R. A. W. RHODES
University of Newcastle-upon-Tyne
The term âgovernanceâ is popular but imprecise. It has at least six uses, referring to: the minimal state; corporate governance; the new public management; âgood governanceâ; socio-cybernetic systems; and self-organizing networks. I stipulate that governance refers to âself-organizing, interorganizational networksâ and argue these networks complement markets and hierarchies as governing structures for authoritatively allocating resources and exercising control and co-ordination. I defend this definition, arguing that it throws new light on recent changes in British government, most notably: hollowing out the state, the new public management, and intergovernmental management. I conclude that networks are now a pervasive feature of service delivery in Britain; that such networks are characterized by trust and mutual adjustment and undermine management reforms rooted in competition; and that they are a challenge to governability because they become autonomous and resist central guidance.
Over the past fifteen years vogue words and phrases for reforming the public sector have come and gone. âRaynerâs Raidersâ and the â3Esâ of economy, efficiency and effectiveness gave way to the ânew public managementâ and âentrepreneurial governmentâ. This paper focuses on one of these words governance. It is widely used, supplanting the commonplace âgovernmentâ, but does it have a distinct meaning? What is it supposed to tell us about the challenges facing British government?
Unfortunately, even the most cursory inspection reveals that âgovernanceâ has several distinct meanings. A baseline definition is essential, therefore, and where else to look other than a textbook. Sammy Finer defines government as:
Current use does not treat governance as a synonym for government. Rather governance signifies a change in the meaning of government, referring to a new process of governing; or a changed condition of ordered rule; or the new method by which society is governed.
So far, so simple; but the problems of definition become acute when specifying this new process, condition or method. There are at least six separate uses of governance:
Of course words should have clear meanings but there is a more interesting theme to my discussion.
The 1980s heralded a new chapter in the debate about ways of governing. Analysing âgovernanceâ will help to pin down the nature of this experiment and to identify trends and contradictions in the evolution of the British state. I argue British government can choose between âgoverning structuresâ. To markets and hierarchies, we can now add networks. None of these structures for authoritatively allocating resources and exercising control and co-ordination is intrinsically âgoodâ or âbadâ. The choice is not necessarily or inevitably a matter of ideological conviction but of practicality; that is, under what conditions does each governing structure work effectively. Bureaucracy remains the prime example of hierarchy or co-ordination by administrative order and, for all the recent changes, it is still a major way of delivering services in British government; for example, the Benefits Agency remains a large bureaucracy. Privatization, marketing testing and purchaser-provider split are examples of government using market or quasi-market ways of delivering services. Price competition is the key to efficient and better quality services. Competition and markets are a fixed part of the landscape of British government. It is less widely recognized, especially by British government, that it now works through networks characterized by trust and mutual adjustment; for example, to provide welfare services. British government is searching for a new âoperating codeâ. This search involves choosing between governing structures. Governance is one such structure.
Uses of Governance
Governance as the Minimal State
This use is a blanket term redefining the extent and form of public intervention and the use of markets and quasi-markets to deliver âpublic servicesâ. To employ Stokerâs apt phrase âgovernance is the acceptable face of spending cutsâ.3 The extent of any change is a matter of dispute. Indisputably, the size of government was reduced by privatization and cuts in the civil service. However, public expenditure remained roughly constant as a proportion of GDP; public employment rose slightly in local government and the national health service; and regulation replaced ownership as the preferred form of public intervention with the government creating ten major regulatory bodies. Whatever the results in practice, the ideological preference for less government was stated loudly and often.4 Governance encapsulates that preference, but says little else being an example of political rhetoric.
Governance as Corporate Governance 5
This specialized use refers to âthe system by which organizations are directed and controlledâ.6 Thus:
the governance role is not concerned with running the business of the company, per se, but with giving overall direction to the enterprise, with overseeing and controlling the executive actions of management and with satisfying legitimate expectations for accountability and regulation by the interests beyond the corporate boundaries ⌠All companies need governing as well as managing.7
The Chartered Institute of Public Finance and Accountancy (CIPFA) adapted this use to the public sector:
Developments such as compulsory competitive tendering, the creation of discrete business units within internal markets and the introduction generally of a more commercial style of management are bringing about a different culture and climate, which represents a departure from traditional public service âethosâ, and its values of disinterested service and openness. The fact that public services are currently undergoing significant change enhances the need for extra vigilance and care to ensure that sound systems of corporate governance are both set in place and work in practice.
Its report identifies three fundamental principles which apply equally to organizations in the public and private sectors. They recommend openness or the disclosure of information; integrity or straightforward dealing and completeness; and accountability or holding individuals responsible for their actions by a clear allocation of responsibilities and clearly defined roles.8 Although a narrow use of the word, the concerns of corporate governance are echoed when discussing accountability in the ânew public managementâ and âgood governanceâ. Also, this use reminds us that private sector management practice has an important influence on the public sector.
Governance as the New Public Management
Initially the ânew public managementâ (NPM) had two meanings: managerialism and the new institutional economics.9 Managerialism refers to introducing private sector management methods to the public sector. It stresses: hands-on professional management, explicit standards and measures of performance; managing by results; value for money; and, more recently, closeness to the customer. The new institutional economics refers to introducing incentive structures (such as market competition) into public service provision. It stresses disaggregating bureaucracies; greater competition through contracting-out and quasi-markets; and consumer choice. Before 1988, managerialism was the dominant strand in Britain. After 1988, the ideas of the new institutional economics became more prominent.
NPM is relevant to this discussion of governance because steering is central to the analysis of public management and steering is a synonym for governance. For example, Osborne and Gaebler distinguish between âpolicy decisions (steering) and service delivery (rowing)â, arguing that bureaucracy is a bankrupt tool for rowing. In its place they propose entrepreneurial government based on ten principles:
Most entrepreneurial governments promote competition between service providers. They empower citizens by pushing control out of the bureaucracy, into the community. They measure the performance of their agencies, focusing not on inputs but on outcomes. They are driven by their goals â their missions â not by their rules and regulations. They redefine their clients as customers and offer the choices ⌠They prevent problems before they emerge, rather than simply offering services afterwards. They put their energies into earning money, not simply spending it. They decentralize authority, embracing participatory management. They prefer market mechanisms to bureaucratic mechanisms. And they focus not simply on providing public services, but on catalysing all sectors â public, private, and voluntary â into action to solve their communityâs problems.10
Clearly NPM and entrepreneurial government share a concern with competition, markets, customers and outcomes. This transformation of the public sector involves iess governmentâ (or less rowing) but âmore governanceâ (or more steering).11
Governance as âGood Governanceâ 12
Government reform is a world-wide trend and âgood governanceâ is the latest flavour of the month at the World Bank, shaping its lending policy towards Third World countries.13 For the World Bank, governance is âthe exercise of political power to manage a nationâs affairsâ and âgood governanceâ involves:
an efficient public service, an independent judicial system and legal framework to enforce contracts; the accountable administration of public funds; an independent public auditor, responsible to a representative legislature; respect for the law and human rights at all levels of government; a pluralistic institutional structure, and a free press.14
Leftwich identifies three strands to good governance: systemic, political and administrative. The systemic use of governance is broader than government, covering the âdistribution of both internal and external political and economic powerâ. The political use of governance refers to âa state enjoying both legitimacy and authority, derived from a democratic mandateâ. The administrative use refers to:
an efficient open accountable and audited public service which has the bureaucratic competence to help design and implement appropriate policies and manage whatever public sector there is.15
And to achieve efficiency in the public services, the World Bank seeks to: encourage competition and markets; privatize public enterprise; reform the civil service by reducing over-staffing; introduce budgetary discipline; decentralize administration; and make greater use of non-governmental organizations.16 In short, âgood governanceâ marries the new public management to the advocacy of liberal democracy.
Governance as a Socio-cybernetic System
âSocio-cyberneticsâ is protected by the cloak of language, but I try to avoid most of its neologisms.17
For Jan Kooiman, governance:
can be seen as the pattern or structure that emerges in a socio-political system as âcommonâ result or outcome of the interacting intervention efforts of all involved actors. This pattern cannot be reduced to one actor or group of actors in particular.18
In other words, policy outcomes are not the product of actions by central government. The centre may pass a law but subsequently it interacts with local government, health authorities, the voluntary sector, the private sector and, in turn they interact with one another. Kooiman distinguishes between the process of governing (or goal-directed interventions) and governance which is the result (or the total effects) of social-political-administrative interventions and interactions. There is order in the policy area but it is not imposed from on high; it emerges from the negotiations of the several affected parties. Also:
These interactions are ⌠based on the recognition of (inter)dependencies. No single actor, public or private, has all knowledge and information required to solve complex, dynamic and diversified problems; no actor has sufficient overview to make the application of needed instruments effective; no single actor has sufficient action potential to dominate unilaterally in a particular governing model.19
So, all actors in a particular policy area need one another. Each can contribute relevant knowledge or other resources. No one has all the relevant knowledge or resources to make the policy work. Governing confronts new challenges:
Instead of relying on the state or the market, socio-political governance is directed at the creation of patterns of interaction in which political and traditional hierarchical governing and social self-organization are complimentary, in which responsibility and accountability for interventions is spread over public and private actors.20
Central government is no longer supreme. The political system is increasingly differentiated. We live in âthe centreless societyâ;21 in the polycentric state characterized by multiple centres. The task of government is to enable socio-political interactions; to encourage many and varied arrangements for coping with problems and to distribute services among the several actors. Such new patterns of interaction abound: for example, self- and co-regulation, public-private partnerships, co-operative management, and joint entrepreneurial ventures.
This use is not restricted to national governance; it encompasses also the international system. For example, Rosenau distinguishes government from governance by suggesting that government refers to âactivities that are backed by formal authorityâ whereas governance refers to âactivities backed by shared goalsâ. Governance is âa more encompassing phenomenonâ because it embraces not only governmental organizations but also âinformal, non-governmental mechanismsâ. So you get governance without government when there are âregulatory mechanisms in a sphere of activity which function effectively even though they are not endowed with formal authorityâ.22
The socio-cybernetic approach highlights the limits to governing by a central actor, claiming there is no longer a single sovereign authority. In its place, there is the multiplicity of actors specific to each policy area; interdependence among these social-political-administrative actors; shared goals; blurred boundaries between public, private and voluntary sectors; and multiplying and new forms of action, intervention and control. Governance is the result of interactive social-political forms of governing.
Governance as Self-organizing Networks
The system of government beyond Westminster and Whitehall was transformed âfrom a system of local government into a system of local governance involving complex sets of organizations drawn from the public and private sectorsâ.23 This use sees governance as a broader term than government with services provided by any permutation of government and the private and voluntary sector...