Governance

The concept of governance has waxed and waned in opposition to belief in the sovereign state. When people believe in a unified sovereign state, they often talk about its government. When they do not believe in the state, they concentrate more on the complex and messy processes of governance. The word “government” characteristically sits best with a moral or empirical belief in a homogeneous nation under a unified state. The word “governance” evokes more plural and moral and empirical visions.

A state is an organized political community under one government. It is a political institution that has a monopoly of the legitimate use of force within its territory. This idea of the state arose in the early modern era. The early theorists of the sovereign state did not describe it as something that already existed. On the contrary, they argued that people should make the state a reality or treat it as if it were a reality.

Finally, as modern states became more powerful, so they promoted national languages and symbols in attempts to foster social homogeneity.

Of course, even the most centralized and homogeneous societies included contests and conflicts among various groups.

A second related challenge to the idea of the state was more empirical. As social scientists rejected 19th-century histories of the state, they championed new topics. Some social scientists associated constitutional law and institutional history with the pre-democratic era. They argued that the rise of a mass society and the spread of the right to vote had created a new type of politics. They suggested that the study of this new politics should concentrate on political parties, organized interest groups, and public opinions as much as the institutions of central government. Over time social scientists thus began to pay more attention to political behavior and the process of policymaking.

Hierarchies rely on authority and centralized control. Markets rely on prices and dispersed competition. Networks rely on trust across webs of associations.

Hierarchies:

Governance: authority.
Basic relations: employment.
Among members: dependent.
Means of conflict resolution: rules and commands.
Culture: subordination.

Market:

Governance: prices
Basic relations: contracts and property rights.
Among members: independent.
Means of conflict resolution: haggling.
Culture: competition.

Networks:

Governance: trust.
Basic relations: exchange of resources.
Among members: independent.
Means of conflict resolution: diplomacy.
Culture: reciprocity.

Bureaucracy had a central authority based on rationality and law. This central authority presided over a chain of subordinate units that performed increasingly specialized functions. Each higher unit exercised command and control over the units immediately beneath it. Each lower unit was accountable to the unit immediately above it.

Hierarchies are thought to work best when an organization has a fairly clear purpose. Bureaucracies in the public sector are meant to pursue the public good. Firms in the private sector are meant to pursue profit. The existence of a clear purpose means that hierarchies can divide their activities into a clear set of functions that can be assigned to different units. Further, the function of each unit can be divided into sub-sets that can be assigned to sub-units. The result is a nested or pyramidal structure of units, each consisting of sub-units all the way to the bottom.

The members of a hierarchy are usually employees. They retain their individual freedom unlike, for example, slaves. But they have a contractual obligation to spend some time working on behalf of the hierarchy and fulfilling some task within it. Throughout the hierarchy clear rules govern the behavior of employees. When people break the rules, they are disciplined.

Generally hierarchies rely on a rule-based approach to authority. Hierarchy is an impersonal order. The places and duties of the people within hierarchies are defined formally. Although the relevant people may have personal relationships with one another, their professional relationships depend on their places in the organization. Authority depends on the offices that people hold in the organization.

Organization theorists have discussed the advantages of hierarchies by asking why the arise. Economists predictably argue that hierarchies are a response to market failure. In this view hierarchies provide a way of reducing transaction costs and limiting exposure to risk. Alternatively sociologists argue that hierarchy corresponds to a modern western concept of rationality and that hierarchies spread along with this concept. In this view hierarchies provide at least the appearance of an impartial expertise.

In addition to being particularly efficient at certain tasks, hierarchic organizations have some widely recognized moral and political advantages. Liberal democracy is often thought to depend on a clear lines of accountability: administrators must be accountable to elected politicians who are then accountable to voters. Formal rules and relationships are a barrier to corruption and official bias.

Critics argue that hierarchies are unresponsive and inefficient. Hierarchies are unresponsive insofar as their employees concentrate on obeying the rules that apply within the hierarchy rather than on reacting to the wishes of those outside of it, such as customers or citizens. Similarly, hierarchies are inefficient insofar as their employees follow orders and procedures even when these are anything but optimal. Employees might concentrate on their own safety or on improving their position in the organization at the expense of the good of the organization as a whole. Again, thay might appeal to the existing rules to protect themselves, not to improve their performance. In doing so they might become risk averse. The organization might then stagnate.

There are some types of task for which hierarchy seems particularly inappropriate. One example is tasks for which there are no clear criteria of success — perhaps including creative innovation. Another example is change and adaptation. Hierarchies rely on institutionalized roles and procedures. If an organization’s environment changes, its established procedures may be of little use in the new circumstances.

Neoliberals often suggested that markets and market mechanism were some kind of panacea. The formalism of modernist economics typically postulated an abstract concept of the market as intrinsically producing an efficient equilibrium. By abstracting markets from history, economists could conclude that apart from a few exceptional circumstances there is no reason to replace markets with other forms of organization.

The alternative view of the neo-Austrian school emphasizes the competitive process. In this view, the market is more dynamic. Neo-Austrian economists think of the market as a process of election occurring in changing and tumultuous conditions. They suggest that the market is often in disequilibrium. For them, the advantages of the market stem from the impact of competition on behavior and outcomes.

The market, especially in the neoclassical view, produces coordination through exchanges and prices. People who are widely dispersed and have no knowledge of one another are nonetheless reacting to one another’s effect on prices. Prices convey information to which people react by altering their actions. These new actions tend to restore market equilibrium. The desires of all the market actors are thus coordinated.

Clearly prices and competition are crucial to the market. In a pure market, prices provide all of the information that people need to decide how much of a good to produce and how much of it to use. Competition ensures that if one actor fails to respond to prices while others do so, the actor who does not will thus suffer the consequences.

Because pricing information and competition are so important to markets, their absence generally leads to market failure.

Although folk wisdom currently focuses on the advantage of markets, we should not let it blind us to the limitations of markets. Economists have long recognized that the use of a price mechanism involves costs that can outweigh the advantages. These costs include the time and effort spent getting relevant information, locating other buyers and sellers, discovering prices, and negotiating contracts. Markets often involve some uncertainty about transactions and outcomes, and it can be costly to reduce this uncertainty. Further, because markets can fail, they usually require regulation and supervision, which is yet another cost. Firms often keep tasks in-house rather than out-sourcing them precisely in order to avoid these costs. They might not want to have to negotiate for labor over and over. They might want to avoid uncertainty about the supply of their raw materials. They might want to have more direct oversight of an activity.

Because prices and competition are crucial to markets, the market is often an inappropriate type of organization if prices or competition are absent.

Finally, markets are often ill suited to the distribution of goods and services about which we have strong moral intuitions. There is no reason why we should assume that the outcome of market exchanges will accord with our collective sense of social justice.

On the one hand, networks differ from hierarchies because they do not usually contain an authoritative centre to resolve disputes among the actors. On the other, they differ from markets in that the actors engage in repeated and enduring exchanges, often relying on trust and diplomacy rather than prices and bargaining.

Yet, trust does not just appear out of nowhere. Rather, the actors in networks generally learn to trust one another precisely because they engage in repeated and beneficial interactions. As the actors experience being part of a network, they come to trust one another not to act opportunistically in ways that would damage the network. In a sense, therefore, networks get increasingly firmly established through a spiral of goodwill.

Networks are more participatory when the actors have roughly equal resources. In contrast, if one actor has the bulk of the resources, that actor often plays a particularly prominent role in the network. These networks are often managed and governed largely by the lead actor.

A lot of claims have been made recently about the alleged benefits of networks. Some organization theorists argue that networks promote the reliable and efficient flow of information. In markets, actors often keep crucial information to themselves because they think that it might help their competitors. In networks, however, because actors trust one another, they freely share information. In hierarchies, information that exists at the top can be slow to make its way down to the lower levels where it is needed. In networks, however, there may be fewer rules and procedures blocking the spread of information to those who most need it. More particularly, networks often appeal as ways of crossing organizational and conceptual boundaries; networks enable different departments and agencies to come together to address a problem that transcends their individual remits.

Even if networks have advantages, they are not without problems. One criticism is that they lack stability. Some scholars argue here that trust does not ensure that actors will not behave opportunistically and even undermine the network. When actors have significantly more to gain by breaking the norms and relationships of a network than maintaining them, they may be tempted to do so. Further, the informal nature of many networks means that if an actor behave opportunistically, the other actors may have no effective recourse to either a hierarchic authority or a legal contract enforced through the courts.

Some argue that the complexity of networks makes them inflexible. In this view a change in a network depends on the consent of all the actors. As the actors are all interdependent, a single actor cannot change the network alone. Further, because each actor depends on the others, individual actors may find it difficult even to change themselves.

Finally, criticism of networks have a moral and political dimension. Networks blur lines of accountability. Their complexity and especially their lack of an overt centre providing coordination and control often makes it difficult to specify who is responsible to whom for what. Problems over the legitimacy of networks have a particular resonance in democracies, for networks can be relatively closed and a few vested interests can use a policy network to pursue their factional interests at the expense of the common good.

There is much irony here. Bureaucracy was popular for much of the 20th century because it promised to control factionalism and vested interests. Bureaucracy was meant to provide policy coordination and to defend the common good. Since the 1980s, many organization theorists and policymakers have turned away from bureaucratic hierarchies to champion markets and more recently networks. Yet, the spread of markets and networks has now led some theorists again to worry about factionalism and vested interests. The benefits of hierarchy are becoming clear again.

By the late 20th century decision-makers were following organization theory in promoting markets and networks. They tried to reorganize public bureaucracies and private corporations. They wanted to reform the hierarchies of the early 20th century by introducing market mechanisms and network ties. I want to bring abstract organization theory down to earth, therefore, by telling the story of how one academic idea influenced public governance. The academic idea of a “wicked problem” inspired a turn to “whole-of-government” agendas.

They argued that wicked problems were particularly difficult to solve. They suggested that although rational planning had proved well suited to more “tame” problems, it had been less successful in addressing complex and interconnected “wicked” problems.

Most definitions of wicked problems refer to a list of features. Wicked problems are more or less unique. They lack definitive formulations. There are many explanations for them. There is no test to decide the value of any response to them. Each response has important consequences, so there is no real chance to learn by trial and error. Typically these features mean that wicked problems are interrelated. Any one wicked problem has complex links to others. Classic examples of wicked problems include pressing issues of governance such as security, environment, and urban blight.

Wicked problems require “thinking that is capable of grasping the big picture.” They require “more collaborative and innovative approaches.” And they require actors to operate “across organizational boundaries” in a whole-of-government approach.

Modernist organization theory concentrates on formal analyses of ideal types. As a result, hierarchies, markets, and networks often appear as abstract models with more or less intrinsic properties. There is a danger of organization theory bewitching people.

Some organization theorists might intend their ideal types to be heuristic guides that help people think about real situations and make sensible decisions. There is always a danger, however, that other people will treat their ideal types as if they were infallible account of reality. As organization theory moves from the academy to professional and policy worlds, so it often get simplified. Decision-makers often lose sight of the nuances and treat the same ideas as rigid and infallible guides. Busy decision-makers hear headlines and grab at solutions that present themselves as science. Tentative academic suggestions become dogmas. Cautious academic proposals become alleged panaceas.

Much of the history of the new governance consists of successive waves of modernist expertise. Each new scientific theory or ideal type appears on the scene as a panacea. Decision-makers try to solve various managerial and administrative problems by introducing a raft of reforms based on the theory. The reforms fail. Often the reforms have unexpected consequences that create more problems. Social scientists offer new theories to explain the failure of the reforms. So goes the cycle of modernist governance.

By the early 20th century some corporations had grown into massive enterprises. Small individual- and family-owned businesses continued to flourish. But corporations were often owned by a large number of dispersed shareholders. These shareholders had no real role in the day-to-day running of the corporation. The management of the corporation depended instead on a hierarchy of professional executives topped off by a board of directors. The board was meant to provide oversight and control of the lower tiers of management. As the 20th century progressed, however, this hierarchic management was increasingly supplemented by attention to market machenisms and network relations.

In medieval Europe, churches and local governments were incorporated so that they persisted from one meeting to another. Chartered companies arose later initially to settle colonies and then to spread trade. Prominent examples included the Dutch East India Company and the British East India Company. Almost all of the early corporations were formed through charters issued by monarchs or legislatures. Indeed, the state did not only issue the charter that created the company; it also oversaw the activities of the company to ensure that the company acted in the public interest.

When industrialization spread in the 19th century, states began to loosen their hold over corporations. In 1844 the British Parliament passed the Joint Stock Companies Act, which allowed people to form private companies without a Royal Charter or Act of Parliament. In 1855 Parliament passed the Limited Liability Act, which insulated the directors of a company from full responsibility for the legal or financial failings of the company.

Most shareholders do not work for let alone control the corporations that they collectively own. The financial benefits of ownership take the form of the interest and other payments made to the shareholders in exchange for their continuing capital investment. Again, managers need not have any significant shareholding let alone a dominant one in the corporation for which they work. As managers, they earn wages for their labor rather than increased returns on any capital they have invested.

One way to introduce principal-agent theory is as an account of delegation. Throughout social life, principals delegate responsibilities and tasks to agents; the agent speaks and acts on behalf of the principal. Agency theory concerns the hazards and problems that can arise as a consequence of such delegation.

Economists argue that delegation gives rise to 3 main types of cost. First, the principal has to pay the costs of overseeing the agents. For example, the principal might hire an auditor to check on the actions of the agents. Second, the agent has to pay the costs of certifying to the principals that his or her actions are indeed in accord with their interests. Finally, the principal has to bear any residual costs that result from the agents nonetheless pursuing their interests, not his or hers.

Responses to an agency problem try to reduce the total of these costs as far as possible. Economists usually identify 2 main strategies available to the principal. First, the principal can monitor the agents. The principal can devise a system for checking on the actions of the agents to make sure that these actions are appropriate to his or her interests. Second, the principal can make the agents share the consequences of their actions. The principal can devise incentive structures for the agents that make their interests correspond more closely to his or hers.

In modern democracies, citizens elect representatives to make political decisions on their behalf, and the elected representatives appoint bureaucrats to implement these decisions.

Generally, however, boards do not give directives to CEOs, partly because doing so might make it harder for them later to hold the CEO accountable. Decision-making and accountability are kept separate: CEOs make decisions, and boards of directors hold them accountable for these decisions. Equally, however, most corporations have rules that prevent the CEO from unilaterally making important decisions. Major decisions often require the prior approval of the board. Boards of directors can sanction CEOs, ask them to step down, and even fire them.

Insofar as employees are constantly present in a company, they are well situated to monitor at least some of its activities. But, of course, they too have personal interests, perhaps in working less or in more luxurious work conditions. Here too, therefore, there is a trend towards giving employees a stake in corporations as a means to align their interests with those of the shareholders.

Economists have noticed that executives can use options in ways that are clearly contrary to shareholders’ interests. Following a series of scandals in the mid-2000s, stock options have become a far less popular form of compensation.

The Commission soon concluded, however, that companies were often adopting the letter of the code but not its spirit. Companies were following the guidelines exactly as they were stated without making any significant attempt to solve the ethical issues that the guidelines were meant to address.

Before the scandal Enron appeared to be an example of good corporate governance complete with appropriate controls, oversight, and compensation packages.

Classic accounts of public administration argued for a clear separation between politics and administration. Many presented bureaucracy as a stronghold of impartial knowledge and advice and so as a check on the factionalism, populism, and other excesses of party politics. People believed that the bureaucracy could initiate and guide intelligent action to solve social problems. The electoral process and politicians would dictate values and goals. The bureaucracy would then use its expertise to develop and implement policies to realize these ends.

Public choice theorists argued that bureaucrats were not impartial experts and defenders of the common good but self-interested actors who were intent on advancing their careers and increasing the size of their fiefdoms. The expansion of the public sector fed worries of state overload; people worried that society might stagnate beneath the burden of supporting so many and such large bureaucracies. In the media and everyday life public bureaucracies were increasingly depicted as ineffective and unresponsive to the citizens they were meant to serve.

In this view market competition creates powerful pressures for efficiency, innovation, and responsiveness to consumers, which are otherwise largely absent from public governance. The other strand emphasized the importance of giving public officials the freedom to manage. In this view state actors should concentrate on “steering” — the formulation of policy — not “rowing” — the implementation of policy and especially the provision of services. These two stands combined to inspire various reforms aimed at separating policy and delivery. Service delivery was to be contracted out to third parties in ways that would create competitive markets in the provision of those services.

Performance-based incentives are usually tied to bottom-line outcomes. They thus depend on suitable accounting and budgetary systems. It is no surprise, therefore, that public governance has moved dramatically towards budgeting for results. Much stress now falls on performance indicators, output targets, and evaluation. Many states have introduced some form of public service agreements explicitly linking budget decisions to planned targets and performance results. These agreements occur in the context of multi-year budgeting and spending reviews at higher levels. On the one hand, public officials are meant to be given the freedom to manage provided that they produce satisfactory outcomes. On the other, budgetary reforms are the means by which the centre attempts to exercise control in an increasingly complex system.

Even neoclassical economists had started to develop theories of public goods for which there was no proper market, and prisons appeared to be an exemplary instance of such a public good.

Market-related policy instruments did not supplant hierarchic ones; they supplemented them. Generally contracting-out did not produce anything remotely like a free market; it resulted in a proliferation of service providers and networks. Generally the central state does not ignore the activities of these networks and third-party actors; it tries to control and coordinate them — to regulate and steer them — as best it can.

The new governance is not monolithic. On the contrary, part of the point of the term “governance” should be to provide a more diverse view of state authority and its exercise. The notion of the central state being in control of itself and civil society is a myth. The myth obscures the reality of diverse state practices that escape the control of the centre because they arise from the contingent actions of diverse actors at the boundary of state and civil society.

The main older theories of international relations are realism and liberalism. Realists conceive of international relations in terms of sovereign states pursuing their interests in an anarchic system. In this view each state is an isolated and monolithic entity. The foreign policy of a state is independent of its domestic policy. Each state pursues security and power as they are given to it by the wider international system. Whereas domestic politics is orderly and conducted within a constitutional framework, international politics is all about power and anarchy. Realists associate their theory with Thucydides’ history of the power-politics between Athens and Sparta and with Thomas Hobbes’ picture of the state of nature.

Liberals accept much of the realist picture while insisting it is not immutable. Liberal philosophers, such as Kant, and liberal politicians, such as Woodrow Wilson, emphasized the possibility of perpetual peace. Initially they looked optimistically to the beneficial effects of the spread of trade and civilization. By the 20th century, however, most liberals rested their hopes on a dramatic strengthening of international law and international institutions.

Both realists and liberals present international relations as an anarchical system in which states interact by trade, war, and diplomacy. They suggest that the defining feature of international relations is the absence of any effective world government controlling, regulating, and coordinating the actions of states. Realists largely accept this picture and seek to work within it. Liberals hope to transform it by bolstering international law and international institutions.

In contrast to both realism and liberalism, the term “governance” highlights the possibility that governing can occur without an effective sovereign power. Control can arise when actors internalize informal norms as well as when an external power imposes rules.

When realists and liberals concentrate on the anarchic nature of international system, they imply that the more or less sole aim of international relations is to prevent war; the point of international institutions is to secure peace. In contrast, social scientists now suggest that global governance addresses diverse transnational problems. Global governance seeks not only to prevent and limit war but also to manage the global commons, to promote development, and to regulate global financial markets.

The League had relied on conference diplomacy combined with a commitment to collective security based on unanimity. Observers inferred that this approach could not uphold peace and security. Many turned to a more realist vision. The UNSC is the flawed fruit of their doing so — a collective international sovereign without a world state. Throughout the Cold War, it provided neither government nor governance.

The functionalists rejected both internationalism and federalism. They drew their inspiration from the practical experience and relative success of specialized agencies. In their view peaceful relations between states could emerge from functional agencies addressing discrete transnational problems. Functionalism promised peace by pieces; peace would arise as an effect of a series of agencies progressively reducing issues of conflict between states, turning political disputes into technical ones, and so binding states in ever closer relations.

They wanted to replace the competition and conflict that they believed characterized classical liberalism with long-term thinking and rational planning. Technocratic planning would remove the insecurity and irrationality of the constant turmoil of free markets.

The post-war system of international relations confronted several problems in the 1970s. One problem was the rise of the South. The South questioned the legitimacy of the existing pattern of global governance. Its demands to redistribute wealth culminated in the Non-Aligned movement’s 1973 proposal for a New International Economic Order. The Third World proved adept at using the UN to voice grievances about the attitude of particular states, especially the USA, to issues such as global trade and global finance. Part of western opinion then became increasingly doubtful about the efficacy and desirability of international organization. Their doubts also fed on the paralysis of the UNSC during the Cold War.

Another problem of the 1970s was the falling apart of the Bretton Woods system for managing the global economy. The USA experienced inflationary pressures and worsening terms of trade. Large amounts of dollars gathered in Europe and Japan. Foreign-held dollars lost their value. Inflation spread to other industrialized economies. In 1971 the USA ended the convertibility of the dollar into gold. Global exchange rate mechanism collapsed. Although in 1973 the USA, the Europeans, and Japan agreed to formalize an agreement in which their currencies floated freely in a deregulated market, this arrangement failed to restore stability and health to the global economy. Instead, the Gulf states increased the price of oil thereby aggravating the economic distress of the USA and Europe. The result was stagflation — a combination of high unemployment and high inflation.

He argued that planners cannot know the subjective preferences of individuals, so they necessarily misallocate resources. Because planners cannot know and measure subjective preferences, they necessarily assign resources in accord with their particular perspectives and judgments, thus handing resources to special interests and spreading corruption. Neoliberals thus championed free markets as an alternative to planning. They argued that the state should not intervene in the economy, but merely uphold the rule of law and enable the market to work properly.

This neoliberalism came to dominate global financial institutions in the 1970s largely because of the powerful influence of the USA in forging what became known as the Washington Consensus. Neoliberals promoted market reforms and free trade by tying them to aid. In particular, the World Bank introduced structural adjustment loans tied to neoliberal policy reforms. Previously investment loans had been disbursed against project expenditures. The structural adjustment loans, in contrast, covered the costs associated with states’ making the transition to more neoliberal economic policies, and they were paid out only as the states adopted neoliberal reforms.

Neoliberal policies faced much criticism, and in 1989 the World Bank shifted its emphasis from structural adjustment to good governance. The World Bank effectively recognized that economic reform alone could not secure development; political reform was required to stem corruption and misgovernment. By 2005 almost half of the conditions imposed on the recipients of loans concerned public sector governance.

Some economists now emphasized that globalization has been patchy. Globalization really encompasses Asia, Europe, and North America, and even within those areas, it is mainly evident in a few big cities. It bypasses much of the world including most of Africa.

One prominent example is international aid to fragile states. Development agencies have changed partly because they have been tasked with a novel role in promoting security. Development agencies are now a first line of defense for western societies in fear of mass migration, transnational crime, and terrorist networks.

The 19th century privileged the ideals of representative government. In the early 20th century social scientists and policy-makers increasingly appealed in addition to a responsible bureaucracy as a necessary counter to the factionalism and irrationalism of much democratic politics. In the late 20th century, faith in bureaucracy gave way to faith in markets and networks. Yet, insofar as markets and networks too seem to be failing, perhaps we should look instead to more collaborative and participatory forms of governance.

The representatives are not simply proxies for the citizens; rather, they have considerable discretion to support the policies that they believe will most benefit their constituents. Nonetheless, because the role of the representatives is at least in part to act on behalf of their constituents, it is important that the voters have a way of holding them accountable. Accountability has generally been tied to transparency and periodic elections.

Corporate interests in particular use their extensive resources to become powerful lobbyists, financiers, and advisers to politicians. They worry is that powerful interests can lead political representatives to act, whether intentionally or not, on behalf of particular elites rather than the general public. In addition, the sheer complexity of modern societies threatens many of the ideals of representative democracy. If the classic theory implied that public policy was made by elected representatives in a transparent manner, not much of that account remains today. Even when legislature pass statutes, the statutes are often vague and their interpretation, application, and enforcement falls to administrative and judicial bodies that possess the relevant technical expertise. Further, the technical issues involved in many laws and policies entail a loss of transparency. Few citizens have the appropriate legal and scientific knowledge to evaluate the laws and policies.

Early in the 20th century social scientists drew attention to factionalism, propaganda, financial extravagances, and other problems in representative democracies. The ideal of a responsible bureaucracy spread in part as a response to these problems. The bureaucracy was meant to provide a bulwark against the irrationalities of the electorate and their representatives. A permanent and neutral bureaucracy would divide politics from policy. Public policy would be legitimate because it would be based on science. Elected representatives would define policy goals and check the activity of experts. Social scientists, professionals, and generalist civil servants would use their expertise to devise rational scientific policies in accord with these goals.

Bureaucracy appealed as a way of preserving representative democracy while removing its worst features — instability, irrationality, and factionalism — from the day-to-day activities of governing.

They associated bureaucracy with public spirit and scientific neutrality defined in stark contrast to the self-interest and factionalism found in democratic processes. Some of them associated bureaucracy with efficiency; bureaucracy was a rational form of organization that facilitated specialization according to function.

Some neoliberals tried to initiate a rather different discussion by arguing that markets did more than democracy to advance the values of individual choice and freedom.

Liberal democratic governance thus got presented as a prerequisite of successful economic development. Sometimes definitions of good governance had a narrow focus on competitive elections, clear lines of accountability, and the rule of law. Other definitions spread out more broadly to include pluralism, respect for human rights, and a broad base of political participation.

A curious optimism pervaded many of the early discussions of the democratic potential of the new governance. The optimism over markets reflected a kind of liberal triumphalism following the collapse of the Soviet bloc. The optimism over networks also reflected a more general sense that the end of the Cold War provided a chance to forge a new agenda, address problems that had been sidelined, correct flaws in institutions, and meet emerging challenges. Governance thus embodied hopes for a free and vibrant civil society. The hope was that democracy could bubble up from below with civil society defending the rights of the oppressed and underrepresented against otherwise overpowering vested interests.

Today most observers are less optimistic about the democratic potential of network governance. There are two main concerns. The first is that the complexity of networks seems to undermine important democratic values including, most prominently, accountability.

A second concern is that when policy actors introduce network governance as a top-down project, they are often more interested in efficiency gains and in building their legitimacy than in empowering citizen participation.

Corporations, states, and systems do not have intrinsic logics and properties that make it inevitable that they will act in a particular way to produce a particular outcome. Social life does not fit neatly into modernist categories, schemas, and formal explanations. Social life is inherently messy and permanently in flux.

It would be foolish to suggest that collaborative arrangements are a panacea for all the ills of modern governance. Difficult problems require a reliance on participation and dialogue as supplements to representation and accountability. One major problem is that rates of participation in many forms of collaborative governance strongly favor the wealthy, the more educated, and those who belong to dominant racial and ethnic group.