Market-Based Government and the Decline of Organizational Ethics

This article discusses ethical challenges posed by market-based government and the degree to which contracting enhances or diminishes government’s ability to ensure that organizations that deliver public services adhere to ethical practices and public values, such as lawfulness, transparency, and accountability. A case study of an organization—Blackwater (now, Xe)—vividly illustrates the considerable difficulty in achieving ethical organizations when so many basic functions are outsourced, with few or ineffective regulatory controls, to private organizations. Because some of these challenges can perhaps best be addressed at the organizational level, we conclude by proposing a typology of organizational ethics in matrix form, according to the organization’s relative standing on the two dimensions of compliance and social responsibility.