Jørn Henrik Petersen and the origins of the third way: the market turn in the Danish welfare state since the 1970s

ABSTRACT

The third way is central to the market turn that has taken place across the Western world since the 1970s. In this article, we explore the origins of the third way in Denmark, focusing on economist and Social Democratic dissident Jørn Henrik Petersen. We show how Petersen from the late 1970s onwards imported a new economic perspective on politics in the form of public choice theories into Danish debates about the welfare state, which contributed to making the third way possible as a cross-ideological project by allowing politicians of different colours to criticize, defend and reform the welfare state.

KEYWORDS:

• Third way
• welfare state
• market turn
• public choice
• public sector reforms
• Denmark

Introduction

The so-called third way occupies a central role in the market turn that has taken place across the Western world since the 1970s. Historically, the label represented an alternative to the dominant political groups of the left and the right, but British sociologist Anthony Giddens gave the term a specific meaning in the 1990s when he used it to describe an alternative to both neoliberalism and social democracy in an era of globalization. Though Giddens compiled a longer list of its defining features, today the third way mainly signifies the synthesis between centre-right economic platforms and centre-left social policy ambitions that was first embraced by centre-left and social democratic parties in response to electoral defeats in the 1980s and 1990s.¹

Aiming to revive social democratism as a progressive project, the third way included an acceptance of the market as a superior mechanism for arriving at most social outcomes. In many countries, for example in the United Kingdom under Tony Blair and in the United States under Bill Clinton, third way reforms focused on reorganizing government functions and public service provision by implementing market mechanisms.² This has also been the case in the region of Scandinavia. The Swedish Social Democratic Party was a pioneer, undergoing an ideological turnaround in the early 1980s in reaction to a long period in opposition since 1976. Central to this renewal was a defence against the attacks on the public sector that economically liberal politicians had launched in the preceding years. As part of this defence, the Swedish Social Democratic Party emphasized the necessity of optimizing the public sector so that tax money was spent to the greatest effect. Moreover, as became a trademark of third way politics, it also stressed the need for public-private partnerships, private finance initiatives and the incentivization of consumer-friendly public service provision.³

Strongly inspired by Swedish developments, the Danish Social Democratic Party underwent a similar ideological transformation in the late 1980s. In this period, adopting a more benign view of the role of markets in shaping society, Danish social democrats began to discuss the idea of initiating collaborations between the state and private business, outsourcing some services to private providers, and implementing market mechanisms in parts of the public sector. Soon these ideas turned mainstream among Danish social democrats. Moreover, following in the footsteps of its Swedish sister party, during its spell in power from 1993 to 2001, the Danish Social Democratic Party implemented a range of market-oriented reform processes of welfare state services. These reforms included privatizations of state-owned companies; the implementation of New Public Management principles in the public sector; and an ‘active’ labour market policy that aimed at decreasing the level of unemployment by stressing individual responsibility and activation and reducing unemployment benefits.⁴

But what were the intellectual origins of the third way? Who formulated its central themes? When, in what contexts, and how were they introduced in debates about the Danish welfare state? Pursuing these questions, this article contributes to existing literature on the topic. Similar to international research, this literature focuses on Social Democratic Parties, politicians, and professionals.⁵ Historical accounts of social democracy in the Nordic countries have recognized elements of the third way in long continuities of social democracy, especially the Swedish social democracy,⁶ discussed Nordic images of a middle way in the Cold War period,⁷ or found the origins of the third way in national social democratic reorientations in connection with the international economic crises of the 1970s.⁸ By contrast, Danish literature on the topic explains the third way as a strategically motivated defence of the universal welfare state that aimed to revitalize its legitimacy, focusing on ideational developments within the Social Democratic Party that began in the late 1980s and on the reforms the party carried out in the 1990s, spearheaded by prominent politicians and party experts.⁹

This article seeks to analyse the ideational genesis of the third way in a Danish context from a new perspective. It does so by focusing on the trajectory of economist Jørn Henrik Petersen (1944–), a pioneering theorist and advocate of third-way reforms in Denmark. Contributing to debates on the welfare state from a self-identified social democratic position since the 1970s, Petersen has straddled careers in academia, public debate and public/private administration. He began studying economics at Aarhus University in 1963, receiving his PhD degree in 1971 with a dissertation on the economic aspects of a centrally managed economy. Soon after he was invited to Odense University to develop a new educational programaimed at producing leaders of the growing number of welfare state institutions. From the late 1970s onwards, Petersen rose to fame as an economist and policy expert by introducing the theories of public choice – which apply economic methods to the study of political processes – to his fellow economists and to public administrators. Moreover, in the 1980s, Petersen became a household name in public debates. As columnist for leading newspapers, he proposed market-oriented reforms of Danish public administration and service provision. Petersen has also held several board memberships in private and public organizations. Most famously, from 1986 to 1994, he was the first chairman of Danish Tv2, and in the 1990s and 2000s he served as member of several welfare state commissions, including Socialkomissionen (Social Commission) (1991–1993) and Velfærdskommissionen (Welfare Commission) (2003–2006). Most recently, Petersen has turned to the history of the Danish welfare state as a way to comment on the role of social democracy in shaping its present and future.¹⁰

Petersen’s relation to social democracy is longstanding, but complex. He grew up in a traditional social democratic milieu in Northern Jutland. His father was a social democratic municipal politician, and, when entering high school in Aalborg, Petersen established a local branch of the social democratic student forum Frit Forum. As a student in Aarhus, he continued his work for social democracy in collaboration with Svend Auken and Poul Nielson, both of whom later served as prominent ministers for the party. While Petersen abandoned his party membership, when he moved to Odense in 1970 (‘I am too individualistic to subject myself to party-discipline’, he later explained), he remained fond of the early social democratic visions of the welfare state and acted in the following years as advisor to social democratic minister Ritt Bjerregaard.¹¹ Since the late 1970s, Petersen has been at odds with the party line, first by advocating welfare state reforms through market models and most recently by arguing that social democratic reforms implemented since the 1990s have ultimately hollowed out the welfare state. Moreover, Petersen has seen it as his task to unceasingly remind the party of the true meaning of social democracy and inform it how the welfare state ought to be salvaged through reforms.¹² ‘Politically’, a recent newspaper portrayal, published in Berlingske Tidende on 2 August 2019, concluded about his political orientation that ‘the professor tends to be a social democrat with a critical attitude towards the party’. However, Petersen has moved in many different circles – for example, in 2004, he was a founding member of the free market think tank CEPOS – and his political visions have often overlapped with the economically liberal wing of the Danish political spectrum.

Using Jørn Henrik Petersen’s discussions of the welfare state as a prism, we provide new perspectives on the origins of the third way in Denmark. We focus on the period from the late 1970s, when Petersen began to advocate market reforms, until 1993, when the Social Democratic Party reassumed power after a decade in opposition and pursued a market-focused reform agenda. Three contributions are particularly important. First, we provide a prehistory of the third way by illuminating hitherto overlooked ideas, debates and developments that preceded the Social Democratic market turn in the 1990s. We show that the origins of the third way was neither in the context of internal Social Democratic debates in the 1980s nor in their policy responses to globalization processes in the 1990s, but in debates about the crisis of the Danish welfare state in the 1970s. Second, we shift the analytical focus from Social Democratic politicians and party experts to an academic and public intellectual who was not a member of the cadre. This shift in analytical focus allows us to show that it was political actors beyond the Social Democratic Party, including dissident social democrats and liberal politicians, who first articulated the central themes of the third way, framing debates and arguments for a market turn in the welfare state well before the Social Democratic Party proposed it in the 1990s.¹³ Third, instead of looking for the roots of the third way exclusively in political debates, we trace them to discoveries within the discipline of economics, focusing on Petersen’s importation of public choice theories into Danish academic analyses of and political debates about the welfare state.

The article does not aim to measure Petersen’s political impact. Partly an intellectual biography, it instead uses his work as a thermometer for currents in the debate about the size and limits welfare state. At the same time, while portaying Petersen as a sensitive observer of the Zeitgeist at the forefront of political-economic debates, we show that he made a significant intellectual contribution, opening a space of imagination without which third way reforms would have been unthinkable. More specifically, we show that Petersen’s most significant contribution as a broker and translator of American public choice theory was the introduction of a distinction between the provision and the production of public services, which became a core feature of the third-way restructuring of the welfare state.

In introducing public choice theory in the context of welfare state debates, Petersen not only criticized what he perceived to be an uncontrollable, ever-growing and overly expensive public administration and service provision. He also sought to revitalize the legitimacy and workings of the welfare state by proposing to make the public sector more efficient and responsive to citizens’ demands for services through market-oriented reforms and thereby solve the economic and political ungovernability characterizing the system. Crucial to his efforts was the questioning of the idea of the state as a legitimate social planner and collective decision-maker. Pushing a new, scientific and seemingly objective view of market mechanisms as enablers of the twin concerns of economic efficiency and political participation, this mode of welfare state criticism could be applied to very different agendas across the political spectrum during the 1980s. The new economic perspectives on politics, as represented by public choice theory, thus made the third way possible as a cross-ideological project, which allowed politicians of different colours to criticize, defend and reform the welfare state.

The crises of the Danish welfare state in the early 1970s

Jørn Henrik Petersen’s route to advocating market-focused reforms of the welfare state cannot be understood without paying attention to three political contexts in the 1970s: the crisis of the social democratic welfare state; new reformist discourses that applied economic arguments to understand and offer market-focused solutions to its crisis; and the inability, or incapacity, of the major political parties to reform the system.

In spite of new criticisms voiced against the welfare state from left and right, and the end of sixteen years of social democratic government in 1968, the Social Democratic Party remained optimistic about its welfare state project throughout the 1960s.¹⁴ The party had good reasons for its optimism. The 1960s is today known as the ‘golden age’ of the Danish welfare state, when, against the backdrop of the international economic boom, the political visions about universal coverage of citizens became entrenched. The decade was characterized by economic growth, low unemployment, and little concern for the growing tax burden that had been caused by the expansion of the welfare state. In this context, the political consensus on securing, safeguarding, and extending social rights to welfare benefits was sustained.¹⁵

This changed in the early 1970s when the international oil crisis, rising taxes, and growing unemployment hit Denmark. These developments gave birth to widespread discussion of the crisis of the welfare state. As part of this crisis, politicians and intellectuals from across the political spectrum challenged the fundamental values and the very legitimacy of the welfare state, focusing among other things on the tax burden, the bureaucracy and the lack of regard for individual preferences. Criticism of the welfare state and its growing public sector was economic and political: the welfare state was, its critics said, ineffective and expensive, in addition to repressive and undemocratic, as it subjected its citizens to a system that was mainly beneficial for its rulers – the public servants.¹⁶

One of the most prominent critics of the recent development of the welfare state was the socialist economist Jørgen S. Dich who launched a fierce critique of the Danish welfare state with Den herskende klasse (The Ruling Class), which portrayed the welfare state as the political project of the ruling class.¹⁷ As an advisor for Social Democratic politicians since the 1930s and as the director of the government’s Employment Council in the early 1940s, Dich had contributed to the making of the Danish welfare state. In 1950, he became a professor of economics at Aarhus University with a focus on social and welfare politics and authored a series of theoretical justifications for the rationality of the welfare state. Accordingly, the critical tone of Den herskende klasse surprised many of its readers.¹⁸

Abandoning his theoretical justifications of the welfare state in favours of political critique, Den herskende klasse expanded upon the analytical perspectives on welfare economics Dich had developed since the 1950s. These perspectives merged Karl Marx’s theory of class struggle with public choice theorist Anthony Down’s theory on the median voter and economist Alfred Marshall’s ideas on supply and demand, marginal utility, and costs of production. Against this background, Dich described the welfare state not as the product of a specific programme or ideology but as the (costly) outcome of party-political concerns for the median voter and the domination of the public sector by power-seeking interest groups. These groups, Dich argued, assumed control over the state by forcing overly expensive government services on the happily receiving population to safeguard its own interests in terms of high salaries, limited work, and a massive expansion of the public sector and without regard for people’s real wants or for economic efficiency. Hence, in his assessment, the rulers of modern society were not the capitalist class but public servants in the social, educational, and health sectors.¹⁹

Dich argued that welfare state institutions and their employees, rather than market forces, had caused the crisis of the welfare state. He provokingly praised private companies for contributing to societal welfare and protecting the interest of the workers (as opposed to the new ‘ruling class’). Hence, Dich did not seek to protect the population through state powers but to protect it from state powers by way of market mechanisms. For example, to ensure that public services addressed the population’s real needs, he suggested introducing competition-enhancing devices in the public sector; deregulating areas of the economy, such as the housing market; and introducing user fees for some public services.²⁰

Den herskende klasse greatly influenced the contemporary debate about the crisis of the welfare state. Among others, Bertel Haarder, who belonged to a new generation of politicians emerging within the liberal party Venstre in the early 1970s, picked up Dich’s analytical framework. Seeking to formulate a ‘new’ and more ‘constructive’ liberalism, like Dich, they located the source of the crisis of the welfare state in its ever-growing, ineffective, and undemocratic public sector, and proposed market-focused solutions to reform the welfare state and end the crisis.²¹

In the early 1970s, however, there were few indications that market-focused criticisms of the public sector would have much effect on Danish politics. The so-called landslide election that took place in December 1973, a month after the publication of Dich’s Den herskende klasse was a disaster for the old political parties and left them bewildered and concerned about meeting both the severe economic challenges and popular dissatisfaction. Shifting governments, taking different measures in order to create economic growth, were characteristic of the era. From December 1973 to January 1975, in a government led by Poul Hartling, Venstre tried to break the deadlock by introducing tax reliefs, which were to be followed by massive cutbacks in the public sector, but which did not solve the crisis.²²

Likewise, the Social Democratic Party – which formed no less than four governments from 1975 to 1982, all headed by Anker Jørgensen – had difficulties responding to the crisis of the welfare state. In 1973, as the party presented a bill concerning the implementation of economic democracy, leading social democratic politicians also initiated a debate about the legitimacy of the welfare state. Central to the debate was a criticism of the traditional focus on growth, a concern about how to address inequality, lack of welfare and experiences of desolation in the welfare state, and reflections on why the population were critical of the welfare state’s values and workings. But the new (and still very optimistic) 1977 party program proposed to solve the contemporary crisis of the welfare state through socialist policies. Accordingly, the program was in favour of expanding public services and addressed public dissatisfaction by reworking political consciousness and values. Only at the end of the 1970s did Danish social democrats became convinced that it was necessary to reduce public expenditures.²³

Jørn Henrik Petersen’s turn to public choice in the late 1970s

The question of how to address mounting public sector expenses and the public dissatisfaction with the welfare state became central to Jørn Henrik Petersen in the 1970s. A student of Jørgen S. Dich’s in Aarhus in the 1960s, Petersen found a role model in him and identified thenceforth strongly with his teacher’s academic work on and stance towards the welfare state. Similar to Dich, he was enthusiastic about the social democratic foundation of the welfare state, but sought to provide a theoretically charged, historically informed and critical perspective on its development. Towards the end of the decade, drawing on but also adding to the work of Dich, he emerged as a new voice in the reformist discourse that utilized economic arguments and rationalities to analyse the crisis of the welfare state. His ambition was not only to explain to academics and politicians why the political system had difficulties controlling the welfare state, but also to provide steering devices in the form of market-oriented reforms of public administration and service provision to improve its functions.

In the 1960s, Petersen entered a discipline of economics in which many scholars embraced economic planning, and his earliest academic texts focused on the particularities of the Soviet planned economy.²⁴ In the early 1970s, he also wrote academic articles, commenting on theoretical discussions of and developments in Danish social policy.²⁵ Moreover, he began an ambitious attempt to construct an overarching sociopolitical theory of the Danish welfare state, acknowledging his debts to his mentor Dich, who had charged him with constructing such a theory in order to explain and legitimate the welfare state. The two first volumes of his trilogy Socialpolitisk teori (Sociopolitical Theory), published in 1972 and 1974, displayed standard social democratic interpretations of the scope, reach and justification of social politics.²⁶ Rather than criticizing the rising expenditures of welfare state, his writings in this period mainly discussed the optimal financing of these expenditures.²⁷

However, Petersen’s understanding of the welfare state changed dramatically in the second half of the 1970s. The change was first indicated in the third volume of Socialpolitisk teori III from 1978, which marked, as Petersen announced in his foreword, ‘a break with the plan I set out in Socialpolitisk teori, volumes I and II’.²⁸ The new point of departure was welfare economics and especially public goods theory.

Public goods theory had emerged in response to the mid-century expansion of the administrative capacities of American government.²⁹ As government expenditures rose in response to welfare and warfare, and the allocation of available resources became a significant political question, public finance theorists tried to ascertain what goods and services government could unquestionably provide, and what the optimal output of these services were. Not an original contribution to public goods theory, Socialpolitisk teori III provided a thorough exposition of the different facets of these postwar developments in public economics.

Soon after his ventures into public finance theory in Socialpolitisk teori III, Petersen began to merge the analysis of economic and political processes through the perspective of public choice. Public choice theory rose to fame in the 1950s and 1960s and is often associated with a range of influential books, including Duncan Black’s The Theory of Committees and Elections (1958), Anthony Downs’s An Economic Theory of Democracy (1957), James M. Buchanan and Gordon Tullock’s The Calculus of Consent: Logical Foundations of Constitutional Democracy, and Mancur Olson’s The Logic of Collective Action (1965).³⁰ Applying the theories and methods of neoclassical economics to the study of politics, these writings have been influential both within and beyond economics in launching an understanding government as a political marketplace in which people are motivated by self-interest rather than ideas about the common good.³¹

Petersen’s theoretical move from public finance to political decision-making mimicked the emergence of public choice in mid-century America.³² For the inventors of public choice theory, the public goods theory of the state opened up a conceptual space for rethinking politics. The specific challenge concerned finding a mechanism that would create correspondence between citizens’ individual demand and the supply of public goods and services. From the late 1970s onwards, Petersen took up this challenge through comprehensive analyses of the Danish public administration and service provision in both academic and more popular writings, using the perspective of public choice theory.

His most extensive application of public choice theory to the Danish welfare state was unfolded in the 1980 book Hvorfor kan den offentlige sektor ikke styres? (Why can’t the public sector be governed?), co-authored with Kjeld Møller Pedersen, a colleague at Odense University.³³ In the book, they addressed the theme of ungovernability that had become central to political debates across the Western world in the 1970s – as epitomized in the Trilateral Commission’s 1975 report on The Crisis of Democracy, co-authored by Michel Crozier, Samuel Huntington, and Joji Watanuki – and had entered the Danish debate in a number of books, such as journalist Kurt Boelsgaard’s 1974 Den ustyrlige stat (The unruly state), Venstre politician Ove Guldberg’s 1979 Det uregerlige Danmark (Unruly Denmark), and lawyer Hans Henrik Brydensholt’s 1979 Dette ustyrlige samfund (This unruly society).³⁴ The more concrete political context was the continuing economic crisis that had climaxed when the second oil crisis hit Denmark at the end of 1979. This crisis increased the national economic problems of inflation and deficits on the balance of payments, a development that prompted the social democratic Minister of Finance, Knud Heinesen, to remark that Denmark was heading towards the ‘economic abyss’.³⁵

Heinesen’s remark fell only five days after his party formed a minority government, which succeeded in negotiating a number of major settlements with the small centre-right parties in Folketinget. The settlements and ensuing economic interventions began to correct the long-run economic balance problems, but unemployment continued to rise. And while some social democrats suggested an end to the growth of the public sector and reforms of its workings to end the widespread dissatisfaction with the welfare state, they offered no concrete solutions. Moreover, Prime Minister Anker Jørgensen struggled to hold together his own party, which increasingly questioned his leadership.³⁶

Portraying four prominent social democratic politicians, including Anker Jørgensen, jumping into the abyss, the front page of Hvorfor kan den offentlige sektor ikke styres? signalled that the book directly addressed the dire political situation in Denmark. In the book, Kjeld Møller Pedersen and Jørn Henrik Petersen were much less hesitant than the Social Democratic Party in providing a diagnosis of and a cure to the main economic-political problem of the time: the seemingly uncontrollable expansion of the Danish public sector. Using public choice theory to explain the expansion, Pedersen and Petersen pointed first of all to the competition between political parties and their relationship to interest groups. Against the background of Anthony Downs’s influential economic theory of democracy, which had also informed Dich’s Den herskende klasse, they explained the expansion of the public sector with reference to the political parties’ tendency to converge around the coveted median voter.³⁷ Ideology mattered little in this model. Parties simply catered to average voters by offering them the public goods and services they wanted, and this in turn led to uncontrollable expansions of public budgets and government deficits.³⁸

In explaining the vast public sector growth, Pedersen and Petersen also pointed to the ‘institutional egoism’ of public administrators, who, in contrast to private-sector managers, always strive to spend their budgets because they cannot dispose of the potential surplus.³⁹ Since their success is measured by their ability to expand their institutions, public administrators work for promotions, salary increases and further recruitments. Focusing on the health sector, Pedersen and Petersen exemplified this argument with reference to how medical interest organizations allegedly lobbied for the passing of new laws and supported the expansion of specialist medical wards as a way to pursue their own interests instead of those of the patient.⁴⁰

While the theoretical inspiration behind Hvorfor kan den offentlige sektor ikke styres? was American public choice theory, its specific arguments concerning the Danish welfare state were similar to those Jørgen S. Dich and Bertel Haarder had unfolded in the early 1970s. Pedersen and Petersen acknowledged these similarities. However, they also pointed to a crucial difference between their analysis and Dich’s. Whereas Dich launched a moral criticism of ‘the ruling class’ as a way to appeal to self-restraint vis-à-vis their exploitation of the welfare state, in their perspective, following public choice reasoning, politicians and public administrators were merely rational market actors. This observation made for a new solution in relation to countering the uncontrollable expansion of the public sector:

When unintended consequences arise from this [the rational behavior of politicians and public administrators], it is related to the incentive-structure that characterizes the institutions. If the aim is to change these consequences, it is not enough to provide moral commendations. The crucial thing will be to institute new rules of the game.⁴¹

These new rules of the game, Pedersen and Petersen explained, required a renewal of the social contract undergirding the Danish welfare state. In extension of James M. Buchanan, they argued that the constitution would have to be amended. Buchanan was the towering figure within the public choice field in America and the leading exponent of constitutional economics.⁴² Aiming to set limits on the rapidly expanding American welfare state by setting constitutional limits on government’s ability to tax and spend, Buchanan’s constitutionalism can be seen as an indicator of the so-called tax revolts that spread across America in the late 1970s, with the Californian Proposition 13 as the most prominent example.⁴³ In the different context of the Danish welfare state, Pedersen and Petersen deployed the idea of constitutional reform to amend the bureaucratic as well as electoral deficiencies that characterized the ever-expanding welfare state. Among other things, they suggested constitutional changes mandating competition among bureaus, between public agencies and private providers, and introducing limits on public spending.⁴⁴ These themes of increasing public service efficiency and responsiveness would become the dominant themes of Jørn Henrik Petersen’s academic and public writings about the Danish welfare state in the 1980s and 1990s.

From academic analysis to public debate and private administration

Petersen’s work developed in various directions in the 1980s. Yet he remained focused on market-oriented reforms of the welfare state and intensified his efforts to disseminate public choice theory, pursuing influence at three levels, each one bringing his theories closer to implementation. First, he became a prolific public intellectual, writing a vast number of opinion pieces for both major and minor Danish news outlets, thereby introducing his market-oriented visions for the welfare state to the broad public. Second, he engaged public administrators directly, contributing to debates about public service provision reform. Third, he became the first chairman of TV 2, which was the first prominent example of contracting out in the Danish context, allowing Petersen to showcase his theories of the private supply of publicly provided services.⁴⁵

Petersen was certainly the most energetic advocate of public choice in Denmark in the late 1970s and early 1980s, but the paradigm was also introduced and discussed by a number of other Danish economists like Rolf Nordstrand, Erik Gørtz, Ole P. Kristensen and Martin Paldam.⁴⁶ While public choice was gaining acceptance as a perspective within the Danish discipline of economics, it was not without critics. In 1981, economist Mogens Kühn Pedersen attacked it as a right-wing doctrine promoting privatization in an article in Juristen og Økonomen (The Lawyer and the Economist).⁴⁷ Pedersen and Petersen responded in the same issue, arguing that public choice theory was not a program of privatization, but a theoretical system for gauging government failures, just as economists analysed market failures. They argued that public choice theory addressed the problem of institutional comparisons to allow for more informed choices between different systems of allocation.⁴⁸ The concern was not, they added, about choosing between public or private provision, but of finding the right mix between the two allocation mechanisms.

The solution that Jørn Henrik Petersen offered in the early 1980s was the separation of provision and production. This was a move away from the constitutional solutions that he and Pedersen had advocated in Hvorfor kan den offentlige sektor ikke styres? Provision of public goods and services remained a vital political task, he argued, but the responsiveness and representativeness of supply rested on the introduction of competition between service producers, which could be either public or private. The main matter was improving the connection between supply and citizen-customers’ individual preferences for welfare services through competitive mechanisms.

Eager to communicate these insights from public choice theory, from 1979 to 1983, Petersen published more than 10 academic articles in Danish journals, four essays in business related journals, five contributions to edited volumes, and more than 15 newspaper articles on the topic.⁴⁹ Moreover, he gave countless talks to various academic and popular audiences as well as to public administrators. Emerging as a vocal advocate for market-focused reforms of the Danish welfare state, he was nowhere as insistent and imaginative on how to reform the public administration and service provision as a public debater in leading Danish newspapers in the early 1980s. In the series of newspaper articles that Petersen authored in this period, recapitulating the main points from his academic work on the topic, he argued that the public sector was characterized by fundamental flaws that had allowed the self-interested behaviour of voters, politicians, and bureaucrats to create a government characterized by an inefficient allocation of resources through excessive spending and an uncontrollable growth of the public sector. In sketching a solution to these flaws, he referred to the separation of provision and production he had introduced in his other writings and stressed the necessity to introduce competition-enhancing mechanisms and incentives in the supply of public goods and services

For example, in an opinion piece titled ‘Sygekasserne må tilbage for at få besparelser på lægeudgifter’ (Health insurance must be reintroduced to ensure cost reductions on medical expenditures) that appeared in Jyllands-Posten on 8 June 1980, he argued that healthcare should learn from private business by ’introducing the competition moment’.⁵⁰ Moreover, he recommended ‘the Californian model that is characterized by internally competing health solutions’, which meant reintroducing a health insurance model in which people each year were to choose their level of insurance (and what they would like to pay), depending on how well they currently felt. In addition, doctors were to be given a basic fee, which would give them full responsibility for the patient’s health. In this scheme, doctors would thus have to pay themselves, if they chose to send a patient to extra examinations, but also be entitled to a bonus in case they managed to keep their budget. According to Petersen, this solution would put a brake on the current economic exploitation of the system, including the tendency among doctors to continuously expand their institutions and budgets. He explained: ‘Only by dividing the public sector into small, independent units with separate responsibilities and competing neighbors can an incentive to save be introduced’.

In Petersen’s newspaper articles from the early 1980s, the arguments for introducing competition in the public sector were embedded a critique of what he described as the public sector’s inability to register the real needs and demands of the population, as, in contrast to the market’s price mechanism, it lacked a mechanism to register the signals of interest expressed by individuals. This deficiency resulted not only in considerable waste-production, but also in an undemocratic allocation of resources, as it provided people with goods and services they did not need or desire. Moreover, in an article titled ‘Den skjulte økonomi’ (The hidden economy) that appeared in Berlingske Tidende on 9. September 1981, Petersen argued that the current system encouraged the emergence of a large underground economy.⁵¹ According to Petersen, signalling ‘the wishes of the citizens, which cannot be signaled in any other way’, the outcome of the underground economy ‘would be the gradual breakdown of society’s social and legal norms’. He added: ‘Without such norms society cannot survive’.

To remedy the societal dangers caused by the lack of responsivity in the public sector, in an article titled ‘Hvem sætter priser på offentlige goder?’ (Who puts prices on public goods?) that appeared in Jyllands-Posten om 16 February 1981, Petersen proposed to establish an ‘arbitrary people’s assembly’ (tilfældigt folkets ting).⁵² This assembly was to be composed of representatives of the population, chosen randomly, for a limited period of time, and placed next to parliament and given the tasked with providing politicians with information about what the population desired in specific areas. ‘The idea’, Petersen wrote, ‘is in other words to combine a representative democracy with a better signaling system based on a higher level of information’.

Obviously, Petersen sought not only to address the economic problems of the public sector, but also to renew its legitimacy by enabling people to participate in decision-making processes. However, he ceaselessly contrasted the mechanisms and virtues of the free market unfavourably to the workings and institutions of government and its public sector. According to Petersen, market mechanisms guaranteed not only economic efficiency but also democratic institutions because it fulfilled people’s wants as consumers. This assumption was drawn from public choice theorists and from Austrian-British economist Friedrich Hayek, whom Petersen frequently referred to in the 1980s. Similar to James M. Buchanan and Gordon Tullock, Hayek was widely known for his free market advocacy. In a Danish context, Bertel Haarder and a group of young libertarians, who founded the society Libertas in the mid-1980s, were the only other debaters to embrace Hayek in this period.⁵³ Next to drawing on ideologically committed theorists, Petersen mainly wrote for liberal-conservative papers and offered political solutions that resembled those voiced by the most economically liberal actors in Danish politics. Tellingly, in one of his opinion pieces from the early 1980s Petersen justified marked-based welfare state reforms in a language reminiscent of the famous slogan coined by Margaret Thatcher: ‘It is difficult, but there is no alternative’.⁵⁴ Clearly, Petersen’s perspective on the welfare state was close not to that of social democracy but to its critics.

Petersen’s newspaper article reflected that public sector reforms, marketization and privatization had become central topics in Danish politics in the early 1980s – especially after the crisis-ridden social democratic government stepped down and was succeeded by the conservative Poul Schlüter’s coalition government in the summer of 1982. Singling out the massive foreign debt and the growing state budget deficit as its primary policy aims, Venstre and the Conservative Party had launched a liberal ‘alternative’ in 1981, which, in the words of Schlüter, ‘was more than numbers and economics. It was a philosophy’.⁵⁵ The government’s economic visions were inspired by developments in Great Britain and the United States, where Margaret Thatcher and Ronald Reagan had formed governments in 1979 and 1981 respectively. They were also, to a large extent, driven by politicians that had been central to the liberal renewal in Venstre in the 1970s. Particularly prolific were Henning Christophersen, Uffe Ellemann-Jensen, and Bertel Haarder, who served as, respectively, Minister of Finance, Foreign Affairs, and Education in Schlüter’s government.

Most importantly, in 1983 Christophersen presented the first of a series of so-called modernization programs, which echoed the ideas for welfare state reforms that he and his fellow party members had authored since the early 1970s. The key objective of the program was to make budget cuts to solve the desperate economic situation while at the same time making the public sector less bureaucratic, more productive, effective, and responsive to individual demands. It presented the government’s ideas of implementing self-regulating mechanisms and competition systems with a focus on five areas: (1) decentralization of responsibility and competence; (2) market steering, freer consumer choice, and changed finance mechanisms; (3) better customer service and simplification of rules; (4) training of leaders and personnel; and (5) increased use of new technology. The 1983 modernization program was met with criticism within and outside government due to its critical attitude towards the welfare state (ideas about privatizations had already been removed from the program, as they had proved to be very controversial in the preceding discussions).⁵⁶

The question as to whether and to what extent the public sector should be reformed through marketization and privatization was also debated by public administration scholars and public administrators at various conferences and meetings in the early 1980s. Petersen contributed energetically to these debates, including Forskningskonference’ 81 (Research Conference 81), which was organized by the Department of Administration and aimed to illuminate possibilities of cooperation between the worlds of research and administration through discussion of the steering problems in the public sector.⁵⁷

Petersen began his contribution by addressing the monumental challenges facing politicians and administrators at the beginning of the 1980s. ‘Inflation, unemployment, low growth or negative growth, environmental degradation, demands for increased public intervention, demands for budgetary cuts at the same time as expenditures rise, ever-more ambitious attempts at “control”’ were seemingly unsolvable problems of governability.⁵⁸ Casting himself in the role of ‘advocatus diaboli’, and following public choice theory, Petersen argued that the crisis was not one of control but of collective decision-making. The focus on control and governability, which had inspired the conference, was accordingly a wild track. As he and Kjeld Møller Pedersen had done in Hvorfor kan den offentlige sektor ikke styres?, Petersen consequently recommended changes to the institutional rules that structured the decision-making process which was overloading politicians and administrators with demands. Researchers, administrators and politicians, he wrote, should take a closer look at the institutional mechanisms through which citizens signalled their demands and politicians’ and at administrators’ incentive mechanisms to respond to these demands satisfactorily. In other words, rather than servicing the supply side of politics by helping politicians and administrators controlling demand, Petersen argued that the researcher’s role was to find alternative institutional mechanisms through which citizens could signal their demand.⁵⁹ Addressing the role of the researcher rather than solutions, he did not specify what such institutional mechanisms might look like.

That was the subject of his contribution to the 1984 volume Offentlig sektor, privatisering og velfærd (Public Sector, Privatization and Welfare). Edited by economist, public administrator, and former Social Minister for the Social Democratic Party, Bent Rold Andersen, the volume contained the proceedings from a series of seminars at which prominent scholars, politicians, public administrators and representatives from private business had exchanged views on current governmental problems.⁶⁰ Petersen’s contribution to the volume, entitled ‘Markedsmekanisme og politisk styring – et bidrag til privatiseringsdebatten’ [Market Mechanism and Political Control – a Contribution to the Privatization Debate], began with a review of the so-called Perspektivplaner of the early 1970s, explaining that these plans had been optimistic about reducing public expenditures.⁶¹ According to Petersen’s analysis, this changed in the 1980s, where the Ministry of Finance began addressing the problems associated with the institutional structure of politics. For example, the 1983 budgetary statement advocated microeconomic incentives like increased involvement of the private businesses to solve public sector tasks on a contractual basis, outcome orientation, and fewer regulations.⁶²

In ‘Markedsmekanisme og politisk styring’, by way of public goods theory, Petersen argued that the provision of certain public services might well remain on public hands, but that the production of these services could be handled by private contractors if they proved more efficient. That way the welfare services were still decided on and financed collectively, but the production contracted out to private producers. What mattered was not who produced the services, but that the mode of production connected producers to consumers’ wants. This separation of provision and production thus allowed for a middle of the road approach between private and public production, which was perhaps the quintessential feature of third-way social democracy. As Daniel Stedman Jones has argued in an article about the origins of the third way, this new approach to public service provision and production in large part stemmed from the so-called Bloomington School of Political Economy. Headed by the couple Vincent and Elinor Ostrom, this school advocated decentralization of decision-making and public service provision and production.⁶³ Against the background of observations in local communities in California in the 1950s and 1960s, they deployed the concept of polycentricity to explain the ideal structure of political representation and service provision. They defined polycentricity as ‘many centers of decision-making which are formally independent of each other’.⁶⁴

Whereas federalism implied a separation of jurisdictions into local, state, and national levels, polycentricity implied crosscutting these jurisdictions on specific matters of policy.⁶⁵ The Ostroms’s concept of polycentricity conceived of politics in economic terms, arriving at the conclusion that both collective decision-making and the supply of public goods and services should be decentralized in market-like fashion. Outsourcing and contracting out were the most prominent examples of this market-like decentralization. The primary benefit of outsourcing and contracting out the production of public goods and services was that it made supply more responsive and more efficient because the political community, responsible only for their provision, could put more pressure on the producers by requiring competition between them for contracts.

Introduced by Jørn Henrik Petersen, such ideas were gaining resonance in the early 1980s. In response to Petersen’s contribution, Erik Ib Schmidt, former Head of the Finance Department from 1962 to 1975, a central figure in the building of the welfare state in the postwar period, and a member of the Social Democratic Party since the early 1940s, acknowledged that the borders between public and private provision had to be redrawn, and he recognized that a combination of political control and market mechanisms were necessary to solve the crisis of governability.⁶⁶ Similarly, in response to the on-going economic crisis, the Social Democratic Party changed its economic policy, outlining an ideology that combined values such as solidarity, equality, and well-being (‘trivsel’) with economic growth.⁶⁷ The grave economic situation, most party members agreed, required continued growth if standards of living and public services were to be upheld. Moreover, leading social democratic politicians arrived at the conclusion that the welfare state should be defended rather than expanded and that public sector cuts and creating better conditions for private business were needed to enhance economic growth and competitiveness. But how to balance these issues was intensely debated. While some were in favour of sticking to ‘classic’ Social Democratic welfare state politics, others argued that limiting the growth of the public sector and making it more efficient were vital if the popular discontent was to be disarmed. For example, former Minister of Finance Knud Heinesen noted in a 1984 article titled ‘Kan velfærdssamfundet overleve’ (Can the welfare society survive?), which appeared in the party journal ny politik (New Politics), that many ‘users’ viewed public services as ‘bureaucratic and rigid’. Moreover, he proposed adapting social democratic politics to ‘the growing user demand for greater flexibility and concern for greater efficiency with a more extensive decentralization’.⁶⁸

A similar discourse informed the new social democratic work program that appeared in 1984 under the title For ny fremgang (For New Progress). While criticizing the government’s aim to privatize public services, it aimed to ‘further a development within the entire institutional area to secure a treatment in which “the users” are entrusted with greater responsibility and participation and which opens public institutions towards society’.⁶⁹ This involved the public choice idea, introduced by Petersen, of initiating public-private collaboration in the production and delivery of public services, and, more generally, a portrayal of the market not only as a force that needs to be tamed and controlled by the state but also as a useful tool in solving the economic and political challenges of the welfare state.

The ideological debates within the Social Democratic Party took place in the context of a larger discussion of the development of a ‘new Nordic model’ that unfolded within SAMAK (the Co-operation Committee of the Nordic Social Democratic Parties and Trade Unions) and were crucial to the party’s gradual ideological renewal taking place in this period.⁷⁰ By the late 1980s, the Social Democratic Party had thus come to share many of the visions that Petersen had introduced since the 1970s. Abandoning ideas of comprehensive state planning, social democrats began to discuss partnerships between the state and private business, outsourcing some provisions of public goods to private deliverers, and implementing market mechanisms in parts of the public sector. These ideas, some of which Knud Heinesen had first launched in the early 1980s under the label of ‘the third way’, to mark their deviation from the public sector reforms pushed by the government, was also introduced in the new working program for the period 1990–1995, which appeared in 1989.⁷¹ Referring to the SAMAK report Förnya den offentliga sektorn (Renewal of the Public Sector) that was underway (it was drafted in 1988 and published in 1990),⁷² the working program announced that ‘decentralization and enlarged freedom to choose has to be the guiding principles. Responsibility and economy have to be outsourced to the users and the employers in the individual public institutions’.⁷³

More generally, on the verge of the 1990s, the Social Democratic Party had become fixed on an ideological course that, similar to the Schlüter governments, aimed at reforming the public sector through the introduction of market mechanisms. It should be stressed that the social democratic government embedded its reform agendas in slogans such as ‘responsibility for all’ and stressed the necessity of ‘political steering’ to indicate the limits of the intended reforms. Moreover, as a way to distinguish its agenda from that pursued by the former government, it stressed that a market solution should be implemented only where it was ‘natural’ to allow for competition and ‘meaningful’ to let citizens act as consumers.⁷⁴ In so doing, it aimed to re-enchant the public sector as a place that was capable of responding to individual desires and helping people to fulfil their dreams, thereby reinventing the welfare state in order to reclaim a lost political terrain. It was in this context that, during its spell in power from 1993 to 2001, the Social Democratic Party implemented public sector reforms that closely resembled what Petersen had been advocating since the late 1970s.⁷⁵ In doing so, Denmark followed paths similar to those of the United States, the United Kingdom, and Germany, where centre-left governments in the 1990s shifted to market-based third way agendas to salvage their welfare states from overburdened budgets and the pressure of globalization.

Epilogue

In the 1990s, Jørn Henrik Petersen reinforced his reputation as a respected scholar, prolific public intellectual and sought-after administrator and policy expert. As for the latter, he was one of seven experts appointed by the Schlüter government to the Social Commission to review the cash transfer system and offer proposals for reform. The commission submitted a report which suggested strengthening the activation efforts by focusing on young people’s education and creating a more transparent public services system. It also aimed to strengthen the incentives to work, for example by lowering the level of social assistance below the average wage, raising the qualifying age for early retirement, and setting a five-year limit on unemployment benefits. Parts of these proposals were implemented by the social democratic government after 1993.

However, in his capacity as public intellectual, from the mid-1990s onwards, Petersen repeatedly lamented that the government did not have the courage to implement further reforms to salvage what he portrayed as a rapidly disintegrating welfare state. ‘The welfare state needs an ax cut’, he stated in an interview with BT on 20 January 1997. Moreover, Petersen repeatedly encouraged the Danish population to show self-restraint in order not to exploit and, ultimately, wreck the welfare state. In this context, he made use of new language, arguing that virtues such as ‘ethics’ and ‘moral’ were urgently needed if the welfare state were to preserve its ‘legitimacy’ and ‘cohesion’ (sammenhængskraft) and fulfill its original aim: to help those in need.⁷⁶

This moral language became increasingly central to Petersen’s academic work in the following decades. Paradoxically, he eventually became a critic of the third way that the Social Democratic Party had taken in the foregoing decades – and that he himself had advocated. This criticism reached a climax in his 2014 book Pligt & ret – Reflektioner over den socialdemokratiske arv (Duty and Right: Reflections on the Social Democratic Ideational Legacy), written on the occasion of the farewell lecture he gave upon retiring from the University of Southern Denmark.⁷⁷ The book was a direct attack on social democratic reforms since the mid-1990s, and in particular on its social and labour market activation policies. In Petersen’s perspective, social democrats had simply adopted the conservative-liberal government’s demonization of societies’ less fortunate and unproductive members, which the welfare state had been established to protect in the first place. The result, he argued, was an erosion of the institutions and the solidarity needed to uphold the welfare state.

Throughout Pligt & ret, Petersen lamented that the ideal of the rational market actor had replaced the ideal of the moral citizen and acknowledged that public choice theory was partly to blame for this development. Not only did he admit that, in its pure form, it ‘often assumed an almost ideological character in its critique of decision-making processes in the public sector’.⁷⁸ On the very last page of the book, he indirectly, but unmistakably, distanced himself from the paradigm by explaining that upon its had been applied in political reforms, ‘the academy had become very cautious and skeptical both towards both the pure public choice-theory and its successor in the form of NPM (…)’.⁷⁹

This was an ironic twist in Petersen’s intellectual trajectory. Not only did he recommend a range of market-focused reforms to different governments as a member of various commissions, he also theorized and encouraged such reforms as a scholar, public intellectual and public administration expert from the late 1970s onwards. His contribution was to apply economic methods to the study of political processes and propose new institutional rules to Danish public service provision that viewed individuals as rational self-interested market actors and compelled them to act as such. As this article has illustrated, these public choice theories, which Petersen helped introduce, were at the core of the third way shift from an expanding welfare state to a competition state focused on cost-optimizing existing services. The initial political context of this shift was not the globalization of the 1990s, though it reinforced it, but the fiscal crises and governability challenges of the 1970s. Now marginalized in the academy, public choice theory was both an indicator of and a factor in this shift. Public choice offered an explanation and a solution to the problems confronting governments across the western hemisphere in the late 1970s. Explaining the problems with reference to the self-interested behaviour of citizens, politicians and bureaucrats, public choice theorists like Petersen argued that the public sector ought to be restructured along market lines. Though public choice theory more a less disappeared from the scene in the 2000s, ideas about government failure, political utility-maximization, cost-cutting and the perfect market remain an important part of the conversation about the public sector. Embraced by social democrats looking for a way to save the faltering welfare state, public service provision remain structured in the image of the market.

Acknowledgments

We would like to thank the editor Heidi Vad Jønsson, the anonymous reviewers, Klaus Petersen, Jesper Vestermark Køber, and Maiju Wuokko for their generous and constructive comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Danish Council for Independent Research [9037-00049B]; Riksbankens jubileumsfond [M19-0231:1].

Notes on contributors

Niklas Olsen

Niklas Olsen is an associate professor at the Saxo Institute, University of Copenhagen. His research interests address European history in the twentieth century, exploring how political languages and practices are constructed and disseminated in various national and transnational settings. His publications include History in the Plural: An Introduction to the Work of Reinhart Koselleck (2012) and The Sovereign Consumer: A New Intellectual History of Neoliberalism (2018).

Jacob Jensen

Jacob Jensen is a postdoc at the Saxo Institute, University of Copenhagen. His main research interests are in the history of postwar American political and economic thought. He has written a dissertation on the rise of rational choice theory in the discipline of economics and has published articles on his fields of interests in The Toqueville Review, Oeconomia: History, Methodology, Philosophy (forthcoming) and Journal of the History of Ideas (forthcoming).

Notes

1. On the third way, see Hay, ‘Third Way’.

2. For a recent comparison of the emergence of the third way in the United States, Great Britain, Germany and Sweden, see Mudge, Leftism Reinvented.

3. Andersson, Between Growth and Security. See also Mudge, Leftism Reinvented, 304–330.

4. The reforms gained vast positive attention abroad in the late 1990s and early 2000s. See Eriksen, ”DJØF-linjen i dansk velfærdshistorie.” Moreover, they have been continued under shifting governments, thus reinforcing the recent shift from the ‘welfare state’ to the ‘competition state’ in Denmark. See Pedersen, Konkurrencestaten.

5. For a recent example from the international literature, see Mudge, Leftism Reinvented.

6. Andersson, Between Growth and Security; and Andersson, The Library and the Workshop.

7. Marklund, “The Social Laboratory, the Middle Way and the Swedish Model.”

8. For example, Outinen, “From Steering Capitalism to Seeking Market Acceptance,” argues that Finnish social democrats represented an avantgarde of the third way.

9. The literature on the third way in Denmark is still somewhat scarce. Standard references are Klitgaard, ”Why are They Doing It?”; Klitgaard, “Velfærdsstatens markedstilpasning”; Green-Pedersen, Kersbergen and Hemerrijick, “The Politics of the ‘Third Way’”; and Green-Pedersen, Kersbergen and Hemerijck, “Neo-liberalism.” For a more critical perspective, portraying the social democratic market turn as a betrayal of its traditional agenda, see Kolstrup, “Velfærdsstatens og socialdemokratiets markedstilpasning.” For a recent account of the ideological transformations within the Social Democratic Party in this period, see Petersen, Petersen and Christiansen, Hvor glider vi hen?

10. Already in 1985, Petersen defended a Habilitation with a work on the history of the Danish pension system. More recently, he was instrumental for a six-volume project on Danish Welfare History. Moreover, he has written extensively on the relation between the welfare state and Lutheranism. He is currently writing a biography on the first Danish (and social democratic) Minister of Culture, Julius Bomholt.

11. For these biographical details, see the interview “’Jern Henrik’ tror han kan klare mosten.”

12. See for example Petersen, Pligt og ret.

13. Focusing on a social democratic party dissident and on liberal pioneers of the market turn, we join perspectives first advanced in, respectively, Andersson, “Neoliberalism Against Social Democracy”; and Olsen, The Sovereign Consumer, 185–226.

14. The following section relies on Olsen, The Sovereign Consumer.

15. Petersen, Legitimität und Krise.

16. Petersen, Petersen, and Christiansen, Velfærdsstaten i tidehverv; and Olsen, “Welfare State Criticism in 1970s Denmark.”

17. Dich, Den herskende klasse.

18. Hardis, Den kætterske socialdemokrat.

19. Olsen, The Sovereign Consumer, 196–197.

20. See note 18 above.

21. Olsen, The Sovereign Consumer, 198–205.

22. Rasmussen and Villaume, Et land i forvandlin.

23. Petersen, ”Programmeret til velfærd?”; Helbak, ”Fra demokratisk socialisme til socialt demokrati”; and Petersen, Petersen & Christiansen, Velfærdsstaten i tidehverv, 110–111.

24. Petersen, ”De matematisk orienterede”; ”Økonomiske reformer i Tjekkoslovakiet”; ”Traditionel og ny Sovjetisk økonomisk teori.”

25. Petersen, ”Dich ctr. Rold Andersens afgrænsningsovervejelser”; ”Om styrings- og prioriteringsproblemer i socialpolitikken”; ”Socialreformkommissionens 2. delbetænkning I”; and ”Socialreformkommissionens 2. delbetænkning II.”

26. Petersen, Socialpolitisk teori; and Socialpolitisk teori: Læren om de direkte tilskud.

27. See also some of Petersen’s contemporary newspaper articles, for example Petersen and Gørtz, ”Boligforlig – og hvad så?”; and Petersen, ”Livslang gæld til Alma.”

28. Petersen, Socialpolitisk teori: socialpolitik og velfærdsøkonomi, foreword.

29. Jensen, “Public Goods.”

30. Black, The Theory of Committees; Downs, An Economic Theory of Democracy; Buchanan and Tullock, The Calculus of Consent; Olsen, The Logic of Collective Action.

31. Amadae, Rationalizing Capitalist Democracy; Cherrier and Fleury, ‘Economists’ Interest’.

32. Jensen, ”Anthony Downs.”

33. Pedersen and Petersen, Hvorfor kan den offentlige sektor ikke styres?.

34. Boelsgaard, Den ustyrlige stat; Guldberg, Det uregerlige Danmark; and Brydenholt, Dette ustyrlige samfund.

35. Rasmussen & Villaume, Et land i forvandling, 243–285.

36. Ibid.

37. Pedersen and Petersen, Hvorfor kan den offentlige sektor ikke styres?, chapter 3.

38. Pedersen and Petersen, Hvorfor kan den offentlige sektor ikke styres?, 74–82. This argument stood in contrast to Downs who actually argued that the government budget tended to be too small because of voters’ rational ignorance. See Downs, ”Why the Government.”

39. Pedersen and Petersen, Hvorfor kan den offentlige sektor ikke styres?, chapter 4.

40. Ibid., chapter 4.

41. Ibid., 105–106.

42. For a recent controversial history of Buchanan’s influence, see MacLean, Democracy in Chains.

43. Huret, American Tax Resisters.

44. Pedersen and Petersen, Hvorfor kan den offentlige sektor ikke styres?, 204.

45. Because of space limitations, we have not included a section on Jørn Henrik Petersen and TV 2.

46. See Nordstrand, ”Den offentlige sektor i 1980erne”; Gørtz, ”Økonomisk-politiske styringsproblemer”; Kristensen, ”The Logic of Political-Bureaucratic Decision-Making”; and Paldam, ”Regere eller reagere.”

47. Pedersen, ”Public Choice.”

48. Pedersen and Petersen, ”Public choice.”

49. Petersen’s publication list is available at https://portal.findresearcher.sdu.dk/da/persons/jhp.

50. Petersen, ”Sygekasserne må tilbage for at besparelser på lægeudgifter.”

51. Petersen, ”Den skjulte økonomi.”

52. Petersen, ”Hvem sætter pris på offentlige goder?”

53. See first of Haarder, Nilsson and Severinsen. Ny-liberalismen. For information about Libertas, see the society’s webpage http://www.libertas.dk

54. Petersen, ”Er de sociale udgifter skurken?”

55. Rasmussen and Villaume, Et land i forvandling, 276–277.

56. Finansministeriet, Redegørelse til Folketinget. The program is analysed in Ejersbo and Greve, Moderniseringen af den offentlige sektor, 34–36 and in Petersen, Petersen and Christiansen, Velfærdsstaten i tidehverv, 115–116.

57. Administrationsdepartementet, Forskningskonference ´81.

58. Petersen, ”Om det politiske og administrative styringsproblem,” 20.

59. Petersen, ”Om det politiske og administrative styringsproblem,” 26–27.

60. Petersen, ”Markedsmekanisme og politisk styring,” 60–66.

61. Ibid., 43–46.

62. Ibid., 46–47.

63. Jones, ”The Neoliberal Origins of the Third Way.”

64. Ostrom, Tiebout and Warren, “The Organization of Government,” 831.

65. McGinnis and Ostrom, “Reflections on Vincent Ostrom,” 15.

66. Schmidt, ”Markedsmekanisme og politisk styring.”

67. Petersen, Petersen, and Christiansen, Velfærdsstaten i tidehverv, 105–136.

68. Cited from Petersen, Petersen, and Christiansen, Velfærdsstaten i tidehverv, 118.

69. Socialdemokratiet, For ny fremgang, 26.

70. Petersen, Petersen and Christiansen, Velfærdsstaten i tidehverv, 121–123.

71. Cited from Petersen, Petersen and Christiansen, Velfærdsstaten i tidehverv, 118.

72. SAMAK, Förnya den offentliga sektorn.

73. Socialdemokratiet, Gang i 90ʹerne, 11.

74. Ejersbo and Greve, Moderniseringen af den offentlige sektor, 46–52; and Petersen, Petersen, and Christiansen, Hvor glider vi hen?, 89–91.

75. Olsen, The Sovereign Consumer, 227–258.

76. See for example Petersen, ”Hvad er min ret?”

77. Petersen, Pligt & ret.

78. Pligt & ret, 314.

79. Petersen, Pligt & ret, 314.