We argue that the neoliberal tradition and new public management reforms of the public sector effectively erode the core (liberal) democratic values of the rule of law and transparency. The tension between public law and managerially-influenced governmental policy is in practice resolved by the emergence of what we call “shadow management” in public administration, whereby managerial decisions that clash with constitutional and administrative law are dealt with in internal memos or consultancy reports and hidden from public view.
The consequence is a duality in the public sector, which potentially reduces public trust in institutions and undermines their democratic legitimacy. Finally, we argue that when governmental neoliberal policy clashes with legal requirements, the likely effect is that the popular institution of the (governmental or parliamentary) ombudsman, originally introduced for legal supervision over civil servants, takes on the new deceptive role of providing pseudo-legal justification for neoliberal reform, making neoliberalism and ombudsmen a particularly problematic combination from a democratic and legal perspective. We support our contentions by a case study of Swedish higher education and hypothesize that the mechanisms we highlight are general in nature.