Jeremy Kendall a

Review of Jennifer R. Wolch: The Shadow State: Government and Voluntary Sector in Transition, The Foundation Centre, New York, 1990, 286 + xix pp.

The Shadow State is a challenging and complex study of the changing relationship between the government and social welfare voluntary sectors in the UK and the US in an era of welfare state reorganisation. Blending an original 'political economic' theoretical framework and a wealth of background information, with sector-wide, industry-specific and case study data at the national and local levels, Wolch addresses perhaps the single most important issue facing social welfare voluntary organisations today: the retention of an appropriate level of autonomy and independence to pursue their own agendas as the state assumes an increasing stake in the sector (through funding and other links).

Since this book was written, the National Health and Community Care Act 1990 has gone on the statute books in the UK. This seeks to encourage municipal health and social care agencies to make more use than before of voluntary (and private, for-profit) organisations as service providers, and to do so by contractual means - in what has become known as the contract culture. Similarly, at the national level, the implementation of the state's recent efficiency scrutiny proposals on central government funding of the sector (Home Office, 1990) signals a shift both towards increased resource flows from the state to the voluntary sector, and to more specificity and formalisation within these flows, as reflected in a more contractual and less 'hands-off' approach to sectoral links. These policy changes appear to push the UK nearer to the US 'partnership' model (Salamon, 1987), so the issues the author explores are particularly salient at the present time, and it is important that each country learns from the experiences of the other (Gutch, 1992).

The theme of the book is that as a result of increased state 'penetration' into the affairs of the sector - both through tighter funding intentions from the public sector, and via non-financial control mechanisms (political economic resources in Wolch's own terminology, including institutional ties between state officials and voluntary group leadership and state regulatory provisions) - a large and increasing number of voluntary organisations thus sponsored currently comprise, or are evolving into (the distinction is not always clear) a shadow state (an expression apparently first used by 'new institutionalists' Clark and Dear in 1984). As such, their capacity to act independently and initiate social change is threatened since they become:

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a para-state apparatus ... administered outside of traditional democratic politics and charged with major collective service responsibilities previously shouldered by the public sector, yet remaining within the purview of state control ... The rise of the shadow state is a complex and contradictory phenomenon which threatens to alter the historical terms of debate about voluntary agencies as instruments of social control versus progressive social change agents (p.xvi).

The book argues that as a 'shadow state', the sector is losing, or is in danger of losing, its autonomy, becoming (over-) bureaucratised and professionalised, and adversely restrained in the fulfilment of its important advocacy or campaigning function. These are commonly- expressed fears in the UK, but much of the debate around these issues has been impressionistic and the evidence anecdotal or limited to case studies, although recent work has offered more substantive evidence that such transformations have occurred. For example, Lipsky and Smith (1990) show that parts of the voluntary sector in the US appear to be assuming some of the characteristics of their statutory funders, and Billis and Harr i s (1992) descr ibe how the ' aggress ive instrumentalism' of government policy in the 1980s has transformed the nature of some local voluntary organisations in the UK. I shall return, largely as devil's advocate, to some of these issues after first briefly summarising the structure of the book.

The book is divided into four sections comprising two chapters each. The first section offers a 'state-centred' theoretical model which draws on the Marxian tradition, new institutionalism and Giddensian social theory (Giddens, 1984). The discussion focuses primarily on the influence of the state as purchaser, regulator and through 'institutional ties': through control mechanisms and constraints (structural, situational and operational), it strategically manipulates the sector and changes the nature of the services it provides (along each of three dimensions: commodified-non-commodified; direct service-advocacy; and elitist- participatory spaces) in its pursuit of legitimation and social control objectives. There is also an emphasis on the dynamic impact of local historical factors and institutions in the sector. The theme that the voluntary sector, through being 'used' to promote their policies by various tiers of the government sector in both the UK and the US, of both left and right wing inclinations, has been transformed into a shadow state, is then built upon in subsequent chapters.

In part two, the Structural Context of Voluntarism, the author uses her framework to structure a description of the evolution of the US and UK voluntary sectors at the national level, emphasising the importance of the institutional and political economic context in which voluntary organisations operate. In so doing, she draws extensively on a wide range of existing national statistics. In the UK, many of

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the figures cover only registered charities in England and Wales and some are merely 'guestimates', so should be treated with extreme caution; the US data, due to the work of Hodgkinson and Weitzman at the Independent Sector and Salamon's work at the Urban Institute in Washington, are vastly superior. Throughout her discussion of the sector's 'transformation', Wolch emphasises the power of the State and focuses much less on the countervailing influences she herself had previously identified, and which her model would appear to be able to accommodate. For both countries, she cites numerous instances of State-imposed restrictions and constraints. In the UK chapter, for example, central government is seen as selectively promoting the sector and controlling its expansion, with voluntarism characterised as a state policy instrument to facilitate loadshedding. Thus, ' traditional ' organisations and activities which further this aim are supported whereas those radical and/or political groups which pose a 'threat" are restricted, either through one-off denials of funding or other privileges, or through a more subtle process of re-orienting the nature of their outputs over time. Examples cited include measures taken by the Home Office to ensure 'economy, effectiveness and efficiency' in their fundees, which 'significantly enlarg[ed] the government 's penetration into voluntary affairs' (p.97), and the Charity Commission's attempts in the late 1980s to tighten the regulations on the political activities of charities, which 'constitute a major deterrent to political activism' (p.98). The chapter also includes a description of how struggles between (right wing) central and (left wing) local government gave each an incentive to 'use' the voluntary sector against the other. In the former case, an 'efficient, accountable, flexible, apolitical' shadow state which could 'deliver services more cheaply than the welfare state' (p.111) was a means of centralising power and bypassing local democracy. In the latter case, the 'new Urban left' looked to 'small, innovative, participatory grass-roots groups to deliver services, become faithful constituents and oppose Thatcherism' (p.111).

In the third section, The Experience of Localities, the author selectively analyses local voluntary sectors, focusing first on urban areas in the US, and then discussing the relationship between voluntary agencies in London and their public sector sponsors. In the US chapter, she argues that her approach, which 'recognize[s] the complexity of the urban locale as a condensate of deep-seated and geographically extensive structural forces and locally distinctive institutions and actors' (p.149) takes us beyond the 'conventional wisdom' in explaining the huge variations that exist in local voluntary sectors in the US. The latter is summarised as relying on key explanatory factors which include differences in levels and variety of social needs creating incentives for voluntarism, varying degrees of regional economic health and

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prosperity, and contrasts in history and culture between old and new regions of the country. Using survey data collected by the Washington Urban Institute's Nonprofit Sector project on six urban areas, Wolch suggests that four aspects of local institutions additionally explain the scope and structure of local voluntary sectors: first, institutional culture and resources of local voluntary agencies; second, state funding of local areas and reliance on voluntary agencies for service delivery; third, the reliance of voluntary groups on state aid; and fourth, the behavioural responses to 'federal welfare state retrenchment' (p.140) of local institutions. In a short review such as this, space does not allow me to do justice to Wolch's elaborate and intricate arguments which appear, backed up with survey evidence, to offer some insight into a staggeringly heterogeneous set of interdependencies.

In contrast, the UK chapter focuses on the 'political economic role and institutional context' (p.151) of the sector in just one locality - London. This is a fascinating case study of a period of traumatic upheaval which illustrates how local agents - in particular, the socialist-dominated GLC and its successors - appeared to affect and 'use' the sector at the local level, and how central government reacted to this. Wolch describes how the GLC allocated grants to some voluntary groups (including actually creating organisations in some cases) 'both as a means to policy goals and as ends in themselves, a way of [attempting to] extend participatory democracy'. By selectively championing and sponsoring the sector's pressure group and mutual aid functions, the GLC had a mechanism for confronting central government's loadshedding policies, market-orientated philosophy and 'the failures of professionally dominated statutory provision' (p.156). Mrs Thatcher's central government responded first by removing service responsibilities from the GLC, and then, in 1986, abolishing this entire tier of local government (together with the other six metropolitan county councils) on the grounds that it was 'wasteful' and 'irresponsible', despite a remarkable lack of evidence that this was in fact the case. This is interpreted by Wolch as a deliberate move by central government to 'eliminate the political and economic resources of voluntary groups advocating progressive (and, hence, threatening) social change' (p.171). The arrangements for replacement funding implied new structural, situational and operational constraints on the sector which Wolch describes in some detail.

In the final section, Ambiguities of Practice, the penultimate chapter examines the effect of GLC abolition on the planning and management practices of a small sample of London voluntary organisations surveyed from the US in 1987 (this partly explains a response rate in single figures, 86 organisations supplying some usable responses; p.235), and draws on evidence from interviews with 24 voluntary organisations

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and other 'key actors'. On the basis of this evidence, having noted trends towards commercialisation and pressures from various quarters to plan more effectively, Wolch suggests that increased state 'penetration' 'is likely to impair the sector's ability to plan for an autonomous future'. The final chapter is a summary of the book's key themes, and includes a description of her rather general vision of 'the progressive potential of voluntarism', together with identification of obstacles to it, including problems associated with hierarchy and a tendency to crisis-planning in the face of funding uncertainties.

Does this book meet its ambitious objectives of 'unravelling the dilemmas of organisational autonomy and state control?' I feel that this book does push us in this direction without ultimately meeting such a goal, but such a step forward is no mean feat. Despite over ten years of intense multidisciplinary scholarship since Ralph Kramer wrote the seminal work in this field, Voluntary Agencies in the Welfare State (1981), we are still some considerable way from a full under- standing of this complex and interesting area. A very clear contribution of this book and its theoretical underpinnings to the existing literature is its 'macro' scope and breadth of vision, yet at the same time its retention of a huge range of 'micro' lower level institutional influences which affect the defining characteristics of the voluntary sector (Kendall and Knapp, 1992). Some of the more recent work done by economists in this field is beginning to take on board the full and complicated range of what are conceptualised as supply and demand side factors which shape the sector and its market share (see, in particular, Ben Ner and Van Hoomissen, 1991), but to date this work has not adequately captured or modelled the realities of the environments in which voluntary organisations exist. In particular, as Wolch rightly observes, these models are essentially static and have so far not incorporated the dynamic political and social change functions of the sector: they cannot accommodate the fundamental Toquevillean role of the sector in the shaping of public discourse - the process of arriving at collective values (Wuthnow, 1991, p.22), nor do they deal with the effects of a wide range of institutional factors and state policies (DiMaggio and Anheier, 1990). Also, these models tend not to reflect the essentially symbiotic and mutually interdependent nature of government-nonprofit power relations in most countries. (In the economist's jargon, in reality we tend to have bilateral monopolies or oligopsonies fraught with informational asymmetries, and thus with numerous opportunities for strategic behaviour.)

What of the book's scope, potential readership, theoretical approach and practical relevance? The emphasis throughout is very much on voluntary organisations located in urban areas which operate in social welfare fields, are in receipt of government funds, and have been

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affected by the welfare state restucturing of the Thatcher and Reagan eras. Wolch has very little to say about the sector's numerous important non-social welfare industries (for example, environmental and inter- national agencies) in which relationships with the State may be very different from those whose activities are interdependent with the welfare state: nor does she consider the rural dimension of the sector. The limited coverage of the book could usefuUy have been made explicit at the onset (perhaps 'urban' should have appeared somewhere in the title). I found Wolch's theoretical framework and the jargon associated with it interesting (I had thought time space trajectories only existed in science fiction films!), but also rather challenging at times. I would have liked to see a longer and more lucid description of the existing theory that underpins the author's approach, and a discussion of which elements of which existing social theories she incorporates, which she does not, and why. As it stands, the book would presumably be more accessible to readers with a grounding in modem social theory who wish to enhance their understanding of the voluntary sector than to those from other disciplines.

One problem which arises throughout the text is a lack of clear benchmarks, definitions and reference points. For example, nowhere in the text can one find definitions or clear explanations of a number of concepts fundamental to the debate. For example, on the autonomy/ public accountability dilemma, Wolch proceeds to negatively portray state involvement with ('penetration of') the sector as it has evolved during the 1980s, and elsewhere condemns it implicitly by the aggressive style in which the book is written, but appears not to fully address the difficult but necessary task of rigorously defining these terms. In fact, there may often be harmonisation of voluntary and government sector objectives, so to start by assuming conflict may not always be helpful; indeed, the raison d'etre of some voluntary organisations may be to enable joint sectoral objectives to be pursued. Even if the situation is one in which bargaining commences from very different positions, mutual accommodation (and hence, possibly, some 'goal deflection') is presumably beneficial to both parties, otherwise neither would have an incentive to engage in the transaction in the first place, and thus 'lose autonomy'. What must be paramount, surely, are the consequences of these negotiations for users, donors and taxpayers. This will be the case whatever the pohtical persuasion and objectives of the state funder, so it may not be 'ironic' (p.201) that it was a left-wing local tier of government (the GLC) rather than a right-wing central government (under Mrs Thatcher) which initiated professional planning and management in pursuing its policy objectives of decentralisation and democratisation!

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Neither does the author offer rigorous definitions or explanations of, for example, what she means by efficiency (which is certainly not just of concern to 'neo-conservative policy-makers'!), or of the 'types', or characteristics of winners and losers in the shadow state other than through rather unspecific references. It should be remembered, incidentally, that the most comprehensive survey evidence that we have on 'types' of voluntary organisation in the UK comes from Gerard's survey of 298 organisations in the late 1970s, when 'welfare state retrenchment' was only just beginning to bite. This found radical, reformist and politically-motivated voluntary organisations to be very much in the minority even then, with the organisations in the sector and the volunteers who worked with them most often characterised by an unusual degree of conservatism and religious commitment (Gerard, 1983). Wolch herself cites the GLC and London Voluntary Services Council as saying that most GLC fundees were 'characterized as service as opposed to campaigning in orientation, and many were well established charities' (p.169), yet perhaps she does not adequately account for the power and influence of these often 'elitist' groups. These may already have been linked with, or even incorporated into, the state to varying degrees for a considerable length of time (Beckford, 1991). We should not lose sight of the fact that 'controversial' groups in the London voluntary sector and their GLC paymasters in the early 1980s were not and are not representative of other local voluntary sectors and governments in the UK.

The author's state-centred approach is partly prompted by the recognition that existing theoretical perspectives lack a theory of the state (cf. James, 1989). However, because a theory of the state is required does it necessarily imply the need for a state-centred approach? Because the model is state-centred it tends, in my view, to overemphasise the influence of the statutory sectors in determining the nature and characteristics of voluntary organisations, and underemphasise the impact of other stakeholders. For example, for-profit resourcing of the sector is probably becoming increasingly common in the UK, so that tripartite links are gaining in importance (Wilson, 1989). Nor is the interface between individuals and various status groups with the sector given sufficient prominence in my view. It is hard to see how we can fully understand the nature of public-voluntary sector relations cross-culturally without giving centre stage to user, donor, citizen and participant preferences and motivations, to changing societal expect- ations and attitudes to government responsibilities, and to national perceptions of appropiate mixes of rights, duties and obligations (King, 1989; Taylor-Gooby, 1989; Taylor, 1990). Finally, we should not under- estimate the countervailing power of voluntary agencies themselves in their transactions with the state. This is likely to arise because the

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specialist or particularistic nature of voluntary organisations' outputs means that they often have a substantial amount of market power, and because they are able to call upon a multiplicity of funding sources (Kramer, 1981, 1990). Another aspect of the relationship is that, as much as the statutory sector might intend to control and direct the voluntary sector, the need to economise on transaction (monitoring) costs limits its capacity to do so in practice, and this may well be a reason for funding voluntary agencies, as opposed to potentially opportunistic for-profit bodies (Krashinsky, 1986; Ferris and Graddy, 1989; Kendall, 1991). Wolch herself acknowledges that her London survey showed that 'the reality of monitoring was at variance with the threatened severity in practice' (p.202).

In conclusion, The Shadow State should prove to be a useful contribution to the literature on voluntary sector-state relations because it brings a wide range of policy issues and statistical data on the sector together in an original theoretical framework, stresses the importance of setting the sector in its political economic context, and emphasises the pivotal role of local institutions in determining the sector's characteristics, scope and structure. Overall the book is well worth referring to, both for some of its more even-handed theoretical insights and for the useful statistical mapping that it contains.

Note

a Jeremy Kendall is a Research Fellow in the Personal Social Services Research Unit, University of Kent at Canterbury, Canterbury, Kent, England.

References

Beckford, J.A. (1991) Great Britain: voluntarism and sectional interests, in R. Wuthnow (ed.) Between States and Markets: The Voluntary Sector in Comparative Perspective, Princeton University Press, Princeton, New Jersey.

Ben-Ner, A. and Van Hoomissen, T. (1991) Nonprofit organisations in the mixed economy: a demand and supply analysis, Annals of Public and Cooperative Economics, 62:4, 519-50.

Billis, D. and Harris, M. (1992) The limits of instrumentalism: public policy and local voluntary agencies in the United Kingdom, paper presented at the Third International Conference of Voluntary and Nonprofit Organisations, March, Indianapolis, Indiana.

Clark, G. and Dear, M. (1984) State Apparatus: Structures and Language of Legitimacy, Allen and Unwin, London.

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DiMaggio, P.J. and Anheier, H.K. (1990) The sociology of nonprofit organisations and sectors, Annual Review of Sociology, 16, 137-59.

Ferris, J.M. and Graddy, E. (1989) Production costs, transaction costs, and local government contractor choice, unpublished paper, School of Public Admini- stration, University of South California.

Gerard, D. (1983) Charities in Britain: Conservatism or Change?, Bedford Square Press, London.

Giddens, A. (1984) The Structuration of Society: Outline of the Theory of Structuration, Polity Press, Oxford.

Gutch, R. (1992) Contracting Lessons from the US, NCVO Publications, London. Home Office (1990) Efficiency Scrutiny of Government Funding of the Voluntary

Sector, HMSO, London. James, E. (1989) The Nonprofit Sector in International Perspective: Studies in

Comparative Culture and Policy, Yale Studies on Nonprofit Organisations/ Oxford University Press, New York and Oxford.

Kendall, J. (1991) A transaction costs overview of the role of the voluntary sector in the mixed economy of health and social care, PSSRU Bulletin, 8, 22-3.

Kendall, J. and Knapp, M.R.J. (1992) The nonprofit sector in advanced industrial countries: The United Kingdom, in L. Salamon and H. Anheier (eds) The Nonprofit Sector in Comparative Perspective: Definition and Treatment, forthcoming.

King, D.S. (1989) Voluntary and state provision of welfare as part of a public- private continuum: modelling the shifting involvements in Britain and the US, in A. Ware (ed.) Charities and Government, Manchester University Press, Manchester.

Kramer, R.M. (1981) Voluntary Agencies in the Welfare State, University of California Press, Berkeley and London.

Kramer, R.M. (1990) Change and continuity in British voluntary organisafions, Voluntas, 1:2, 33-60.

Krashinsky, M. (1986) Transaction costs and a theory of the nonprofit organ- isation, in S. Rose-Ackerman (ed.) The Economics of Nonprofit Organizations, Oxford University Press, Oxford and New York.

Lipsky, M. and Smith, S.R. (1990) Nonprofit organisations, government, and the welfare state, Political Science Quarterly, 104, 4, 625-48.

Salamon, L.M. (1987) Partners in public service: the scope and theory of government-nonprofit relations, in W.W. Powell (ed.) The Nonprofit Sector: A Research Handbook, Yale University Press, New Haven, Connecticut.

Taylor, M. (1990) Directions for the Next Decade: Understanding Social and Institutional Trends, NCVO, London.

Taylor-Gooby, P.(1989) The role of the state, in R. Jowell, S. Witherspoon and L. Brook (eds) British Social Attitudes: Special International Report, Gower, Aldershot.

Wilson, D.C. (1989) New trends in the funding of charities: the tripartite system of funding, in A. Ware (ed.) Charities and Government, Manchester University Press, Manchester.

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Wuthnow, R. (1991) The voluntary sector: legacy of the past, hope for the future?, in R. Wuthnow (ed.) Between States and Markets: The Voluntary Sector in Comparative Perspective, Princeton University Press, Princeton, New Jersey.