The Free and Frank Series: The Political Economy

13/12/2025

This is the tenth instalment in a series exploring what free and frank advice means in Aotearoa’s constitutional and institutional arrangements. Having traced the concept’s statutory whakapapa from unspoken convention to constitutional principle, this week I add the final piece to the conceptual toolkit: political economy. The previous posts traced the bargain, the purple zone, and the authorising environment. Political economy asks a prior question: how does institutional space get furnished, whose interests does the furniture serve, and why do some arrangements persist whilst alternatives become unthinkable? By the end of this post, I hope to have shown that understanding what shapes advisory relationships requires attending not only to who occupies the space but to the deeper structures that determine what can and cannot be said within it.

Three traditions of political economy escalate the analysis. The market-institutional tradition, drawing on Polanyi (1944), shows that markets are built, not natural. The critical tradition, through Kelsey (1995) and Roper (Rudd & Roper, 1997), asks for whom. The Māori political economy tradition reveals genuinely plural economic logics that a single institutional framework may struggle to accommodate. From there, I trace how political economy shapes the conditions of advisory practice: what can be said, what goes without saying, and what cannot be said at all.

Over the past few weeks, we have been assembling an analytical toolkit to investigate and understand what free and frank advice actually is. We began with the ghost in the machine: the observation that free and frank advice is both central to democratic governance, appearing everywhere, yet so deliberately undefined that it seems to mean different things to different people. We traced how the public service bargain fractured during the reform era, leaving officials caught between competing expectations of responsiveness and independence. We mapped the purple zone as the institutional marae-atea where political authority and administrative expertise must integrate rather than separate. We followed Rose Cole’s call on that marae and discovered its complexity and the price people pay to navigate it daily. We examined the authorising environment and discussed the problems of public value, and the multiple, competing sources of authority that officials must serve without usurping democratic or Te Tiriti legitimacy.

Throughout this journey, a question has been building: what shapes these arrangements? Why do some things become sayable and others not? Why do particular frameworks come to seem natural whilst alternatives fade from view? Today, we turn to a concept that sits beneath the others, shaping the conditions within which purple zones are configured and public service bargains are struck. That concept is political economy.

If the purple zone is the workspace where integration happens, my doctorate advances the proposition that the political economy can explain how that workspace gets furnished: whose interests the furniture serves, and why some arrangements persist while others prove impossible to imagine. The two concepts mirror one another. The purple zone describes where political and administrative authority meet; political economy asks whose purposes that meeting serves, and what alternatives have been foreclosed by the way the space has been constructed.

At its core, political economy rests on a simple premise: that we cannot understand economic life without attending to political choices, and we cannot understand political possibilities without grasping economic constraints. Markets and states are mutually constituted. But what makes political economy genuinely interesting is disagreement about how that mutual constitution works, and whose interests it serves.

Three traditions offer different answers. Remember, I write from political theory, not economics.

The market-institutional tradition, associated with Karl Polanyi (1944) and his contemporary inheritors like Naazneen Barma and Steven Vogel (2007), emphasises that markets do not arise spontaneously. They are built. Polanyi’s most arresting claim is that “laissez-faire was planned”: the supposedly free markets of nineteenth-century Britain required an enormous expansion of state capacity. Thus, the question is never whether states should intervene in markets, but how they constitute and shape markets, through what institutional arrangements.

The critical tradition, represented in Aotearoa by Jane Kelsey (1995) and Brian Roper, asks a sharper question: for whom? Kelsey’s work from The New Zealand Experiment (1995) through to The FIRE Economy (2015) traces how neoliberalism was systematically embedded in our legal, institutional, and ideological structures. Roper’s The Political Economy of New Zealand (Rudd & Roper, 1997) examines how successive reform waves reshaped class structures and state-economy relations. This tradition insists on distributional questions. It is not enough to observe that markets are constructed; we must ask who did the constructing and whose interests the resulting arrangements serve.

The Māori political economy tradition offers something different again: not merely a cultural variation on standard themes, but a genuinely distinct logic of economics and institutions. Recent scholarship articulates economies organised around taonga, with labour understood through mahi and exchange governed by utu: reciprocal obligations extending across generations (Scobie et al., 2025). Wealth, in this conception, is measured not by what accumulates but by what passes through one’s hands (or institutions: Iwi, Hapū, Whānau, Hapori, Marae, Rohe, or any of the Article Three entities) in service of others. The Māori economy now exceeds $126 billion in assets and is growing faster than the general economy, yet operates, at least in part, according to different rules of exchange.

What makes this a distinct political economy, rather than simply a cultural variation, is the question of authority and institutional design. Te Tiriti o Waitangi establishes two spheres of legitimate governance, kāwanatanga and rangatiratanga, with some different economic logics operating within each. The interface between them is constitutional, not merely administrative, raising fundamental questions about how institutions are structured to enable or constrain these different modes of economic organisation. Scobie et al. (2025) et al. (2025) demonstrate that Māori businesses must adopt “hybrid strategies” to navigate a dominant system that frequently conflicts with Indigenous worldviews. Yet, this navigation itself becomes a site of institutional innovation. The challenge is not simply resourcing rangatiratanga within existing structures, but transforming those and the kāwanatanga structures to accommodate genuinely plural economic logics.

These three traditions escalate rather than simply accumulate. Polanyi and his inheritors show that markets are built, not natural. Kelsey and Roper ask the harder question: built by whom, and for whose benefit? Scobie et al. reveal something more fundamental still: that alternative economic logics operate according to different rules entirely, raising questions not just about who controls the construction, but whether a single institutional framework can accommodate genuinely plural modes of economic organisation. This is the question free and frank advice must navigate but cannot resolve within existing structures.

What Political Economy Does to Free and Frank Advice

Why does any of this matter for free and frank advice? Because political economy often shapes the conditions of possibility for what can be said.

Consider three categories. First, what can be said: the range of options is understood as a legitimate subject for analysis. Should we adjust this rate or that rate? Design this regulation or that one? Change that rule, or this one? These occupy the ordinary business of policy advice.

Second, what goes without saying: the assumptions so deeply embedded that they rarely surface for examination. In Aotearoa, many were laid down during the reform era. The primacy of fiscal discipline. The preference for market mechanisms. The understanding of efficiency as a cardinal virtue. These shape advice not by forbidding conclusions but by framing questions in ways that make some answers more thinkable than others.

These assumptions were embedded through concrete institutional arrangements that altered the conditions for advice. Departmental chief executives, previously known as Permanent Heads with protected tenure, were placed on fixed-term contracts, typically five years, replacing long-term institutional loyalty with short-term individual accountability (Boston et al., 1996). The “marketisation” of advice through contracting out policy work to consultants created competition for the permanent civil service, treating advice as a commodity that could be purchased or contested by external providers (Schick, 1996).

The statutory framework reinforced this logic. The Public Finance Act 1989 conceptualised advice as an “output”: a deliverable specifiable in purchase agreements between ministers and chief executives. The policy advisory function shifted from being a professional convention developed through iterative practice and the structure for debate in order to make good decisions, to a contractual product. The State Sector Amendment Act 2013 responded to persistent concerns about advice quality by specifying the character of the deliverable itself, amending the chief executive’s responsibility to the “tendering of free and frank advice”: yet still conceptualising freeness and frankness as a characteristic of the output rather than addressing the relational conditions under which candid counsel could be provided, let alone the definition itself.

Indeed, my doctoral research examines how, when ministers view departmental advice as merely one source among many in a marketplace of counsel, officials feel pressure to “sell” their analysis by removing unwelcome elements that might make them less competitive. The hard truths that might distinguish public service counsel from consultant product become competitive liabilities that rational actors learn to minimise. If advice can be purchased elsewhere, and if one’s career depends on satisfying the minister of the day, the conditions for frankness are altered: not by explicit instruction, but by the logic of the system itself.

Murray Horn (1995)’s (1995) The Political Economy of Public Administration helps explain why such arrangements prove so durable. Horn’s framework defines political economy as the study of how political actors make institutional choices to minimise transaction costs and solve fundamental problems of commitment; that is, how they secure their policy objectives over time despite the risk that future governments might overturn them or administrators might undermine them. His key insight is that the institutional arrangements emerging from the reform era were not accidents or inefficiencies, but rational solutions to the enacting legislature’s problem: how to protect its policy achievements from being dismantled. Fixed-term chief executive contracts, advice-as-output in purchase agreements, and the marketisation of policy counsel all function as commitment devices. What looks like dysfunction, the layering of reform upon reform, the apparent inefficiencies, the inertia and treacle, are features, not bugs. Institutional arrangements create durability by design, making it costly for future governments to reverse course. This is why they persist even when criticised: their very rigidity is the point.

Third, what cannot be said: or can only be said at significant professional cost. This is advice that would challenge not a particular policy but the underlying political economy settlement itself.

Here the work of James Robinson and Thierry Verdier (2013) deepens the analysis. They ask a deceptively simple question: how do politicians credibly reward their supporters? Promises are cheap; for once elected, a politician might not follow through, and supporters know this. But a public sector job solves the problem. The job is the reward, delivered continuously. It can be withdrawn if loyalty wavers. And the employee’s welfare becomes tied to the politician’s continued success. The exchange enforces itself.

The logic extends beyond public employment. Consider a farmer whose livelihood depends on water consents, environmental exemptions, or the right to externalise costs onto waterways without paying their full price. These regulatory arrangements function like the patronage job: they deliver ongoing benefits, they can be tightened or withdrawn, and they tie the beneficiary’s welfare to the political coalition that maintains them. The farmer who prospers under such arrangements has every reason to support the politicians who preserve them, and to oppose any reform that would price in the true costs.

Or consider the property investor who benefits from the absence of a capital gains tax, from interest deductibility, and from planning rules that constrain housing supply. These are not natural market conditions; they are political choices that deliver ongoing rents to a particular constituency. The investor’s wealth depends on their continuation. Advice recommending taxing capital gains or liberalising land use threatens not just a policy preference but also a credibility arrangement that binds a political coalition together.

The uncomfortable implication is this: such arrangements create pressure toward inefficient policy. If public services were highly productive, people would not need patronage jobs. If environmental costs were fully priced, some farming operations would not be viable. If housing markets were not structured to deliver capital gains, an entire constituency’s wealth would be at risk. The system has a built-in incentive to undersupply public goods and underprice externalities. It requires a degree of dysfunction to reproduce itself.

This matters for free and frank advice because it suggests that “what cannot be said” is not merely a matter of professional norms or ministerial preferences. Some advice is structurally incompatible with the credibility arrangements that hold a political economy together. The advisor who recommends dismantling the mechanisms that make political exchanges credible is not just offering unpopular advice; they are proposing something the system cannot absorb without transforming itself.

In neoliberal settlements, the equivalent of the patronage job may be career security within institutions that operate according to orthodox frameworks—or simply access to the policy conversation, which depends on speaking in terms the system recognises as legitimate. Challenge the fiscal rules or the inflation-targeting paradigm, and you are not merely offering heterodox analysis; you are threatening the credibility structures through which your own professional standing is maintained.

The same logic applies to advice that questions constitutional premises. If rangatiratanga constitutes a distinct sphere of legitimate authority, not merely a stakeholder interest but a constitutional partner to kāwanatanga, then advice rendered entirely within Crown frameworks is constitutionally partisan. The advisor who frames a question as “how should the Crown regulate this domain?” has already foreclosed the question of whether the Crown has sole authority to regulate it. Such advice is not merely incomplete; it is structurally incompatible with a system that bases its authority on the Crown.

I have chosen these examples to heighten the stakes. But the underlying point stands: some advice in the political economy is structurally unsayable, not because it is unwelcome but because it would threaten the arrangements that hold a political economy together.

The toolkit is now assembled: the public sector bargain, the purple zone, the authorising environment, and the political economy. Together they reveal that free and frank advice operates within boundaries that are not merely professional or political but structural and institutional: built into the arrangements that hold settlements together. The argument I am building is that free and frank advice resists definition not through oversight but by design. Understanding why requires political theory. That is where we turn next. In the coming weeks, we will examine four traditions: consent theory, rationalist deliberation, non-domination self-government, and trust-based accounts, each of which deepens rather than solves the definitional problem. From there, we turn to agonistic democracy and Bonnie Honig’s concept of “remainders”: the idea that contestation is constitutive of democratic life, and that such a definition would prematurely foreclose the debate. We will conclude the literature with Richard Mulgan’s (2012) view on free and frank advice before moving on to interpretive theory, and why Bevir and Rhodes (2003) are my methodological path. We will arrive at the potential definitions of free and frank advice by March.

Next Post

Political economy completes the conceptual toolkit. It reveals that the conditions of advisory practice are shaped not merely by institutional design but by the deeper structures of power that determine what can and cannot be said. Some advice is structurally unsayable, not because it is unwelcome but because it would threaten the arrangements that hold a political economy together. The toolkit is now assembled. It is time to see how the pieces fit together. See you next week.

References

Public Finance Act 1989 (NZ).

State Sector Amendment Act 2013 (NZ).

Barma, N. H., & Vogel, S. K. (Eds.). (2007). The Political Economy Reader: Markets as Institutions. Routledge.

Boston, J., Martin, J., Pallot, J., & Walsh, P. (1996). Public Management: The New Zealand Model. Oxford University Press.

Horn, M. J. (1995). The Political Economy of Public Administration: Institutional Choice in the Public Sector. Cambridge University Press.

Kelsey, J. (1995). The New Zealand Experiment: A World Model for Structural Adjustment? Auckland University Press.

Kelsey, J. (2015). The FIRE Economy: New Zealand’s Reckoning. Bridget Williams Books.

Polanyi, K. (1944). The Great Transformation: The Political and Economic Origins of Our Time. Farrar & Rinehart.

Robinson, J. A., & Verdier, T. (2013). The political economy of clientelism. Scandinavian Journal of Economics, 115(2), 260–291.

Rudd, C., & Roper, B. (Eds.). (1997). The Political Economy of New Zealand. Oxford University Press.

Schick, A. (1996). The Spirit of Reform: Managing the New Zealand State Sector in a Time of Change. State Services Commission.

Scobie, M., Forward, T., McLellan, G., Barrett, J., & Webb, D. (2025). Amplifying Māori Approaches: The Transformative Potential of Māori Economies. Wellbeing Economy Alliance Aotearoa.