Introduction

The argument of this chapter is that in the 1980s Britain stumbled into a new approach to the design of the institutions of the welfare state: the creation of self-inventing institutions. This was not a deliberate strategy, born of some notion about postmodernist institutional architecture. Rather, it was the unintended result of the Thatcher administration's general stance to the delivery of public services: in particular, its introduction of mimic or quasi-markets into the public sector. The government's policies represented an experiment – in the sense that it was testing its theories about how these services should be organized – and the resulting institutions are inevitably vulnerable to the results of that experiment: that is, if the theories did not accurately predict the outcome (and what theories ever do?), the institutions will have to adapt accordingly. By accident, therefore, Britain may have designed welfare state institutions which, rather than setting policy goals in organizational concrete, will have to change in response to the environment which they themselves are creating: they represent, as it were, the shells of buildings which can be adapted for different uses. Built into their design are incentives to learn from what is an uncertain and turbulent environment.

To explore this theme, this chapter will examine the Thatcher administration's experiment in introducing mimic or quasi-markets in the National Health Service (NHS), the social services, and education (Le Grand 1991). These are the product of a compromise between ideological aspirations and political realities.