Privatization and Accountability

In Public and Private Partnerships: Accounting for the New Religion, Minow identifies accountability as a fundamental consideration when examining the allocation of various tasks to public and private actors. This articles identifies two aspects of accountability - accountability within an organization, and accountability of the organization itself - and elaborates on the significance for the provision of various goods and services. The relationship between profit maximization and the organizational form is examined. The question of why the profit motive might be undesirable from a social perspective in some settings is addressed. Principal-agent theory is then used to analyze the failures of public provision. It is acknowledged that public intervention is appropriate in some cases, but that the private sector should be relied upon when possible. Finally, it is suggested that accountability provides a weak rationale for direct public intervention in markets.