In this blog, LSE Press authors Sandy Pepper and Gwyn Bevan explore the systemic and public policy reforms required to generate a fairer and more equal political landscapes in the UK.

Exploring executive pay, public management and the effects of neoliberalism, Bevan and Pepper engage in a thought-provoking conversation, offering unique perspectives on the intricate dynamics of public service motivations, the impact of market forces, and the complexities of executive remuneration.

Alexander ‘Sandy’ Pepper is emeritus professor of management practice at the London School of Economics and Political Science. He joined the Department of Management in September 2008 as an ESRC/FME Fellow and was appointed Professor of Management Practice in January 2013. He is a Fellow of the Institute of Chartered Accountants in England and Wales. His recent book, If You’re So Ethical, Why Are You So Highly Paid? Published via Open Access with LSE Press in November 2022.

Gwyn Bevan is emeritus professor of policy analysis in, and a former head of, the Department of Management at the London School of Economics and Political Science. He is an affiliate professor in the Istituto di Management of the Scuola Superiore Sant’Anna, Pisa.

His recent book, How Did Britain Come To This? A century of systemic failures of governance Published via Open Access with LSE Press in October 2023. A launch event was held on campus at LSE which has over 172k hits on YouTube.

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Sandy Pepper: Hello, Gwyn. Your book has sparked quite a bit of reflection for me. Let’s start with the idea of knights and knaves. In your book, you referenced Julian Le Grand’s book Motivation, Agency, and Public Policy. Do you think we need more intrinsically motivated individuals in public service?

Gwyn Bevan: The concept of knights and knaves which Julian puts forward is vital and engages heavily with the Attlee settlement which I explore in my book. The assumption that everyone in public services is altruistic and driven by the desire to do good has proven overly simplistic. Recognising the coexistence of knights and knaves prompts the need for different systems tailored to address both motivations.

Sandy Pepper: You also touched on the limitations of economics in explaining the changes in UK public management over the last 50 years. Can you elaborate on why economics alone isn’t sufficient?

A shift in thinking, away from a sole focus on financial gains, is crucial. This cultural shift should prioritise creating workplaces where everyone is fairly remunerated, fostering a more equitable environment.

Gwyn Bevan: As I often say to my students when teaching at LSE, “economics is necessary, not sufficient.” Economics is crucial, but it can’t provide a complete understanding. Thatcher’s market-oriented reforms introduced in the 1980s under neoliberalism created an over-centralised and overly marketised state. We need a more nuanced approach that considers where markets and hierarchies work best.

Sandy Pepper: The third theme I picked up on is the debate about organising systems—markets versus hierarchies. What are your thoughts on finding a balance between the two?

Gwyn Bevan: It’s a critical point. The dichotomy of markets and hierarchies doesn’t offer a one-size-fits-all solution. Recognising that certain sectors require different approaches is essential. Overly relying on markets, especially where they struggle, leads to failures in public services.

Sandy Pepper: Considering executive remuneration now; you mentioned the ‘arms race’ for higher pay and its impact on intrinsic motivations. How can we address this issue?

Gwyn Bevan: The pursuit of profit maximisation has led to perverse outcomes. I agree with your suggestion of revisiting remuneration packages, focusing on reasonable salaries, and incorporating executive investments in company shares to align their interests with shareholders as you put forward in your book.

Sandy Pepper: I agree, it seems like a cultural shift is needed, not just in remuneration but also in how executives perceive their roles. I think it’s important for highly paid people to understand that at some point, society runs the risk of breaking down; as Thomas Piketty illustrates in his U-shaped curve of inequality.

These are real issues that we need to address – governments often talk about it but do nothing about it. We need executives to recognise the significance of the issue. A shift in thinking, away from a sole focus on financial gains, is crucial. This cultural shift should prioritise creating workplaces where everyone is fairly remunerated, fostering a more equitable environment.

We need systemic changes that address the root causes of issues. Recognising where markets struggle and embracing a more decentralised approach, along with a balanced consideration of intrinsic and extrinsic motivations, is key.

Gwyn Bevan: I agree, and I think that’s the world that we should somehow be trying to move closer to. Looking at the global context, how do you see executive remuneration in the UK compared to Europe?

Sandy Pepper: Remuneration varies across countries. While there are high-paid executives in France, the UK sits in the middle, historically adopting a stance between the extremes seen in the US and continental Europe. The cultural differences play a role, and the UK needs to define its identity in this post-industrial era.

To wrap up, Gwyn, in the context of your book, How Did Britain Come To This?, what reforms or changes would you propose if you were in a position of power?

Gwyn Bevan: Revisiting the Beveridge model is essential. We need systemic changes that address the root causes of issues. Recognising where markets struggle and embracing a more decentralised approach, along with a balanced consideration of intrinsic and extrinsic motivations, is key.

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Image credit: Ben Allan, Unsplash