1. Nature and focus of the public
Birth of the Modern State
The modern state was called the bourgeois state, the one that was designed and built in the second half of the 18th century, with the conceptual and theoretical contributions of ideologues such as Bodino with «The Six Books of the Republic, Grotius with« The Right to War and to Paz », Altusio with« Politics, Hobbes with «The Leviathan», Locke with «Essay on Civil Government, Rousseau with« The Social Contract, Montesquieu with «The Spirit of the Laws» and other intellectual processes that occurred after the separation of the Church and the State at the end of the 30-year war in the Peace of Westphalia.
The bourgeois state was built on the concept of freedom. It was about that individual freedom so necessary to get money within the new historical economic conditions, derived from the capitalist system that was brewing. Freedom that was opposed to the feudal type moorings that came from the previous historical phase when monarchical absolutism prevented free thinking, deciding and acting. An indispensable freedom so that the market system could operate with its own laws and the economic processes of the company with free workers could be successful.
Of course, a society based on individual freedom needed an individual order and rules of conduct that avoided the generalization of chaos. For this, an entity with authority and power was necessary to put order and regulate the interactions of individuals and the common occupation of the territories. This entity could not be other than the State, which, to be neutral and objective in the exercise of social order, could not be sustained by the religious norms from which it had emancipated in Westphalia, but had to have new criteria and guidelines that they would group within the concept of Law. Likewise, to have independence with balance for the entire conglomerate, it could not depend on religious power but on the same social base that supports it and where its role is headed.The power of the State lies in the people and its operation is governed by law; Only in this way, individual freedom, which is none other than freedom for economic enrichment, finds the favorable conditions for a new society: the Capitalist Society with its own political regime, the Democratic Regime.
Basic functions of the State
The motive behind the creation of the Modern State was economic. If a bourgeois class had not been born with economic power resulting from the new economic processes of production and distribution, a new type of state would not have been necessary. For this reason, the functions assigned to them are in accordance and dependent on the conditions of the economic system, where the interests and requirements of those most economically benefited by the system prevail.
Since that time and for two centuries, the beneficiaries of the system were the industrialists. People who with their work capacity managed to accumulate wealth (Economic Surplus) through productive activities in the secondary sector. Social wealth was concentrated in industrial activity and the functions of the State were conditioned to protect the interests of the industrialists.
In addition to the purposes assigned to the State, such as the defense abroad and the preservation of peace and order within the territory, ultimately it is said that its main task is to achieve the common good, which translates into seeking the good for all, without exception, the members of society. But before an economic system whose main characteristics are to promote inequalities of all kinds, the mission of the State becomes difficult. How does this entity, no matter how much power it has, to fight against the laws that govern the capitalist system and achieve the general objective of good for all, if this is against the most benefited of the economic system?
Genesis of the public
Both society and the economic system are products of natural law which, through the instinct of conservation, compels individuals of the living species to create mechanisms and instruments to preserve the living conditions of the members of the species. All individuals by the mere fact of being members of the same species, have the same requirements imposed by natural law. Thus, the common good is derived from the requirements imposed by nature on individuals, regardless of gender, race, age, wealth, or any other distinctive of social origin. The common good is a derivation of natural law that imposes needs on homo-sapiens without the intervention of his will or desire. In this sense, public affairs are all derived from the biological requirements of the individual,Because they are of natural origin, they interest all people without distinction.
Article 1 of the Political Constitution of Colombia says that the Colombian State is based on respect for human dignity and the prevalence of the general interest. The general interest is synonymous with the common good, that is, the State is founded on the public interest which is the same as the general interest and the common good.
The public is then what is common to all members of society, what is of general interest or what corresponds to the requirements and needs that come from the human condition of the individual, that is, to the human needs that come from the natural law.
Public Administration
Since the bourgeois state appeared, matters common to the social conglomerate or those of general interest have been the competence of the state. No particular person or group of people has neither the duty nor the attributes to take care of and manage the satisfiers of public needs. So when the Modern State was created, it was assigned the task of dealing with these matters.
For two centuries public goods and services, that is, those that transport satisfiers for common needs or those of general interest, had been the exclusive monopoly of the State administration. For this purpose, the State was assigned the power to charge for its services, through the tax system. The scheme that for two centuries was conceived within the healthy philosophy of social justice, is that the administration collects taxes in proportion to the wealth of the taxpayer, so that with those resources, the cost of offering the entire community free of charge is financed. openly and indiscriminately, the satisfiers of public needs, whether through goods or services. In fulfillment of this task, the State formulated, executed, operated, and executed,public projects whose cost was paid with tax money.
2. Transformation of the public project
The economic process
Every economic system, whatever the historical moment or the operating mechanism, has two basic processes, which are derived from its natural source and biological role: i) the process of producing satisfactors and ii) the process of social distribution of the goods and services that transport the satisfactors produced.
The system contains the components of:
PRODUCTION –- DISTRIBUTION - CONSUMPTION
The distribution component has a mechanism that makes it work. The mechanism that the capitalist system has is the MARKET.
Public goods and services are also within the economic system and therefore also undergo production and distribution processes. The difference compared to other non-public goods and services is that the State produced them and the distribution was not carried out through the market mechanism.
If the goods and services were not socially distributed through the market, then the State should not submit to the laws that govern this mechanism, that is, the laws of supply and demand. The State simply produced the goods and services and provided them openly and free of charge to the entire community so that it could freely access them according to its own will. So if someone wanted these same goods or services but did not want to access those offered by the State, they could go to a private producer and buy them at the rate that the seller had established. Of course, the free goods and services provided by the State were aimed primarily at those who did not have the resources to buy them, that is, the poorest classes;and equally it was these strata who resorted to the goods and services offered by the State, because they were free.
When the state produced goods or services that were not of public need, it did so through industrial and commercial companies or mixed companies, which entered the market, but with intervention rules where the free play of supply and demand was not allowed.
Market expertise
Many satisfiers that are part of the package of public goods and services were also distributed through the market. But these goods and services were not produced by the State but by private companies.
Since the beginning of the system, more than two centuries ago, private companies have been tied to the laws of the market. Its decisions about production and obviously the introduction of its product to the social distribution mechanism have been determined by market conditions and the laws of supply and demand.
Private companies, whether they produce goods or services of public necessity or any other kind of goods or services, have always been subject to the market, so they have acquired great expertise in the very characteristics of this distribution mechanism.
The Postmodern State
Business Capitalism had its predominance for two centuries. It was characterized by the concentration of wealth in the industrial sector and because the owners of the wealth were entrepreneurs. That is why the State had the characteristics that we know of it and the policies were to defend or protect the interests of industrialists and their associates, such as those of the mining and agricultural subsectors.
But after two centuries the type of capitalism changed and with it came another type of state. Recalling Carlos Marx who said that the productive forces are the most dynamic element of social development, so that each technological advance drags changes in the rest of the economy and the political and ideological instances, the advances in microelectronics facilitated the change in concentration of wealth, which moved to another sector of the economy, the arrival of the Liberal-Law State and the ideology of postmodernity.
Now, since the end of the 20th century and what has happened in the 21st century, rentier capitalism and the concentration of wealth in the tertiary sector predominate. Financial Capitalism is booming and the capital market is the engine of the economy, above the market for goods and services. Investing capitalists prefer investing in fixed income papers rather than risky investing in companies that produce goods and services.
With the arrival of the new capitalism, the new type of State emerged and with it the new approach to the public. A type of State that, as always, places itself at the service of the wealthy of the moment, adopting policies to favor them, even against the interests and needs of the people. Now the privileged is the financial sector, which receives all the benefits of government policies.
The borders of the public project
The Modern State was exclusive in the formulation, execution and financing of public projects. But when the Postmodern State arrived, that exclusivity was broken. In the era of corporate capitalism, the State was characterized by being an intervener in the economic and benefactor in the social, which exerted through the monopoly in the production and distribution of public goods and services. Now that it is a liberal state in economic and social law, it is no longer exclusive in the production and distribution of public goods and services. The separation between the public and the private no longer has borders. For both it is the same.
In 1991 in Colombia a new Political Constitution was adopted and with it a new type of State. The letter now allows the production and distribution of public goods and services, in addition to the State, also to be carried out by private companies. Now there are public projects of the State, but also public projects in private companies.
Distribution in public projects
We had noted that the distribution of public goods and services at the time that were exclusive to the State was not carried out through the market. Therefore the decision on what to produce, how much to produce and how to produce was not subject to the laws of the market. There was also no marketing strategy or marketing channels and the recipient of the satisfiers was a user or beneficiary.
With the entry of private companies into the world of production and distribution of public goods and services, it was necessary to introduce this world of the public, within the market. There is no other possibility for private companies to participate in the public economy, except at the expense of the public entering the market. Well, the private company only knows the market system and is only governed by the laws of the market. But with the introduction of the public economy to the market mechanism, the State is also being forced to submit to the rules that govern this system, in its activities related to the production and distribution of public goods and services.
Consequences of change in public management
As a result of the inclusion of private companies in the production and distribution of public goods and services, social and economic phenomena of doubtful classification have occurred, from the point of view of human dignity and the improvement of the quality of life.
On the one hand, the private company had two centuries of experience in operating the market, but had no experience in managing public projects. He saw public projects as new business opportunities, applied the paradigms that he already knew and that governs the private company, and the results for both the company and the "clients" have not been as expected.
On the other hand, the State had two centuries of experience in managing public goods and services, but had no experience in operating the market. It was forced to enter the market, introduce the paradigms of the private company and apply the parameters of financial profitability and the results for both the company and the "users" have not been as expected.
The engine of the private company is the profitability that is achieved in the difference between the rate charged to the consumer and the cost of producing the good or service. Contradictorily, in public goods and services the motor is the common good, the general interest or ultimately, the satisfaction of the natural needs of the human species.
In the postmodern era, market management is the key to the success of public projects. Both the private company and the state company are facing new operating conditions and management, so there is a need to approach market management with new paradigms and models different from those they had traditionally known. The State that had not used them, so everything is new for this, and the private company that was used to moving according to the laws of supply and demand, but with projects based solely on financial profitability.
3.- The market situation in the public project
Introduction
The market issue is relevant in the public project. Even much more important than in the private project because in this type of project the method and methodologies are already known both for carrying out studies and for implementing management strategies, while in public projects it is a less known field.
Although the laws of supply and demand are unique in the functioning of the market, public projects require a different approach than traditional ones that are oriented only to achieve the highest possible financial return. Although the motive of any project that is introduced in the market is true, it is profit achievement and this does not exclude the public project, given the humanitarian and, why not, biological aspects of this project, the financial profitability should not Being the sole purpose or the means to achieve it, they must be the same ones that produce profitability in another type of project.
In the same way, for state-owned companies, the issue of the market is of particular importance due to its novelty in its sphere and the little experience the agency has in this field. Even if the project is financed with resources from the official budget, the parameters to measure its effectiveness and rationality must have a significant financial component.
Probably for some, the phenomenon of bringing public projects to the market is irrational from a human and social point of view. But it is a reality that like it or not, it is happening in the Colombian environment and although it is struggling to change it, that purpose will take many years; for it is only just beginning and the political trends do not seem to favor another direction. So although it is not acceptable, it is necessary to recognize it and live with the situation.
Market characteristics
An important aspect in the public project is the market, although the guidelines and criteria for addressing it are different from those traditionally known in the private project. So it is necessary to remember some basic concepts.
The demand
a) Origin of demand
The demand originates from the population but is not exactly the same, despite being a public project. Given the nature of the project, population and demand should be the same, but in the market they are not.
The population is greater than the demand despite the public needs of the entire population. To enter the demand, it is necessary to have an income, which the entire population does not have. That is, for a person to enter the market, they must have income. In times of high unemployment, demand shrinks due to the large number of people who have no income.
The origin of the demand is in human needs. A human need is a requirement that individuals have to preserve or dignify human life in the context of the social context. Human needs can be classified because they are not all the same. The following table shows us the classification of human needs.
Classification of human needs
| ACCORDING TO ITS ORIGIN | ACCORDING TO ITS FUNCTION | ACCORDING TO ITS CHARACTER |
| NATURAL | PHYSIOLOGICAL | SUBSISTENCE |
| CULTURAL | PSYCHOLOGICAL | DIGNIFICATION |
Natural Need: Created by a biological law
Cultural need: Created by human thought
Physiological need: Requirement for the physical functioning
of an organ of the human body.
Psychological need: Requirement for the mental functioning of the human individual.
Subsistence need: Minimum requirement to preserve the
living conditions of the individual.
Need for dignity: Requirement to raise the quality of
life of the individual.
Human needs generate the demand for satisfiers. The satisfier is the ability to eliminate the requirement either because it covers its root or because it avoids the factor that causes it. The satisfiers are tangible or intangible that, inside, contain the ability to eliminate a requirement.
The offer produces goods and services that in their interior contain satisfiers of human needs. The supply of public goods mainly produces and offers satisfiers to respond to natural, physiological and subsistence needs. But depending on the need, some cultural, psychological and human dignity needs may also be public.
In general, there are a plural number of goods and services that contain satisfiers of the same need. Alternatively, a need can be satisfied with one good or another. The choice by a person of the good or service among a range of possibilities to meet a need depends on the prevailing culture.
It is part of the demand for a good or service, a person who having the need, also has money to buy. If you don't have money, you can't go to lawsuit.
b) Demand behavior
To better understand the phenomenon, let's examine the graph below, which is explained with the following assumptions:
- For visual purposes, we take a Cartesian plane with vertical and horizontal axes. The population is grouped according to the stratum, that is, according to the income level. The quantity of product that each population group buys is marked on the horizontal axis.
- The amount of Stratum 6 (E 6) is indicated next to the vertical axis, that is, closer to zero (0). As it moves away from the vertical axis, the quantities purchased by the different strata are placed in descending order as follows: stratum 5, 4, 3, 2, 1. The different prices that are presented in the market are indicated on the vertical axis.
When the price is very low, for example in P1, all the strata, including the low-income ones, can buy the product. But if the price rises to P2, low-income families such as stratum 1 can no longer buy because their income is not enough. So the same market is in charge of expelling these families from the possibility of obtaining the good they are needing.
So on, as the market price rises, families of strata 2, 3, 4, etc. they withdraw from demand because their income is not enough, until they reach a situation where the price is so high, such as P6, that only higher income families like those in stratum 6 can buy the property.
This behavior, which is derived from the law of the market, is very dangerous in public projects, especially if they are satisfiers of natural human subsistence needs, since families that do not have an income are not in demand and do not have access to the satisfier.
Market research
Public projects need market research. Previously, when these projects were exclusive to the State and the distribution of public goods was not carried out through the market, this study did not need to be carried out. At that time, a socioeconomic study was prepared as the basis for project formulation, and that was enough. Today, both state and private companies must carry out the market study if they are in a public project.
The aspects to be taken into account in the market study of a public project differ somewhat from those used in private projects. These studies closely resemble socioeconomic studies. In other words, there are many socioeconomic aspects that must be taken into account in the market study and in the marketing of the product.
A market study of private projects analyzes demand, supply, prices and marketing. The study of demand, as the most important component, analyzes quantities that are purchased at different prices, preferences and tastes of consumers, substitute products, complementary products, etc. In the market study of a public project, the supply study may be secondary, marketing is carried out differently, and the demand study has other components.
Demand, consumers and "clients" in a public project do not behave as in private projects. The concept of elasticity operates differently with a tendency towards a very rigid Elasticity-price. Well, basic human needs, those of natural origin, are always present in the person and therefore the reaction of the lower income strata is little in the face of rising prices. When it comes to a basic need, the person makes an effort and cuts spending on another concept and despite the high price, tries to buy the good or service. Nor does the concept of consumer tastes and preferences have much meaning in the “Demand Function” of public goods and services, because the satisfactors are practically defined and there is little to choose from.
For example: in the health service, treatments, procedures and medications do not depend on the taste of the patient but on the definition of the doctor. Likewise, in terms of substitute and complementary goods or services, there is little to choose from. More so when the satisfiers of public needs are defined with the influence of a strong cultural factor.
In the analysis of the demand for public projects
On the other hand, other aspects do need to be taken into account, among which are the following that we include by illustration:
| VARIABLE | TOPIC |
| Demography | Population, Gender, Age |
| Family | Number, people, boss, guy |
| Occupation | Study, employee, independent, pensioner, disabled, minor, study and work, old, disabled, businessman, underemployed, unemployed |
| Education | Titles, level, training |
| Health | Morbidity, insurance |
| Social organization | Types, coverage |
| Culture | Habits, customs, traditions, aspirations, |
| Specific aspects of the product | Perception regarding the good or service being analyzed |
A demand study in the public project must include an analysis of the culture of the target population. Knowing their habits, customs, social values and rules of conduct is a key requirement to determine product design and marketing mechanisms. If we consider that the quality of the ability of a product to satisfy the requirements of a market, the quality of the public good or service must be conditioned to the cultural traits that identify the population towards which the product is directed.
Social organization is another relevant aspect in the study of demand. The community can be dispersed and the individuals isolated which means some conditions for commercialization or the community can be organized which means other conditions to bring the product to the public successfully. The social organization has various modalities among which are, the communal organization, union organization, civil organization, solidarity organization, etc. through which you can channel the service delivery or product distribution processes.
Social participation is an obligatory topic in the analysis of demand because a constructive and proactive participation helps to increase the efficiency of a company that operates public projects. Various levels of participation are known such as: information, execution, consultation, initiative, oversight, decision and co-management, so that it must be known to what extent the community has training and vocation to participate in order to establish the procedures that allow manage the company's interactions with the community based on existing conditions and modalities. Afterwards it is possible to modify them, but in any case, you should start from an initial situation.
In the analysis of the public project offer
An important aspect to examine is whether the product under review is being offered by private companies, official companies, or both. How they are offering it. What characteristics does the offered product have?
It is important to take into account if the State is defining the product, as it happens in health, that the POS is determined by the State. If the State regulation is flexible, as in education, the PEI is prepared by each educational institution under guidelines defined by the State. Or if there is complete freedom for product design.
At public project prices
In most public projects there is a regulatory intervention of prices by the State. For example: In health, the insured's rate of 12% of salary is set by the State; SOAT sets prices for IPS. In education, the cost of enrollment in private schools is authorized by the State; in the officers, academic rights are regulated and strata I and II are subsidized by the general system of participations. On roads, the toll rate is set by the Institute of Roads. In domicile or mobile communication services, the rate is authorized by the branch superintendency. In basic domiciliary services, the rate is authorized. Etc.
The commercialization of public projects
It is necessary to take into account the difference in the distribution processes when it comes to a good or a service. Marketing is done differently when it comes to each other.
A good has the particularity that to make the product, it is not necessary to have direct contact between the producer of the satisfier and the consumer of the same. While in services it is absolutely essential that there be direct contact between the producer of the satisfier and the consumer, under pain of not being able to consume the product. This distinction creates the difference in marketing.
In the case of goods, there may be wholesale and retail distribution channels. But in the case of services, there are two possibilities: the producer moves and approaches the consumer or the consumer moves and approaches the producer.
In public projects, close interaction between the selling company and the consumer is required. It is the application of the principle of participation that becomes a determining factor in business efficiency, especially for service companies. The "customer" is an important factor for the quality of the product.
Quality is defined as the ability to satisfy customer requirements, so that in the case of services, customer satisfaction and service improvement depends largely on the role the customer plays. Both in the feed-back or feedback, and in the conduct adopted by the beneficiary of the service when using it. For this reason, the management of a public project requires contact mechanisms with "clients" that allow pedagogical processes, educational guidance, two-way communication, participation in the management of the company, as occurs in official companies. of health and education, where users have seats on boards of directors.
4. The methodological confusion
It seems that the academic community, as well as the institutional one, are not approaching the issue of public projects adequately. It is observed that the methodologies for identifying, formulating and evaluating these projects are not given precision.
In the background and justification chapters, it is not clear if it is a socioeconomic study or a market study, but above all, a specific methodology has not been defined considering the project within its own category, which is neither private nor official. In the exact evaluation, it is intended to examine the benefits of the project with the conceptual tools of private projects, such as the internal rate of return (IRR), the net present value (NPV), the cost benefit ratio (C / B) and the annual equivalent cost (CAE).
Likewise, in the examination of efficiency, effectiveness and effectiveness, what is observed in practice is that it is a matter of requiring public project operators to measure their results in terms of financial indicators based on the principles of private projects.
With all of the above, it is concluded that there is a great need to develop appropriate methodologies and techniques, which reflect in theory and concept, what is actually presented.
