and regulated common standard and providers must not differentiate between citizens except in specified regulated circumstances. Where service content is differentiated between users, it is usually based on a professionally adjudicated need or potential to benefit from the service. Here the provider rather than the user is the expert and, in this capacity, controls access to the service. The service relationship itself is founded on personal interaction and a shared desire for a particular outcome. In turn, this outcome gains its effects through mutual participation or co-production. This is a client relationship.

In contrast, commodification emphasises the customer relationship in service consumption. A customer is one who, on the basis of expectations, pays for and receives a specified product or service, has the right to choose both the product and the provider and to receive the product as specified once paid for. In return, the provider may differentiate and discriminate between different customers, target some and exclude others. Thus, reciprocal and discriminating choice is inherent in this relationship.

There are risks to be wary of here. First, there is a policy risk. Extending the customer relationship (as defined above) by, for example, offering choice in circumstances where users are not able to exercise it, may aggravate rather than ameliorate inequalities, or, indeed, be unwanted when they prefer not to have a choice. This may be intensified if price is used to ration access. The opportunity for trading is not the same as the capacity and ability to trade; just as the opportunity for exercising choice is not the same as the capacity and ability to choose. The beneficiaries from extending the customer relationship through commodification are those with the capacity to exploit it; those without that capacity will be disadvantaged. There is also a provision risk in which providers treating service users inappropriately as customers may fail to deliver effectively, even at all. And there is also a reciprocal consumption risk that users may develop unrealistic and even improper demands of provision. Generational differences may be important here. Those who grew up as welfare services were being newly provided display more acceptance, even gratitude, for what they receive. Those who have been born into them may be more demanding and display more assertive behaviour toward providers.

Conclusion

This editorial offers only some pointers to where the gains and losses may be found. It suggests that commodification itself changes the service received, that allocation becomes based on amenability of need to be monetized and away from other measures of need, that evaluation of a commodified service shifts the emphasis towards monetary cost away from service value and that governance favours service provisions with clear stages and agents with identifiable costs. Thus commodification may detrimentally shift the balance of advantage in the allocation of goods and services in favour of those who can exploit its mechanisms. But commodification may at the same time enhance our awareness of what we are buying (rather than spending), an advantage that may be itself prioritized in times of limited resources.

Acknowledgement

The authors are pleased to acknowledge the support of the Public Administration Committee of the UK Joint University Council for Applied Social Sciences for the conference that stimulated this editorial and the other papers in this PMM theme.

Additional information

Notes on contributors

Andrew Gray

Andrew Gray is Emeritus Professor of Public Management, Durham University, UK and Honorary Professor of Public Policy, University of Nottingham, UK.

Simon Roberts

Simon Roberts is Associate Professor of Social and Public Policy, University of Nottingham, UK.

Bruce Stafford

Bruce Stafford is Emeritus Professor of Public Policy, University of Nottingham, UK.

Jane Broadbent

Jane Broadbent is Emerita Professor of Accounting, Royal Holloway University of London, UK.