122 Eropean Governance ‘Conclision: governance in the EU Resear onthe Europea Commonity and Laer Union, was IASG tc ly by mean sto ats Hyco, European integration a sen a something 10 ie eapuined and the debate centred on whether integration vas diven by nation-states guarding thee sovereign, oF eth was driven by underlying economic and techno: logialdevclopmens that neseestaed supranational poli calcogertion pera Sean of public policy, however, became interested in studying the EU a a polity, Rather thas explain integration, they wiped to examine EU policy-making and is lets on nation! pobes-making. Hence, governance came co denote the management of compl policy-making stractres a a levels ahe EU be they hierarchies, markets or neeworks Using governance as an ataltcal eamework in European stubs goes not ental that ational policy-making ignored Rather governance foeses on the fora and informal ns tation ge feame desi making: ad these insiutons ean alow natn as wel banal of senna Fnflene by the actors. Using governance should nat ental ‘ignoring questions of rle and power: athe, should meas eating ho ates she ale abut aces 0 poe end how Thc pints made by stents of European governance te helpful to the debate on democracy inthe EU because they inply democratization cman levels, Thus, governance in the fU yelers to rules guiding the entre FU policy process iC about looking at Boundary cules ~ who has access t0 policy decisions alongside rules regain the actors that a Invole in policy implementation 5 Governance in Comparative Politics I: The State and Economic Development Argentina and Austlis were atthe same eel of develop ‘ment and among the cchest counties in the world inthe 1920s. Yr, by 197%, Australia was nearly five times richer than Argentina. Th Fast Asian tigers succesfully parsued nterventionisteconenc polices, bat the same statey fale jn many Latin Ameian counties. Botswana has enjoyed annual growth atesf over 10 per cent of GD, while peace Sicaly all other Afican counties have found themselves fn pemaneat-econmic cris. And Germany's economy boomed afer the Scond World Was, while Botatns declined. ‘What can explain hese ciferences) The answer, laa a Increasing number o sues, ate tobe found inthe charace fer of state and polit. The succesful counties do not have the same kinds of pial regime. Some of them have bse Authoritarian, other democracies. What they do. have it ommon are fairly song states with ably to dec devel pment initcives als particular Kind of tate-soiety tla ‘on thac is conduct ro economic development This chapter outles proaches tothe role of he state jn he ep of governane. The chapter starts by Dri sketch the sie approaches dominant rom the ped the Second Woud War unl the mi 1980s, then out vinging these back ia approaches that entered the ‘hrng the 198s snd PSOE Vey ef thse ere124 Governance: The State and Economic Development cntirelystatecentred. The debate quickly came to cice ound which type of sttesecety Interaction would best promote economic development and which type of insta ions would most encourage novation and invexmet, Gov mance was brought into the debate with reference fo the ‘vay in which insations spanning the sate-sociey divide twee et up. The role of the state in economic development Should not be cestied to being merely an enabling en fonment forthe market, nor should the economy be ensely Planned. Kathe the seat aca acading publican Private actor should be emphasized, “The chapter gives an example of this by looking at how the developmental sate of Esse Asia was theory eawing upon evidence fom these states it was arged that 00d governance was fa rom the neoliberal image of good fovetnance applied by the World Bank or Westen bilateral ‘donors did nat denotes minimalist sate. On the contrary, overancerelered to more statedieted efor to include ical actors in commen eff to promote economic deve opment. Studies of ccosfl governance enabled eeholarsto demonstrate the benefits of a replating cole in development forthe tate and state-sciery networks. Furthes they ignited 3 debe about whether such governance models could be ransfered to weak stats inthe developing worl. Societal approaches to the state Inthe preSecond Woeld War er, politi cents were pri marly concerned with seadying and comparing the formal, legal insttusions of political systems, not the features of the societies in which the constations worked, Around the tum of the rvenieth century, some sade, most noeably ‘Woodrow Wilson's Congressional Goverament, attempted (0 Iroaden the focus by studying the constitaton in operation how it works in realty by including politcal partes, and later also pressure groups it the analy, hut the analytical focus remained on the forinal institutions of the state “Aer the Second World Was, attention shied sway fom formal state institutions tothe behaviour of individuals and Governance: The State and Economic Development 125 aroups in socery (Rasmussen, 1971: 53462). Behavioral were not at all keen on the concep of sate; they preferred the concept of politcal system. David Easton, for example, Introduced his Systems analysis asa way to move beyond state insitutions and instead seady political behaviour (Easton, 1965: 79). The fogs was on “input tothe polit sal system such as demands fom diferent neat gtoups, tnd onthe easter in he form of peblic policy. Whae happened inthe process Of tansforming Inputs f6 outputs was aot an object of inquiry. The sate was considered a neutal arbiter of ploralty of societal inter ‘55, and it was aot considered to generate interests of it ‘own, For example, Robert Dabls (1961) playlist study of Politics in New Haven coaeluded that there wat not one Srong intrest group with pots but that a plurality of inter (ts existed The mayor ia New Haven took al these exist ing preferences into coasideration when desing. on pparccular policy ibid: 214). Thus, the mayors strong ind ual iniatives for urban zenewal were eatensively doc tented but not grounded in any overall sate-centeed Basis ofthe poten for certain hinds of mayors to make nw uses of federal funding” (Evans, Rueschemever and Skocpol, 1985: 4. noche words, the mayor's interests were not considered to be institutionally derived, Sc als rl wre ot sei with et features but focused on idenaiying the main functions of poltal systems. The most important Tancrons mentioned by stryrualfunctionlists are pot socilzation, interest azine ston pbcy-making and poy implementation. Inputs rom the envionment are agaret and transformed to outputs (Almond et ly, 2000) I the System fails co perform these unetions i likly to collapse inthe long term. The existence ofthe poical system i 0 1 speak, explained by the fanetions i performs. Hut the nature ofthe sae is seldom in focus as a separate object of Study, and the concept of sae isl i racely use Marsist_approaches didnot concur with plucalist or serucorafonciooai approach thatthe sate was neutral arbiter ofa plurality of interes, On the contrary, the126. Governance: The State and Economic Development ‘main pine of Marxist scholars was thatthe state represented ‘ne stong interest group: the bourgeoisie. The tate was Cs tunable to take iniatives that would be against the prefer: ences ofthe capitalist clas. Some neo-Marxist studies incro- duced the concep of ‘relative autonomy’ toreferto the ably of states to act autonomous Thus, diferent capitalise ates ‘may purse diferent economic policies depending on the felaive stength of socal classes. However, according to Skocpol neo-Marxist writers remain founded in "socery- ‘entered sesumpions, nor allowing themscives to doubt tit, facbase, states ae inherent shaped by classes or els ruse tes and function to preserve and expand medes of preduc- fon" fEvans, Rueschemeyer and Skocpol, 1985: 8). ‘NeasMarsist scholars consiered the tole of the state in economic development to be roughly in ine withthe iner- fst ofthe bourgeoisie, while plralis scholars tend o see the fate s+ more of 3 neutral arbiter berween competing inter fst. Soce-cented scholars be they Marxist or plurals, ‘vere crtcned for ignoring the many case in which seater have heen observed to act atonemotalyaguinee dominant interes in society. In partelar, soceyscenred anaes failed to account forthe nimerows instances of sate inter ‘enton that went beyond the narsow roles they ad pre ‘eribed tothe sate Bringing the state back in Since the mi-19805, a return tothe state has been promi- nent in political scence (Barkey and Path, 1991) Whereas Socity-cented theories had heen of a Marxist, palit or Ssractural-functonalst slant, these neostatist studies adopt 41 Weherian approach, Sttecenred analyses conceptualize thestite as an ator able to formulate independent goals anc to shape scital outcomes In this way they sce state In stitutions as independent explanatory variables in societal change. ‘Nevstatist scholars thus maintain that sates have aton= ‘omy: the state is not merely a reflection ofthe most dome rant soit groupes on the contrary, sates conceived 3 Governance: The State and Economic Development 127 ‘organizations claiming contol over testories and people fnay formulate and pursue goals chat ae not simply rel tive of the demande or interests of social group, classes fr society (Evans, Rueschemeyer and. Skoepol, 1985: 9). ‘Changes in public policy should noc be explained merely by Aachange inthe relative power of societal pressure groups, for Instance, but could a well bea esl ofthe influence of iter. ‘eee generated within the state. For example, the change of policy paradigm from a Keynesian to a monetaist ideology fn Brain around 1980 has been explained as a result of policy nerworks of public ofcias,poltcans, journalist and {seatchers adopting the monetarisprescrpion fr impo ing the economy (Wolfe, 1991; Hall, 1993) Although the degree of autonomy varies with the character of networks, the change ro moncarsm nonetheless took place inspite of Iassve fesiance from trade unions and other influental groups ‘Sete’ autonomy often drives from thee capacity, accord ing to neostatist scholars. Capacity isthe ably forme: int and implement pois, and fencreares Wi cretsing Giicetintoe aed econo, Capty rere an et cient bureaucratic ofganizaton that has Webesan chat ferscs, such as corporate cohesion of the organization, Aliferentition and insulation from is sci envionment, ‘unambiguous location of decision-making and channels of uthosty, and intemal fearues of mest rceutment and ‘merit promotion (Evans, Rueschemeyer and Skocpal, 1985: 50), An efcent bureaucracy, according to Max Weber, could not be dominated by private interes 33 in patimonialsoc- fis, where the state true a ft were the cule’ private domain (Weber, 1975). lo derives from its cetelization and terstoral boundedness. Michael Mana (1988: 29) Argues that soietie need some of chee aciities to be eee lated over a centalizedteetory. So do dominant economic classes, churches and other ieologeal power movements, ‘and miliary eis, They, therefore, entrust power resources to state clits which they are incapable of flly recovering, precisely because thee own sociospatial basis of organies tion is lot centralized and teritoral” Hence, the autonomy ‘ofthe state derives fromm the fact that it alone meets externalMy 128 Governance: The State and Economic Development threats to domestic order Interstate warate has, inthe case of European sates, been a: major diving fore in develop ment of ate autonomy and capaci: war eested an impetts forthe state elite to generate domestic revenue, 0 strengthen state administration and t promote domestic proton. I paricla the state pursted and supported th development ‘of weapons technology and production, and hereby in recy generated further industil development (Giddens, 1985). The impetus to bul ffceat state apparatuses this seen to derive from war: conquest means that state ators {Expand their administation over new terzories. And preps "ation for war lads efforts co increase resource extrarion, [As a by-product of preparations for war, ruler insted cies and onganizations that eventually resulted in the imatrilztion of modem buzeaucray: cours, treasuries, fax systems, regional administration aad public semble (iy, 1990: 75). "Thus, the capaciy and Sutonomy of the sate is a consequence of histncallyigeo-politially formed lite orieneations (Weis, 1998: 4) Models of economic governance Nee sha pare sana sant toe sh cnn nen ate For instance antrst las are mses o poe vent large monopoles rom blocking the market mchaaisn. This swan pointed out a cary at 1944 by Karl Polanyi fa his Famous ‘The Great Transformation (Polanyy 1944, sep 1987: pacity pp. 135-51), Polanys work was acisigue ofthe ecomom lof governance, which spread feom Bein to mach ofthe Western World daring the ain teenth contry “The basic idea in the ibralist model was that maskets, shrug nce wuld ae aoa pod ered ina SeareTae inpate a a RE ol censure equim and increase the wealth of socks, lowever 33 Polanyi showed, laissez-faire proved tobe isu cine, and markets needed 0 be ausained by sae t= Tati In addition to trade” union laws and anterase ‘Governance: The State and Economic Development 129 legislation, sates ako provide public goods chat will be CSeerauppled ender marks condone: Pabe good te ‘lined ly tuo fer) if the od i provided DFO india W canaot be wthbeld rom anbody hes con ‘Sumpion andi) om india see of the pl good dans See dete from enpbody eke’ oes Naga des ot ‘dean ai ate public gon, Public goods wil not be povided. in tutes boos eres an inertnet re de people wl nox py forthe when they Kw oer can ey em Wrhove having pid mall play aan the saat iene, which oct when an economic ‘ctv prodoces cat that are not hore by any of the paris nthe stn An example cool be pollo asd bya factory’ emision. States can regulate ao a o dns staulitis. “erst sci are that ate aconomy ay be important for capital accumulation. Providing prope eehts tnd pubic goods i frequently not suficint co mata a froweh moment Left to peat actors capital aca thon may stagnate a oligarchs prefer to mainein the sats ‘quo (Raeschemeyer and Evans, 1985: 45), These aliarchs thay prefer to sick their owa sector, which they consider Safe rather than diet surplus capital co new aes. Ths State initiatives that are not necessarily in ine with the Alominant economic interests of sity may be needed promote enrepreneuship In addition, ianovation a8 New technologies may no occur if et co the marke cat large pital injections for esearch and developmen are requte ‘Thesete may he theonly actor able to pruduce such capita "The second omic governance ws the Key ssiucnael ehaks ion emer ‘equ In pare ie was based on the mernoned aguens regarding the need for rulation, but i also emer 3 Femedy to che peat depression of the 1930 The model was tase upon the ideas of the Britsheconomse John Masnard Keynes, which were vasialy thatthe government cold alle viate economic ers by expanding fecal expenditure and thereby reertabish + growth momentim. During te 19303 ad 1940s, 4 number of Western governments success pursued Keynesian plc, President Rooeevel for exam ted expansionary fcal polices to improve conitons Fo M a130 Governance! The Sate and Economic Development busines and agriculture and to reduce unemployment. He also introduced tle to the unemployed and measures 0 eid socal marginalization and impoverishment. Tn che Western countries, over two decades of grows and proxpeity flowing the end ofthe Second World Wa con Famed the idea thar the state could alleviate crises, ensure near fullemployment and welfare, However two ol eses during the 1970s and 1980s, and period of economic recession wth ‘unaway inflasion and sing unemployment, makers ff the Keynesian welfare state Incressed government spend ing was no longer enough t ameliorate crisis. The collapse ffthe Soier Union and its planned economy farther reveled thae "sate failure’ could be even more detrimental to co homie gtowth than "market failure’. Hence a ew period set in from the 1980s, which was dominated by a hid made of Sconamie gauemnance th 8 ‘heats. The model was Based on monetarist des that 30 ‘zament should give privity to controling inflation, dere toting the private seston an reducing public spending and taxation. The model pariclarly aimed at redcing the role ff corporat atrangemen, in which wage bargaining was entzlly managed, although chs didnot happen everywhere, Hince, the dominance af the neoliberal doctrine has not i inated the existence of more intervening tates. Coordinated ‘pitas i still character of many politcal ewonomies, for example, hose of Austria, Germany or Scandinavia (Hall land Seeks, 2001), and the overall degree of coordination is larger than century ago in all countries, including the Anglo ‘American one, “To some extent, the neo-liberal model apparetly revived ‘he Brissh and American economies (Gamble, 2000): how ve, thas abo been proved o fal in some aspects (Jessop, 1398, 2002). The old soures of markt failure inthe eral ‘model sill appeared, Poataation grogeamimes and processes fof zlliag hac the sate neededstcerig, at calls for re ina Sere fer Sante dene ie Sve sec did nor-autormaiclly lead to. @ welhfunctoning, market ‘conony. Corruption and mafia like behaviour penetrated ppavatiztion programmes, and party posses or other influ lal persons abeained cwmnetship of former sae assets. The Governance The State and Economic Development 131 Russian experience demonsteated hae makes need state rp- lston, In addition, the fee movement o nancial capital Sons borders prov toe dsabliing force to sich an xen that cls for regulation, for example through fon cureeny tades, have become moce frequent.” Market Sates didnot solve all the problems of economic overnance. The dbus erty Hbraina-and_ sis? ame 10 ‘scome somewhat locked s-ncithee sate aae marke sar ferwean the iva sera wat upheld the SST fe mpi ested ae the solution for market falueta bh owe state. A zero-sum ereeption seemed to preva, in whih more state Meant [ese marker and vce versa. Howevey the move #0. poste indasrial sviety involved the cmengence of other eypes of feovernance, ring more on ntorks and on onzonal lslogue betwsen indvidvals on both sides of the public-private divide, Governance theonsts thus reject the harp dichotomies in the market oe stae approaches. Bob essop (2002b: 224-30), for example, idenches a shied way beeween market anarchy and sate impssaive coassinaton sche ‘which comprises horizontal elForganization {mong matully interdependent actors (bil: 228). Heer hie governance has bovome wiespresd # post industrial Society whichis more complex and more specialized than Industrial soviet. Hence, networking, negotiation and par netsips are part of modern economic states. Heterarchy, however ha its on sources of lure Jesop, 1998, 2002) Since che point with hetrarchie governance fs thar "goals wil he modifed in and though ongoing negota tion and election’ fala may occu when goals are nt sie- Eessfully redefined and if consensus i aot foul. Moreover, the base conflicts of interests inherent in capitalist soviety do foe disappear with the rise of sllorganizing networks Ulesiop, 2002) Systems of Reterarchy may notin all eases provide the best mechanisms through which to resolve com Als, since they do not have the legitimate authority of the emacraie nation-state, which merged. with the exact