Month: October 2016

Why network governance won’t stop climate change

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In today’s post Professor Jonathan Davies draws on Gramscian theory to argue that network governance ideology fails to engage with real power structures, and that state-society partnerships cannot stop climate change. This post was originally published on the Innovations in Climate Governance (INOGOV) website and republished with their permission

The idea of “network governance” began to grip academics and policy makers as part of the turn to the “third way” in the 1990s. Enthusiasm for networks arose from a particularly influential reading of social change.  Confronted by dramatic processes of globalisation and de-traditionalisation, often associated with the passing of modernity, many thinkers reasoned that states could no longer exercise sovereign power and instead have to involve a multitude of other actors to govern successfully.  Governing systems, in other words, have to become de-centred, or polycentric.  As INOGOV research demonstrates, climate change governance has been strongly influenced by these ideas.

At the same time, with the decline of trade unionism in many countries, the language of “working class” disappeared from mainstream political discourse, to be replaced by “civil society”.  Civil society with its networks of voluntary and community organisations is a far more palatable partner for neoliberalising states than the unions. It can be incorporated into state projects, and provide links into dispossessed and alienated communities that are abandoning the institutions of representative democracy. Working through “civil society”, state-organised networks could focus on the practical business of problem solving within the parameters of neoliberalism: trying to balance competitiveness with social cohesion, while setting aside the structural foundations of inequality and injustice. Urban living labs seeking to innovate around smart cities and sustainability are a good example of this ideology in practice.  For the most idealistic thinkers, network governance ushers in a new, cooperative and communicative form of sociability capable of replacing the crumbling hierarchical edifice of modernity.

Much of my work has been concerned with the critique of this exaggerated and normatively charged theory of change (see [1], [2], [3], [4]). I argue that the idea of network governance as an “innovation” transforming the way we are governed is hopelessly idealistic. At best it is the vague premonition of a post-capitalist society incubating within the bowels of a nasty, authoritarian neoliberal conjuncture.  There are multiple reasons for skepticism about “network governance”.  First, there is nothing new about it.  Any brief survey of early 20th century literatures show that the kinds of institutions considered “innovative” by network enthusiasts have been around for a very long time. Second, when studied close-up, “networks” look very much like the “hierarchies” they are supposed to replace.  Participatory networks, like urban living labs, tend to be cosmetic.  States and corporations are by far the biggest drivers of climate change, and they determine how it is governed through duplicitous practices like carbon trading.  Moreover, networks entrench inequalities of wealth and power – the very reason they are attractive to elites.  They leave the dispossessions and human disasters of climate change untouched and require us to think about injustice in de-politicized vernaculars of “innovation”, “adaptivity”, “inclusion” and “sustainability”.  They promise relentless “change”, but always within the parameters of the present.  Like a washing machine, we are in continuous motion but never move.

To try and put network governance in its place, and situate it in a better understanding of historical continuity and change, I turned to the work of Italian revolutionary, Antonio Gramsci (see [1], [2]).  Gramsci developed a theory of politics, in which state and civil society are deeply enmeshed.  He argued that the coercive and consensus-building tactics and strategies of government play out on the terrain of civil society.  Gramsci’s definition of civil society was much broader than the rather benign world of voluntary organisations depicted in democratic theory.  He included the media and education systems, while today’s Gramscian scholars also point to the power of charitable foundations. Much of what we call “civil society” is either closely linked to corporations and the state, or depends on them for donations, grants and contracts.  Swathes of civil society are hierarchical, predatory and conservative. Gramsci called this deep web of entanglements and inter-dependencies “the integral state”, Lo Stato Integrale.  He argued that government “educates” civil society through a myriad of coercive and consensus-building techniques.  When states are threatened with revolution, he said, a well-organised civil society turns out to be their best protection.

Studied through the lens of the integral state, what we call “network governance” looks very conventional and not at all “innovative”.  States may be shedding their postwar welfare and redistributive functions, but its coercive functions have not disappeared.  On the contrary, they are coming to the fore. When we look at the anatomy of state-organised governing networks, we find coercive managerialism everywhere.  In participatory mechanisms state managers control agendas, while those seeking to politicize an issue are often quickly marginalized.  Informal networks, on the other hand, reinforce the power of governing elites and corporate interests, which dominate climate change decisions.  Under austerity, participatory mechanisms are either set aside or tasked with advising on where the state should make its cuts. Even the much-vaunted participatory budgeting mechanisms of Latin America are widely recognized to be in decline.  And, in hindsight, they didn’t exercise that much control over the governing apparatus to start with.

The point is not that public participation is bad, or that polycentric systems do not exist in some circumstances.  It is rather that branding unremarkable practices as new, radical or innovative can be dangerous because it conceals deep continuities and asymmetries in the structures of power.  In the age of authoritarian neoliberalism, network governance is little more than a sticking plaster for the gaping wounds of late capitalism, of which climate change is among the worst.

Jonathan S. Davies is Professor of Critical Policy Studies and Director of the Centre for Urban Research on Austerity at De Montfort University, Leicester, UK

The hollowness of GDP: The case of Ireland

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In today’s post Dr Daniel Bailey and Professor John Barry argue that Ireland’s GDP statistics highlight the disconnect between ‘official’ growth and the real economy, and raise questions about the nature of growth itself. This post was originally published by SPERI Comment and republished with their permission.

In the last decade, the prominence afforded to Gross Domestic Product (GDP) in political discourse has increasingly been challenged by a series of social and environmental critiques. These critiques – made by the likes of Wilkinson and Pickett, the Stiglitz Commission, theILO, and the New Economics Foundation – argued that policy-making ought to be sensitised to alternative metrics better suited to the socio-economic and ecological conditions of the present day. Recent GDP announcements in Ireland have only added to the contestations surrounding the political centrality of economic growth in political economy.

The credibility of the GDP statistic in Ireland was strained when the Central Statistics Office (CSO) announced that its growth rate for 2015 was 26.3%; far superior to any of the figures recorded during the ‘Celtic Tiger’ years of the 2000s. This figure was met with widespread ridicule, including by Nobel Prize-winning economist Paul Krugman who described it disparagingly as ‘Leprechaun Economics’.

The drivers of this growth spurt, according to official sources, were a series of ‘inversions’ whereby companies re-locate their official headquarters to Ireland, where only a minority of their business operations take place, in order to benefit from subjecting their profits to Ireland’s low corporation tax rate. This has included companies re-structuring in such a way that sees them legally transfers its assets or its intellectual property to Ireland despite the country only fleetingly hosting the economic activity of these companies. As a consequence, there was a simultaneous boost in net exports in 2015 as these multinational companies contracted non-Irish companies to carry out certain operations.  Such volatility in the GDP numbers is facilitated by the small and open nature of the Irish economy and its reliance on foreign direct investment, and by its 12.5% corporation tax rate which attracts multinational corporations looking for a foothold in the Eurozone.  The Irish Times have reported that Apple – whose exact tax arrangements with Ireland have been under some scrutiny recently – was one company responsible for the rise in Ireland’s capital stock, as well as AerCap in the aircraft-leasing sector. In addition, the robust defence of Ireland’s corporate tax arrangements by the current Irish government, and most of the opposition in the Irish Dáil (parliament), is telling and revealing in demonstrating the alliance and common interests between global corporations and nation-states such as Ireland.

In other words, although Ireland’s 2015 growth rate has some impact on governmental income and the debt-to-GDP ratio, it has only a diminishing connection to the performance of the ‘core economy’ and the reduction of unemployment. Prime Minister Enda Kenny, lost his parliamentary majority in February’s General Election not least because his appeal to the electorate on the campaign trail to ‘keep the recovery going’ was met with a response of: ‘what recovery?’.  The eroding credibility and meaning of the GDP statistic in Ireland was evident in such a debate, and the subsequent data released by the CSO will only further these perceptions.

The susceptibility of the Irish economic model to accountancy practices such as those seen in the ‘inversion’ strategies above mean that further volatility and the financial risks associated with it cannot be ruled out. Indeed, the 2016 economic data thus far forms an ironic postscript to the 2015 data as it shows that the economy has contracted so far this year. The volatility of the GDP measurement – an inherent component of the internationalised Irish economic strategy – means that it is highly problematic for either public spending or deficit reduction to be planned reliably on the basis of growth projections.  The contraction, however, tells us similarly little about economic trends such as the unemployment rate which have become increasingly disconnected from GDP levels; just as GDP has become disconnected from well-being, economic security or global poverty reduction.

Following Tom Healy, the methodological nationalism of GDP is disguising the existence of two economies operating within Ireland today. One is a very high-productivity, relatively low-labour intensive, export orientated and highly profitable economy.  The other is a low-productivity, high-labour intensive, domestically orientated and relatively less profitable economy.  Clearly this is a stylised depiction, but it does capture the misleading character of ‘single country’ and undifferentiated analyses of the ‘recovery’.

Therefore, alongside the credibility or usefulness of GDP we have to ask a connected but larger and more crucial question for modern political economy: who wants ‘jobless economic growth’? Posing the idea that GDP growth can be compatible with continuing joblessness does open up a possibility of delegitimising GDP growth.  This is based on the idea that for most people their support for ‘economic growth’ is not based on corporate profit-making or reducing government debt-to-GDP ratios, but based on strategies for growth producing jobs, and ideally high-paying, good quality jobs at that.

This is not a problem unique to Ireland. To differing extents, capital flows in many countries distorts the original premise of its ascension in political discourse.  The increasing mismatch between economic structures and the conventional statistical framework developed more than 70 years ago has recently prompted Diane Coyle to suggest that the ‘path dependency’ of the latter is now threatened more than ever by a coalition of interests seeking to develop alternative indicators more suited to the ecological, economic and societal challenges and opportunities of the 21st century.

Ireland, however, is a particularly extreme example of GDP serving an increasingly misleading and irrelevant measurement not only wellbeing, but also for the wealth of the nation. As such, the GDP growth figure has rarely been as ethereal or mythical as it is in Ireland today. But more than that, the hollowness of the statistic for the lives of the Irish people means that it is even more important for Ireland to develop a notion of national prosperity or success which goes far beyond conventional understandings of economic growth.  If ‘jobless economic growth’ is not working, can we begin to move our political economy thinking beyond GDP growth to envisage political economies of job rich non-economic growth?  If the Irish experience of ‘jobless growth’ is a discredited form of ‘Leprechaun economics’ (which should really perhaps be called ‘corporate profit shifting economics’), what do we put in its place in a ‘post-growth’ political economy?

Dr Dan Bailey is a Researcher as the Sheffield Political Economy Research Institute, and John Barry is Professor in Politics and International Studies at Queens University, Belfast.