The New Geo-Governance

Gilles Paquet

• Publisher: University of Ottawa Press
• Year: 2005
• ISBN:
  9780776618654
• Topic: Política y relaciones internacionales
• Subtopic: Relaciones internacionales

Over the last few decades, the Westphalian nation-state has lost its hegemonic position in the system of geo-governance. A dispersive revolution has led to the emergence of powerful newly networked business organizations, new subsidiary-focused governments, and increasingly virtual, elective, and malleable communities. This in turn has led to the crystallization of distributed governance regimes, based on a wider variety of more fluid and always evolving groups of stakeholders.

In The New Geo-Governance, Gilles Paquet develops a general conceptual framework to deal with the new evolving reality of global governance. He uses this framework to critically examine the evolving territorial governance (hemispheric governance, meso-innovation systems, smart city-regions) and tackles the more complex governance challenges raised by sustainability and common-property resources like oceans. Paquet further explores the implications of this emerging polycentric geo-governance on the new forms of stewardship and its impact on citizenship, federalism, and other technologies of coordination, and reflects on the sort of subversive bricolage required if the missing mechanisms for effective coordination are to be put in place.

The New Geo-Governance will be of great interest to students and scholars interested in governance, organizational design, international affairs, and political studies.

PART I

A Framework

Chapter 1

Institutional Evolution in an Information Age

“A map…does not ‘solve’ problems and does not ‘explain’ mysteries;
it merely helps to identify them”
E.F. Schumacher

Introduction

A socio-economy is an “instituted process”, that is, a going concern held together and characterized by a certain number of rules, norms, principles, and conventions. Together, they make up the institutional order. Institutional orders differ from place to place, and evolve through time as circumstances and values change (Polanyi 1957).

As the production of material values, characteristic of the industrial age, has been progressively displaced as the driving force in the economy by the production of information values, the rules, norms, and conventions of the former age have been strained. This has triggered much institutional change (Masuda 1990:3). This chapter examines the ways in which the institutional order has been reconfigured, and the likely consequences of this mutation.

I look at what is meant by institutions, institutional order, and institutional change in section 1, and at some of the features of the information age in section 2. This enables me, in section 3, to identify some major institutional changes triggered by the information age, that have provoked the emergence of a new dynamic built on four pillars: a new centrality of cognition, new forms of regulation and network cooperation in the control of the forum, elements of a new world information order, and a new form of “neobiological” evolution of the institutional order. In section 4, I argue that there are, at the core of this new dynamic, new forms of transversal coordination across the different layers of the institutional order. In the conclusion, I speculate on the predictability of the routes through which the new context will institute itself.

Institutions, institutional order, and institutional change

Institutions are a world of “objective structures which are the products, not necessarily intentional, of minds or living creatures; but which, once produced, exist independently of them” (Magee 1973:60). They are arrangements meant to reconcile the geotechnical constraints emerging from the world around us with the subjective world of minds, plans, and values. So if either of these realities changes, institutions are strained, and adapt more or less quickly and well.

These institutions are part of a loosely connected institutional order. This institutional order is reshaped throughout history (i) by the accretion or demise of layers of new specific institutions, (ii) by the adaptation of specific institutions to the overall institutional order (to fit better with the rest of the order), and (iii) by the evolving circumstances and organizations that are generating continuous pressure on institutions and the institutional order to evolve.

(a) Institutions and institutional order

Rules, norms, and conventions define what is and is not allowed. They “serve as orientation maps concerning future actions”: they enable a large number of actors “to co-ordinate their actions by means of orientation to a common signpost” (Lachmann 1971:13, 49–50). Institutions are proteiform: they range from tacit and informal norms or conventions to explicit formal rules, from undesigned to designed entities, from wide-ranging framework institutions to secondary institutions that are more limited in scope. Taken as a whole, these institutions make up the institutional order.

Such an order may be loose or tight. Specific institutions do not necessarily aggregate into a tight institutional order with permanence, consistency, unity and gap-lessness like an ideal legal system (Lachmann 1971:75). Individual institutions may come and go, become stronger or be eroded without the system being imperiled. A tight institutional order embodies a dominant logic and influences the process of emergence of individual new institutions: it readily adopts some of these new institutions and considerably limits the influence of others. Specific institutions are more likely to adapt in certain directions if they belong to a particularly tight institutional order; a loose institutional order has limited adoptive power as well as limited power to elicit adaptive behaviour (Prahalad and Bettis 1986; Bettis and Prahalad 1995).

At any time, any specific institution may have a high or low degree of “goodness of fit” with the rest of the institutional order, and with the coordination needs of the socio-economic context. Specific institutions as social armistices do not necessarily correspond to an equilibrium situation (North 1990). At best, they embody a “workable tension” between coherence and flexibility, between the needed stability of the orientation points for coordination to occur, and the equally important need for flexibility to accommodate to the new circumstances. The institutional order is therefore not necessarily an equilibrium configuration. It corresponds to a “workable configuration” of the evolving “rules of operation and structure of institutions for the system as a whole” (Adelman 1973). The emergence, erosion, or dysfunctional evolution of individual institutions may at times throw the existing institutional order out of kilter and jeopardize its survival (Lachmann 1971:83).

(b) Institutions and organizations

Individual institutions often originate as a convention for the mutual convenience of purposive organizations. They may also emerge as the result of tough bargaining among powerful groups, or as the unintended consequences of endeavours by private or public concerns.

Institutions are both resilient and fragile. On the one hand, existing institutions that are inadequate arrangements (in the sense that they do not generate the best performance for the different organizations) may prove quite resilient, especially if some powerful forces benefit from them. On the other hand, even reasonably sound institutions, based on conventions of mutual convenience, may crumble, as circumstances change: pressures then tend to weaken the convention until it is no longer enforced and falls into disuse.

Once in place, specific institutions play a range of roles: they do much of our thinking for us, they confer identity, they classify, they remember and forget (Douglas 1986). On all these fronts, they serve the different interest groups more or less well. Organizational efforts by disgruntled groups may tend to erode informal institutions, or to modify formal framework institutions forming the outer structure of the institutional order (Lachmann 1971: 82–3). Depending on their importance, these pressures may even modify the dominant logic and threaten the institutional order. Such an erosion of the institutional order increases dramatically as the probability of adopting deviant institutions increases, and as organizations develop a propensity to adapt in what appear to be dysfunctional directions. This adaptation-adoption process is self-reinforcing (Arthur 1988).

(c) The cognitive dimension

Institutional orders, like other social systems, consist of a structure, a technology, and a theory. “The structure is the set of roles and relations among individual members. The theory consists of the views held within the social system about its purposes, its operations, its environment and its future. Both reflect, and in turn influence, the prevailing technology of the system—that is, the set of procedures by which the game is played (Schön 1971; Ramos 1981). These dimensions are interdependent. Any change in one dimension leads to corresponding modifications in the others, and therefore in the whole system.

At first, scholars like Douglass North emphasized almost exclusively the importance of shocks originating from the environment to explain the modification in the structure or technology of the game. More recently, there has been a growing recognition that the “theory” may be the core dimension: when it is changed, critical disruption occurs. And the source of such disruption need not be anything more than a change in representations, in the symbolic space, in the cognitive process (North 1990, 1991, 1993). Indeed, change may result from a misrepresentation by organizations of the signposts the institution is putting forth: even if the real social space has remained unchanged, the representations of the social space, or the predispositions and inclinations of certain key actors, may be modified. Institutional change ensues.

This cognitive dimension of institutions and institutional change has become increasingly important with the emergence of the informational age. It has become also an ever more important feature of most models of the institutional order, as is illustrated by the contours of Douglass North’s recent problématique. It emphasizes human learning as the foundation of both institution-building and institutional evolution. Mental models, ideologies, and belief systems are presented as the basis for representational redescription, and such cognitive dimensions are recognized as being fundamentally as important a source of learning (and therefore of institutional change) as any modification in environmental constraints (North 1993).

As will become clear in the following sections, the relative importance of the cognitive dimension, and of the impact of the symbolic space on the socio-economic-political space, have been heightened accordingly (Debray 1991; Abrahamson and Fombrun 1994).

The information society syndrome

The discontinuity triggered by the new telecommunications technology and the dawn of the information age has been epoch-making, and its impact will be on the scale of other information revolutions like the language revolution, the writing revolution, and the printing revolution. “In each case, these information epochs preceded the birth of a new system of societal technology that in turn became the basis for a transformation in human society” (Masuda 1982).

The information age and the new telecommunications have catalyzed a new dynamic, not unlike the one observed at the time of the Renaissance: changes in the social structure, new forms of entrepreneurship, new modes of thought, new lifestyles, and new modes of practical learning and expertise (Von Martin 1944).

There has been a transformation of the cognitive and socio-cultural fabric of our world.

(a) From energy to information dominance

The economic process has drifted from energy dominance to information dominance: the interaction between man and nature has become more extensively programmed by an ever more important knowledge-information component. The new employment has been generated in the knowledge development and transfer sectors, rather than in the manufacturing and transportation of material goods (McLaughlin 1966). And for various independent measurements of the size of the information-related segment of modern economies, indicators have shown a dramatic growth of that sector, especially since the 1960s (Parker 1975; Porat 1977).

One general point emerges from these analyses: the economy has become more immaterial (i.e., dematerialized) in the last half-century. The determinism (physical/technological/geographical), built on the framework of the material goods production system, has been considerably weakened. There are massive economies of scale in information processes (Wilson 1975) and those gains in information-transfer efficiency by large-scale flexible organizations underlie the oligopolization and the multinationalization processes which have been noted in recent years.

A number of corollaries follow. First, the dematerialization of economic activity has generated new forms of enterprise, and a reconfiguration of the manner in which the economy is instituted (Williamson 1975, 1985). Increasing returns have made it possible to construct “virtual organizations” based on instantaneous communication through global networks. Second, a certain deterritorialization of the economic process has been triggered: economic activity has become more footloose, that is, less dependent on the presence of not-easily-moveable physical resources. Formerly powerful places that had built their power on locational comparative advantages have been displaced by the new important placeless power of global networks. Third, these two processes have been self-reinforcing in a synergetic way: as information and knowledge become more central, increasing returns and network externalities become more important, and the dominance of placeless power increases (Graham 1994).

Such corollaries go a long way towards explaining the mutation in the structure and functioning of organizations like firms. The nineteenth century firm “was built around the notion of product”. Its location was significantly dependent on proximate access to physical inputs and energy sources. Later, firms came to be defined less by the product itself than by the process that gave rise to the product. More recently, information processes, technological research and innovation have become more central to activities of firms, which have come to be defined by their information systems. While technology used to be transferred mostly through its embodiment in produced goods, or in the scope of the process, the increasing importance of information processes relative to energy processes has made the firm the medium of technology transfer: not just by the process that gives rise to the product, but through control over the information network or system necessary to produce it (Schön 1970). This has led some to suggest that a modern corporation is a “knowledge system” and its output “packaged knowledge” (Wikström and Normann 1994).

(b) Interconnectedness, turbulence, and accelerated change

Emery and Trist (1965) have analyzed the pattern of change in the transnational environment, and proposed a typology of environmental textures: placid-randomized, placid-clustered, disturbed-reactive, and turbulent. Supposedly, the transnational environment has evolved through these different stages, and can now be characterized as turbulent: the ground is in motion.

This turbulence is a result of the shift from energy to information dominance, and it is characterized by (i) a deepening interdependence of all facets of society: as interconnectedness grows with accelerating information transfers, complexity increases with the dimension of organizations, and synergies become ever more important; and by (ii) an increase in the degree of relevant uncertainty that affects organizations as complexity, interconnectedness, and the faster pace of change increase within the system. Even 25 years ago, a number of reports provided an impressive amount of data consistent with this hypothesis (Toffler 1975; Cairncross and McRae 1975; OECD 1979).

At the core of this turbulence are the new forms of transnational communication: new networks linking parts of the economic process in all countries. The firms and organizations that are well integrated transnationally have better access to information, and accordingly cope better with the heightened uncertainty. The firms or organizations excluded from such networks bear higher costs of adjustment. Hymer (1972) (at the international level) and Törnqvist (1968) (at the national level) have shown that differential patterns of information flows translate into changing patterns of location of economic activities and of methods of organization and coordination (Richardson 1960).

Finally, increasing returns become centrally important as learning effects and network externalities become relatively more prominent than in the previous age. This in turn leads to greater possibilities of path-dependence (i.e., that small chance events can determine which organization or institution prevails) and lock-in (i.e., that once an organizational or institutional “solution” is arrived at, it might be difficult to exit from it) (Arthur 1988).

(c) A more distributed system of governance

The required speed, flexibility, and innovative adaptation characteristic of the information age can only be generated by a high degree of noncentralization, together with a high degree of integration. This has transformed the governance system, as the traditional hierarchical structures in the public, private, and social sectors have proved inadequate. The centralized power had to be diffused. In all sectors, organizations lost power outward to transnational networks, sideward through partnerships and alliances, and downward to regional/sectional fragments. Power has not dissipated, it has been diffused, and the system of governance has become more distributed.

Another important reason for this development has been the ongoing democratization resulting in, amongst other things, a proliferation of smaller organizations (private, public, and not-for-profit), and a multiplication of the number of players involved in the process of governance. This has triggered not only a breakdown of the old bureaucratic way of organizing and managing concerns, but also a “fuzzification” of the boundaries between the public and private sectors, between industries, and between organizations, as an ever larger number of planned non-permanent alliances and partnerships (that worked across organizational boundaries) materialized.

These arrangements depend much less for their effectiveness on “power over” or “power of the purse” and much more on “cooperation”. Yet these new types of cooperative arrangements that have emerged as a result of “the dispersive revolution” are not necessarily “legitimate” in our institutional order (Genschel 1993; Hampden-Turner and Trompenaars 1993; Hollingsworth 1994).

Galaxy firms, federal governance systems, and a wide range of social “movements” have become what anthropologist Virginia Hine would call “segmented polycephalous networks” (SPN) held together by an “ideological bond” or “the power of a unifying idea”, the sort of glue necessary to make the organization live and prosper. To underline this key dimension, Hine has labelled the new form of organization SP(I)N where I stands for ideology (Hine 1977). The organization chart of a SP(I)N would look “like a badly knotted fishnet with a multitude of nodes and cells of varying sizes, each linked to all the others directly or indirectly” such as it might be for the Audubon Society or the Sierra Club, or for a private firm like ABB (Asea Brown and Boveri), or the Confederaziun Helvetica (Hine 1977; Boisot 1987; O’Toole and Bennis 1992).

A central and critical feature of SP(I)Ns is the emphasis on voluntary adherence to norms. While this voluntary adherence does not necessarily appear to generate constraints per se on the size of the organization (as some of the examples mentioned above indicate), it is not always easy for a set of shared values to spread over massive disjointed transnational comm...