PhD research: 'Why market organizations perform better than government organizations'

In modern societies, wellbeing is to a large extent determined by the optimal functioning of organizations. According to PhD candidate Huigh van der Mandele this wellbeing is affected by various ‘diseases’, some of which are curable and some incurable.

A known ‘incurable disease’ is caused by major changes in technology and/or markets that the structure of an organization cannot cope with. In his thesis, Van der Mandele identifies another disease: uncontrollability. This disease is chronic in the sense that recovery is impossible. According to Van der Mandele there is a good reason to assume that every organization will suffer from this disease at some point, even without markets and/or technology changing.
 
Van der Mandele went in search of the answer to why organizations operating on the market generally perform better than government organizations. He argues that on the market, insufficiently functioning organizations fall apart because of economic necrosis (‘the blunt axe’) or economic apoptosis (‘the fileting knife’). Government organizations functioning insufficiently, however, usually survive thanks to the support of indulgent financiers (the ‘soft budget constraint’ by Janós Kornai) without improving their effectiveness. This partly explains the generally much higher effectiveness of market organizations (businesses, but also sports clubs, schools and churches) when compared to government organizations.
 
Curriculum vitae
Huigh van der Mandele (Rotterdam, 1945) studied Agricultural Science in Wageningen, the Netherlands. He conducted his PhD research in his own time and will be awarded his PhD in Economics on 27 November 2006, at 2.45 p.m. His thesis supervisors were Prof. J. de Haan and Prof. A. van Witteloostuijn.
The thesis is entitled Uncontrollability and economic apoptosis. A first enquiry into the concepts and this relevance for the market-government debate.